BY ANDY MCGRADE
Education technology, often called EdTech, provides a visual-based interactive experience for students (in and out of the classroom) and an innovative investment opportunity for investors. As the EdTech landscape grows at a rapid pace, investors have the opportunity to see returns on investments in a unique field blending both the education and technology spaces. In a nutshell, EdTech is designed to enhance traditional teaching methods by integrating technology ”” especially mobile technology ”” into school curriculums to increase teaching efficiency and student mastery. The recent surge in this integrated learning approach has been driven by demographic, cultural and technology trends, with key players ranging from governments to application developers.
Should investors take note? Yes.
On the demographic front, the global population is “growing younger” as countries like Nigeria and India are driving the under-24 population cohort to grow by 260 million over the next 40 years. Additionally, not only is the supply of prospective students increasing, but growing numbers of students are enrolling, and completing, their education across all levels. Furthermore, women”™s enrollment has steadily increased over the past decades and every nation has shown increased literacy rates since the 1970s. These trends increase the demand and scale of this investment opportunity.
Trends in technology are the other part of the equation. As the world becomes increasingly connected, the business of connectivity grows. An estimated 6.8 billion people globally have mobile-cellular subscriptions and more than 2 billion have active mobile-broadband subscriptions. As the cost of wireless internet, mobile devices and tablets decreases, populations that previously had little access to technology now have readily accessible learning opportunities. Further, the developed world may currently have the highest levels of communication technology penetration, but the developing world has both large populations and higher growth rates. As information communication technologies develop, so does the technology infrastructure needed to introduce new and innovative teaching methods.
Across the globe, countries are recognizing not only the importance of the EdTech trend, but also the risks taken in not making the commitment to invest in the technology. Undereducated populations risk losing foreign investment and employment opportunities, and the governments of developing countries, where the education gap is greatest, are finding it vital to invest in EdTech rather than risk falling further behind. With these investments, developing nations have the opportunity to educate populations that traditionally suffered from lack of opportunity to further decrease the education gap into the future.
There has been a surge in investor interest in education technology, yet this field is still in the early stages of development. GSV Advisors estimates the global e-learning market totaled approximately $91 billion in 2012, and they expect spending to reach $256 billion by 2017. With the increase in connectivity and demand for technology growing rapidly and the global implications of such technology becoming all the more evident, this may be a powerful secular trend offering attractive investment opportunities for the inquisitive investor.
Andrew McGrade is a managing director and market investment director at US Trust, Bank of America Private Wealth Management”™s portfolio management team in Fairfield County. He lives in Weston.
