The UK has £10bn skills gap, so investors must back the ‘edtech’ boom
The “edtech” revolution began long before 2020. The last two decades have seen a surge in demand for skills such as coding and data science, which traditional educational institutions have, as yet, been unable to meet.
A recent study by Qlik and Accenture estimates this skills gap, evidenced by the difficulty to fill positions or filling positions with insufficiently skilled workers, is costing the UK alone £10bn a year in lost productivity.
The nature of education makes the sector slow-moving, which can be unappealing to venture capital investors. But the potential is huge here, and the need is great, so investors need to back it.
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Education tech — or “edtech” — can help to bridge this gap, enabling adult learners to reskill into new sectors and giving the vast numbers of people with access to new infrastructure and digital literacy the ability to take control of their educational futures.
University starters this year are predominantly made up of those from Generation Z, the first truly digital native generation. This bracket, according to a study by Pearson, is more receptive to learning through digital media than any generation before.
It’s important to stress how broad the edtech umbrella is: it isn’t just about creating long-distance classrooms, it’s building an entirely new digital architecture for learning. Some startups are utilising artificial intelligence to provide one-to-one tutoring based on the needs of students, while others use technology to supplement existing education spaces using futuristic devices like interactive projection screens.
One of the most exciting areas is virtual reality, which allows users to enter a digital world where they can learn skills that would otherwise be prohibitively expensive, be that piloting an aircraft or designing a skyscraper. For example, a firm called FundamentalVR, based in London, is using VR headsets and handheld devices with haptic feedback to simulate the delicate intricacies of surgery.
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However, it is true that the embrace of new teaching methods can be ponderous, and is often hampered by conservative institutions that have to navigate both macro and micro political climates. Procurement processes are outdated, making it bureaucratic and difficult for edtech companies to break into.
Education is an intrinsically long process, and demonstrating positive outcomes can take months or even years. This creates a longer feedback loop for edtech companies compared to other tech startups, and can put off investors hoping for a fast exit, which in turn discourages top founder talent from entering the sector.
Beyond this, there are issues of monetisation, with the end-user often different from the payor, and difficulties in global scalability, with vast discrepancies from country-to-country and even region-to-region in everything from language to curriculum to infrastructure.
Many startups with seemingly great ideas fall at these hurdles. Take the example of inBloom, an open-source education platform that received $100m in funding in 2011, largely through the Bill & Melinda Gates Foundation, only to collapse three years later having failed to convince enough schools that its bold vision for a shared future of education wouldn’t lead to a dangerous breach of student privacy.
The future asks difficult questions of the edtech sector as a whole, too, such as how we avoid creating a digital divide between the wealthy and the poor, or those in areas with high-speed broadband and those without. The internet penetration rate in mainland China, for instance, is just 60 per cent, compared to more than 90 per cent in the UK. In India, that figure falls to just above one third.
But the numbers all point in the same direction. The sector is primed for serious growth. A Morgan Stanley analyst predicted last year that the online tutoring market for US school-age children (known in the local market as “K12”) will grow 23 fold to $160bn by 2030.
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It is innovative companies, led by entrepreneurs and technology, which will help shape the minds of the generations to come. Those that find ways to level the education playing field, building tools that those without practical and emotional support can access, and businesses that solve training and retraining at scale and virtually.
Then there are those that will complement and enable these builders: the satellite internet firms broadcasting cheaply to the world’s poorest; the fintechs finding more efficient ways to tie payment to earnings; and the philanthropy tools that enable those with more to easily and efficiently fund those with less.
There is much work to be done, but there has never been a better opportunity for edtech entrepreneurs, technology investors, and the country’s education system.
Main image credit: Getty