It’s hard not to run into articles pushing the next big edtech product poised to disrupt the learning experience. Countless rankings are published almost monthly. While short-term investment in the industry paints a sobering picture, long-term forecasts and the advent of AI may help cement their foothold across higher ed and K12.
Following $20.8 billion and $10.6 billion valuations in 2021 and 2022, respectively, HolonIQ forecasts global edtech venture investments in 2023 to total only $3.5 billion. The first six months of the year are already backing up this prediction. Second-quarter reports show edtech reaped only $707 million. This brings total investment to around $1.8 billion, a 58% drop from a year ago.
But this bleak outlook might be a symptom of a much larger funding problem in higher education, specifically when it comes to ramping up technological resources. Investments in institutions’ administrative services in finance, human capital management and student selection decreased by an average of 22% in 2022 compared to the previous year.
Reports focused on decade-wide analysis rather than year-to-year changes reaffirm the viability of edtech. The market is expected to be near $1 trillion by the end of the decade and will find a pace of 18% annual growth.
Driving that investment is the rise of platforms updating their services to integrate tools and learning programs on AI, the worldwide phenomenon that has taken higher education and organizations for a whirlwind.
“There’s a huge demand out there. It’s like a big sucking sound, where the world is looking to absorb all things AI across every company at the same time,” says Anant Agarwal, founder of edX and chief platform officer at 2U, its parent company. “AI will impact every job, whether it’s a frontline worker, teacher, administrator or an executive at a company. Everybody needs to learn and upskill.”
More than 40% of hiring managers expect that all job candidates hired in the next five years will need AI skills, but fewer than 20% currently possess them, Forbes reports. Employees are feeling the pressure, too: Gallup found that a quarter of U.S. workers are now afraid of becoming obsolete due to the technology.
Consequently, the company is preparing its members for the upheaval by using AI to inform new learning methods and build new job skills, says Agarwal. This fall, it’s secured several prominent partners for its AI boot camp, including Michigan State University, the University of Denver, The Ohio State University College of Engineering and Southern Methodist University.
Because the need for upskilling extends past the current student body and to adults already in the job market, Agarwal believes edtech’s foothold on AI learning invites a new consumer base. Searching for anything AI-related on edX has gone up by 80% in the past six months, according to Agarwal. The platform’s short, part-time courses can also incentivize working, middle-aged adults to upskill.
“We need to be deploying edtech to reach the masses of lifelong learners that need to be upskilling as a way of life, he says. “And that’s a whole new demand, a whole new industry, whether business to consumer or business to business.”