Skip to content
ADVERTISEMENT
Sign In
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Events
    • Virtual Events
    • Chronicle On-The-Road
    • Professional Development
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
  • More
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Events
    • Virtual Events
    • Chronicle On-The-Road
    • Professional Development
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
    Upcoming Events:
    An AI-Driven Work Force
    University Transformation
Sign In
TheEdgeIcon.png

The Edge

The world is changing. Is higher ed ready to change with it? Senior Writer Scott Carlson helps you better understand higher ed’s accelerating evolution. Delivered every Wednesday. To read this newsletter as soon as it sends, sign up to receive it in your email inbox.

February 24, 2021
Share
  • Twitter
  • LinkedIn
  • Facebook
  • Email

From: Goldie Blumenstyk

Subject: The Edge: Where Ed Tech's $2-Billion Year Leaves Colleges

I’m Goldie Blumenstyk, a senior writer at The Chronicle covering innovation in and around academe. Here’s what I’m thinking about this week.

To continue reading for FREE, please sign in.

Sign In

Or subscribe now to read with unlimited access for as low as $10/month.

Don’t have an account? Sign up now.

A free account provides you access to a limited number of free articles each month, plus newsletters, job postings, salary data, and exclusive store discounts.

Sign Up

I’m Goldie Blumenstyk, a senior writer at The Chronicle covering innovation in and around academe. Here’s what I’m thinking about this week.

Let’s talk about all that ed-tech money.

It’s quite the contrast: Colleges are laying off personnel, cutting entire academic departments, and otherwise struggling with budgets battered by lower revenues and higher costs. Meanwhile, investors are pouring billions into companies that sell education technology and related services to colleges and schools — and into investment funds themselves.

That imbalance could spell trouble.

Ed-tech companies raised a record $2.2 billion in venture and private-equity capital across 130 deals in 2020, according to EdSurge, which tracks those figures in its funding database. Last year’s total was up nearly 30 percent over the $1.7 billion invested in 2019, across 105 deals. And that doesn’t count the additional hundreds of millions invested already in 2021, or the potential gusher of new capital being raised by education-focused private-equity funds or by the now-trendy Wall Street vehicles known as SPACs, or special purpose acquisition companies, that have no actual operations (yet).

We’ve heard this story before. Heck, I’ve written this story before — initially two decades ago, when the bubble first burst on “education dot-coms.” Ed tech, of course, is a more mature industry now than it was after the boom-and-bust in 1999-2000 (and subsequent booms, in 2008 and 2015). Many colleges, too, have become savvier consumers, better able to hold their own as a growing number of companies look to get in on the action.

But with Covid-19 pressuring institutions in ways never before seen, and analysts noting that the money flowing into the sector is creating overvalued companies with unrealistic expectations for post-pandemic profit and growth, I wonder how long it will be before the bubble bursts again — and where that will leave institutions and students.

Conversations I’ve had in the last two weeks with several investors, analysts, and academics inform my sense of the pros and cons. So here goes:

To be fair (and less cynical than I tend to be on this topic), investment capital flowing into ed tech brings obvious benefits. For one, it fuels entrepreneurship. And that means “greater odds of our problems being solved,” said Matthew Rascoff, associate vice provost for digital education and innovation at Duke University. It behooves academics to work closely with companies, he said, and watch what they’re doing: “We should be willing to buy the good solutions.”

Some of the new (and newish) companies that are attracting capital right now do respond to the challenges colleges are facing, like how to encourage interaction among students remotely (see especially $16 million for ClassEDU and its Class for Zoom platform, and $14.5 million for Engageli and its alternative to Zoom). Improving communication is another theme (for example, $16 million raised by Mainstay, formerly known as Admit Hub, to expand its chatbot capabilities).

Another positive: More companies create a more competitive landscape, which can result in better pricing for colleges. It can also give colleges greater leverage to, say, ask a company to run a pilot program with a new product before committing to a contract, noted Fiona Hollands, a senior researcher in the department of education policy and social analysis at Columbia University’s Teachers College. “If the buyer is smart, they’ll get what they want,” she said. “If they’re not, they’ll get what everybody throws at them.”

Of course, that assumes college leaders and IT staffs have the time and energy to figure out what requests they’d even want to make. After a year of managing pandemic operations, many are still barely keeping up — and they’re exhausted.

Just staying current can be a challenge, said Robert Pianta, dean of the School of Education and Human Development at the University of Virginia. “As a higher-ed administrator, I’m getting bombarded” with pitches from companies, he told me. “Some I recognize, most I don’t.”

Oops, is my cynicism showing? Even the “positives” are a mixed blessing.

While a lot of the $2.2 billion tracked by EdSurge went to companies focused primarily on postsecondary students and institutions (Coursera, $130 million; Course Hero, $80 million; Handshake, $80 million), the tally also included many deals in other education markets. Think companies that help parents educate their children and help adults educate themselves. (What’s more pandemic-y than Master Class raising $100 million?) But increasingly, products cross from elementary and secondary instruction to college education to work-force training. Actually, there’s another positive: to show the limits of siloed thinking about education.

More salient to me, however, are the risks of an overheated, overvalued ed-tech industry. The entry into education of those “hot” Wall Street creations known as SPACs seems a clear sign of that overhype.

Quick detour here for a little primer on these things: A SPAC is a “blank check” company created to raise money from investors in public markets even before it’s specified what businesses the company will own and operate. In the last year, financiers have raised close to $1 billion creating at least four ed-tech SPACs. The acquisition capacity of each one is several times the amount it has raised because it can attract capital through a private investment in public equity, or PIPE, deal. Within two years, the SPAC has to buy something or return investors’ money.

Does that sound like a lot of capital looking for a deal? Yeah, to me, too. As one education-industry banker told me: “The knock on SPACs is that they’re going to have a hard time finding good assets to buy.”

In that case especially, investors may pay too much. Sure, right now, ed-tech companies look like a solid bet. Colleges have eased their usual procurement rules and allocated emergency funds to solve remote-learning challenges. Because of Covid-19, a lot of these companies “have grown extraordinarily fast,” Troy Williams, head of ed-tech strategy for the University Ventures investment firm, told me.

But what happens if the pandemic effect fades and companies can’t meet their investors’ (perhaps inflated) expectations? No tears for the investors here. But that could get really disruptive for the colleges and students the companies are working with. Attention may shift to sales rather than customer service, the strategy and offerings may change, or the company might look for a buyer or merger partner.

To be sure, such moves are generally less disruptive to campuses today than they were in the early days of ed tech. The industry now has more common standards so that its products and tools can move more easily into different systems. Cloud-based technologies have minimized the need for extensive reprogramming at the campus level. Still, as the market analyst and consultant Phil Hill said, “When things go bad, they go really bad.” That can leave college leaders feeling the heat as well.

It’s too early to determine the impact of this ed-tech investment bonanza. But it’s not too late to pay attention to something perennially missing from these booms: whether the tools are working. As Pianta told me, with all the money now flowing, “there hasn’t been a parallel investment in the kind of infrastructure and resources to study the impacts.”

Pianta’s not disinterested on this subject. He’s chair of a nonprofit, the UVa-affiliated EdTech Evidence Exchange, entirely devoted to this work. That doesn’t negate his concern. The fact that the exchange is still scrambling to raise the funds it needs to build a platform to help college educators share information about ed-tech efficacy might even prove his point.

Most companies and investors won’t fund that kind of research unless customers insist on seeing such information before they buy. And most colleges don’t make those demands. It’s a “circle of gridlock” I’ve described before. The pandemic has changed a lot about higher ed. Maybe now the Covid-driven ed-tech surge will crack open that circle, too.

Got a tip you’d like to share or a question you’d like me to answer? Let me know, at goldie@chronicle.com. If you have been forwarded this newsletter and would like to see past issues, find them here. To receive your own copy, free, register here. If you want to follow me on Twitter, @GoldieStandard is my handle.

Goldie’s Weekly Picks

trendsbartlett-web-full-bleed.jpg
Racial Reckonings
The Antiracist College
By Tom Bartlett
This may be a watershed moment in the history of higher education and race.
Two university buildings on hills, one under dark stormy sky, the other under bright blue sky
The Review
Regional Public Universities Don’t Need Rescuing
By Kevin R. McClure, Cecilia M. Orphan, Alisa Hicklin Fryar, and others
They’ve been treated shamefully, but they’re more resilient than people give them credit for.
JuneNACUBO-0218.jpg
Finance
College Endowment Spending Rose and Returns Fell as the Pandemic Set In
By Audrey Williams June
The average one-year return on endowments was 1.8 percent, down from 5.3 percent the year before, according to a new survey.
Tags
Leadership & Governance Innovation & Transformation Finance & Operations Law & Policy
ADVERTISEMENT
ADVERTISEMENT

More News

Illustration showing the logos of Instragram, X, and TikTok being watch by a large digital eyeball
Race against the clock
Could New Social-Media Screening Create a Student-Visa Bottleneck?
Mangan-Censorship-0610.jpg
Academic Freedom
‘A Banner Year for Censorship’: More States Are Restricting Classroom Discussions on Race and Gender
On the day of his retirement party, Bob Morse poses for a portrait in the Washington, D.C., offices of U.S. News and World Report in June 2025. Morse led the magazine's influential and controversial college rankings efforts since its inception in 1988. Michael Theis, The Chronicle.
List Legacy
‘U.S. News’ Rankings Guru, Soon to Retire, Reflects on the Role He’s Played in Higher Ed
Black and white photo of the Morrill Hall building on the University of Minnesota campus with red covering one side.
Finance & operations
U. of Minnesota Tries to Soften the Blow of Tuition Hikes, Budget Cuts With Faculty Benefits

From The Review

A stack of coins falling over. Motion blur. Falling economy concept. Isolated on white.
The Review | Opinion
Will We Get a More Moderate Endowment Tax?
By Phillip Levine
Photo illustration of a classical column built of paper, with colored wires overtaking it like vines of ivy
The Review | Essay
The Latest Awful Ed-Tech Buzzword: “Learnings”
By Kit Nicholls
William F. Buckley, Jr.
The Review | Interview
William F. Buckley Jr. and the Origins of the Battle Against ‘Woke’
By Evan Goldstein

Upcoming Events

07-16-Advising-InsideTrack - forum assets v1_Plain.png
The Evolving Work of College Advising
Plain_Acuity_DurableSkills_VF.png
Why Employers Value ‘Durable’ Skills
Lead With Insight
  • Explore Content
    • Latest News
    • Newsletters
    • Letters
    • Free Reports and Guides
    • Professional Development
    • Events
    • Chronicle Store
    • Chronicle Intelligence
    • Jobs in Higher Education
    • Post a Job
  • Know The Chronicle
    • About Us
    • Vision, Mission, Values
    • DEI at The Chronicle
    • Write for Us
    • Work at The Chronicle
    • Our Reporting Process
    • Advertise With Us
    • Brand Studio
    • Accessibility Statement
  • Account and Access
    • Manage Your Account
    • Manage Newsletters
    • Individual Subscriptions
    • Group and Institutional Access
    • Subscription & Account FAQ
  • Get Support
    • Contact Us
    • Reprints & Permissions
    • User Agreement
    • Terms and Conditions
    • Privacy Policy
    • California Privacy Policy
    • Do Not Sell My Personal Information
1255 23rd Street, N.W. Washington, D.C. 20037
© 2025 The Chronicle of Higher Education
The Chronicle of Higher Education is academe’s most trusted resource for independent journalism, career development, and forward-looking intelligence. Our readers lead, teach, learn, and innovate with insights from The Chronicle.
Follow Us
  • twitter
  • instagram
  • youtube
  • facebook
  • linkedin