As students have no choice but to learn remotely during the COVID-19 pandemic for the second straight school year, the education technology industry has exploded. But according to Tory Patterson, founder of the largest edtech VC fund, Owl Ventures, that was going to happen sooner or later.
“I think these products were growing super rapidly before the pandemic,” Patterson told Thinknum. “The pandemic obviously accelerated adoption levels. We were building up to this environment organically anyhow. We brought forward that user volume three to five years right away.”
The rise of edtech
Patterson founded Owl Ventures in 2014 when he saw that the edtech sector was growing but underfunded. One catalyst for starting the firm was when the Obama administration subsidized high speed broadband in every US classroom that same year. Six years on, Owl Ventures has over $1.2 billion in assets under management and its portfolio includes the likes of BYJU’S, Quizlet, DreamBox, and MasterClass. Owl’s latest pair of funds, totalling $585 million, is allowing them to cut their largest checks to date.
In 2015, edtech was a $107 billion industry, but it’s expected to triple to $325 billion by 2025. Banking giant Goldman Sachs is calling for $19 trillion in total spend in the future of learning in five years’ time. Despite that, Patterson said, edtech massively underfunded compared with other sectors.
“The fact that it was so underfunded, from a venture perspective, it’s just this bizarre anomaly relative to the size of the industry,” Patterson said. “There’s a lot of interesting reasons why that was, why technology was sort artificially held at bay from impacting education at scale.”
Patterson has watched the industry grow steadily for the last several years, but everything changed when the pandemic hit. Edtech companies had no choice but to meet the rising demand from school districts and consumers alike.
“Had this industry been allowed to evolve for a decade or two before this moment, we’d be having a very different moment,” Patterson said. “It’s this last mile broadband connectivity, which basically artificially impaired the ability for software developers to deliver products at scale. So that’s all changed in the last five years. And the industry’s catching up quickly.”
Edtech is one of the few industries that saw growth as a result of a cataclysmic world event, something that Patterson hasn’t forgotten. “The world’s going through a tremendous amount of pain right now, so don’t take these comments to lack any empathy for the situation we’re all collectively in, especially families,” he said. “That being said, most edtech companies are seeing a massive spike in user engagement, and top of funnel interaction with product. In terms of a moment in time to build audience, this is unlike anything I’ve ever encountered in my career.”
The upsides that edtech companies offer to teachers and students alike — data-driven customized learning, online study tools, automated busywork— will likely remain a part of education long after students return to the classroom.
“That’s a net positive, no matter what side of the aisle you sit on, it’s just about innovation, bringing capital into this sector, all with the intention of driving student learning,” Patterson said.
"Most edtech companies are seeing a massive spike in user engagement...In terms of a moment in time to build audience, this is unlike anything I’ve ever encountered in my career.” - Patterson
The drawbacks of edtech
Edtech may be growing at a fast pace, but it’s not perfect. Patterson outlined two of the main drawbacks of the new technology. The first, excessive screen time, has been a result of students forced to learn remotely as in-person learning was made impossible by the pandemic. Remote learning has since been seen as a necessary evil by many.
“Anyone who sits in an office all day, like you and I do, we know it’s not ideal,” Patterson said. “So for a young, developing student who’s got a lot of energy and hormones pumping through them, [remote learning] is out of sync with their natural biology to some degree. I think we’ve got to get better at that. I hope we’re not in a distance-learning environment for too much longer, but regardless of that, I think long stretches of computer time are problematic. And there’s no two ways about it.”
The other drawback, Patterson says, is a lack of equity among students. Remote learning has left many students without the additional resources schools offer: a place to socialize, a source of free meals, and a sense of stability that may not otherwise be present at home. For low income, immigrant, and homeless students, as well as students of color and other disadvantaged groups, the pandemic may have created a bigger equity gap.
Bringing students back to the classroom is the best solution, but until the pandemic is over, that won’t be possible. “But in the interim, we can’t go two or three school years and let our low income families experience this learning gap,” Patterson said. “A lot of people are talking about it, and not a lot of great solutions are on the field right now.”
"We can’t go two or three school years and let our low income families experience this learning gap." - Patterson
The edtech industry will continue to grow, and according to Patterson, some of the key players in the industry will become household names, much like Lego or Disney is for many Americans. “We’re at something like 25 edtech unicorns. I think there’s going to be 150 within five to 10 years,” he said.
“There is going to be an explosive bloom of new edtech companies that are all aimed at solving these problems,” Patterson added. “So we’re trying to gear up for the wave we know is building out there in the ocean.”