Is edtech in a bubble?

By Jose Ferreira, Knewton Founder and CEO

Education and edtech are proving big draws at this year’s World Economic Forum Annual Meeting, with nearly a dozen panels and related events. I’ve been lobbying for this kind of commitment to education here since I started coming to Davos three years ago, but this is the first year I’ve seen it happen (there were no panels on education in the last two years).

This new focus is reflective of a much larger trend. In the past few years, the edtech industry has grown incredibly — as has the amount of money flowing into the industry. These investments have prompted continual debate about the “edtech bubble.” Namely, are we in one, and if we are, when is it going to burst?

I’ll let you know my opinion — but first a little context. Back in 2007, when I first started raising money for Knewton, there was really no venture capital (“VC”) backed edtech at all. There was Chegg and BookRenter, which were distribution companies packing books in boxes more than tech companies. There was me trying to raise VC for Knewton and Princeton Review founder John Katzman trying at the same time to raise VC for his new startup 2Tor (now 2U). Grockit was out on the West Coast. (I’m sure there were others, but those were the ones on my radar.)

At the time, not many VCs were into edtech either. A notable example: When I reached out to Fred Wilson of Union Square Ventures, he declined even to look at Knewton, saying that the education industry was something his fund hadn’t been able to get excited about. (A year later, USV famously changed its mind, deciding education would be one of the most interesting places to invest.)

In 2009, Kno and Inkling launched, along with a number of other startups. It was a sizable increase in the number of VC-backed edtech companies. That same year, Arizona State University and GSV Advisors hosted a small edtech conference bringing together startups and investors. The ASU conference started almost by accident, but it proved a surprise hit, and attendance has doubled every year. One year after the ASU conference launched, Goldman Sachs concluded that education would be one of the great growth industries of the next 20 years. They teamed up with Stanford University to host their first Global Education Conference. A year later, that conference doubled, too.

Today, the level of activity is at an all-time high. Hence all the questions about whether we’re in an edtech bubble. Some people aren’t even asking — they just take it for granted that we are.

But I can’t quite get comfortable saying that edtech is in a bubble.

Why? 

Read more>>

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