Analysis of the EdTech marketplace has taken significant swings in the past few years. Bullish predictions ushered in a swell of investment dollars and billion-dollar valuations that propelled dozens of companies into unicorn status. At its peak in 2021, $20.8 billion dollars had been invested in EdTech. That’s 40 times as big as the market was 10 years earlier.
The influx of funds made it easier for innovative founders to launch their companies. But as those of us who have been part of the EdTech space well before its latest moment in the spotlight know, gaining and sustaining traction in education takes a unique approach.
Now we are seeing the aftereffects of the quick scramble to online learning and digital tools, marked by company closings and significant layoffs. As education collectively recalibrates, it seems an apt time to change the way investors evaluate EdTech. We need investors who take the long view — those who will value the impact on learners as highly as they value financial gains and choose to back companies that are innovating at the cross-section of those two points.
At WGU Labs we have a long and deep commitment to an impact-first investing approach. When we invest, we choose companies that are built for students who are furthest from opportunity and focus on improving core learning. Our approach has four core areas:
A Model and Roadmap Aligned to Impact
We evaluate the model, mission, and market of a business not just on the financial impact it can have, but also the company’s potential to drive equity within education. We rate companies based on the social and environmental aspects of their business model, alignment with our core values, levels of grant funding received, and the company’s intentional efforts to reach students who have been historically left out of EdTech solutions.
Clear and Documented Efficacy Goals
Leaders, educators, and students want products that work. When they don’t the cost is greater than lost budget and time — though those things matter within higher education too. Failed products can have an impact on student success, causing students to miss outcomes they hoped to achieve. For those reasons, we examine how companies plan for, test, and measure efficacy. We consider how companies document the change they want to create, define intended outcomes, involve people with experience to design effective programs, and conduct rigorous research to demonstrate impact. By elevating the importance of research, we know the products in which we invest have greater potential to drive the change that’s needed in higher education.
Marketing and Messaging
The way a company positions itself in the market has to be authentic to its brand, which includes a commitment to social impact. When we evaluate companies, we look for synergy between the marketing and messaging and the company’s mission statement. We evaluate the ways companies clearly communicate a commitment to advancing positive change, earn recognition for their impact, and choose inclusive language to determine how much social impact they can potentially create.
Diversity, Equity, and Inclusion
To make a true impact within higher education, it’s not enough to externally communicate a commitment to diversity and inclusion. We evaluate companies on their commitment to these principles on every level, from the values of the company and embedded DEI strategies to the people who are driving the company and decisions forward. We are committed to companies who want to go beyond lip service in these areas to undo structural inequities within their own company as well as the world around them.
Investing from an impact-first lens can be a game changer within EdTech. According to some reports, there were more than 1,400 deals last year, a volume of investments that brought $10.6 billion to EdTech companies. Even as the pace of deals cools, the EdTech market is still strong. Those of us who are invested in creating change for students and designing equitable environments where all students can thrive have the opportunity to direct this by choosing investment strategies that promote new values.
Ready to make social impact a bigger part of your investing strategy or company model? Explore our evaluation framework for social impact at a deeper level.