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Rahul Bhushan, co-founder of Rize ETF
However, there is one significant technology trend still largely overlooked.
Yet, it is a sector – perhaps unglamorous to some – but which is universally agreed to benefit humanity: Education.
We are not just talking about primary and secondary schools, but the entire learning and knowledge transfer market.
Education providers across the board are digital laggards, under-serving today’s learners who, in all other areas of their lives, are immersed in digital communications and knowledge sharing.
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Failure to substantially incorporate technology to improve administrative and teacher productivity and efficiency, as well as to expand learning experiences from a predominantly analogue foundation, has undermined the full potential of the Education sector.
From primary and secondary through to higher education and skills-based learning – education providers have been reluctant, slow, incapable and/or ineffective in adopting to digitisation.
This is changing – and the investment opportunity is growing exponentially.
Venture capitalists invested a record $20bn into education technology (edtech) in 2021 – helped along by the Covid pandemic.
But with an increase of nearly two billion people into the global education system between now and 2050, investment in the sector has maintained momentum through 2022 (according to TechCrunch), indicating its resilience amid challenging economic conditions.
Global spending on edtech is expected to swell from $163bn in 2019 to more than $404bn by 2025 – almost 150% more investment, as the massive digital infrastructure catch up is exploited.
But the opportunity is actually even larger.
The forecast increase in capital flow only represents 5.5% of total global education expenditure, leaving plenty of upside potential.
These are some of the companies driving innovation in edtech:
2U has established itself as an online programme manager helping US universities offer online education and services spanning free courses to degree programmes.
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Its slate of acquisitions culminated in its $800m purchase of edX, a Harvard/MIT-created massive open online course provider, last year. EdX hosts university-level courses for students worldwide.
2U’s biggest recent announcement was its plan to leverage this capacity to transition from being considered a service player with a technology arm into a platform technology marketplace.
The company only listed in 2021, but has already made its mark as a phenomenal marketplace of short, on-demand online educational and vocational courses.
It currently offers more than 204,000 programmes for 54 million students worldwide.
Much of Udemy’s growth was sourced from B2B channels during the pandemic, as employers worldwide looked for ways to support and upskill their employees from their isolated environments.
After a post-lockdown lull, its performance has returned as its growth has continued as the sector shift towards an omni-channel approach.
The days of having to take a specific class in a specific place at a specific time are passing, with students now learning wherever and whenever they want.
Chegg is another stock that boomed during the pandemic.
It is leading the rapidly-emerging trend of “flipping” the education world’s traditional focus on core physical print resources on its head, replacing this with digital textbook rentals and interactive resources, servicing students across their lifelong learning journey.
While many universities argue that the company works against their traditional methods of assessment, Chegg counters that these institutions must reassess the repetitive ways in which they monitor their learners’ performance in an increasingly digital world.
With a market cap of close to AUD7.8bn (£4.4bn), this Australian stock is one of the largest on the list, its share price soaring over the past five years.
IDP is engaged in recruiting international students for placement in English-speaking countries and delivering its widely recognised IELTS English language qualification alongside the University of Cambridge.
For a company dependent on travel, it buttressed the Covid impact by pivoting into online language learning, which boomed during the pandemic and is expected to continue growing (from $59.6bn today to $191.1bn by 2028).
The company also recently appointed Tennealle O’Shannessy as CEO: a powerful leader in global education, with a proven track record of building successful digital businesses.
Duolingo is a language-learning app offering bite-sized, 20-minute courses, to 37 million users every day.
Duolingo is not considered to be a true education stock by some due to its lack of affiliation with the traditional educational system. However, the fact remains that it is delivering truly phenomenal growth from edtech – revenues rose by 55% to $294.2m year-on-year in FY 2021 alone.
Rahul Bhushan is co-founder of Rize ETF
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