June Edition of the X Report
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June Covid Swipe Right

In this month's X Report, we look at utilising technologies to empower enduring principles and discuss the current disruptions in education and work. Each month, we will share a snapshot of key trends, showcase the stars of today and tomorrow, provide some food for thought as well as mergers, acquisitions and fundraising.

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Using New Technology to Empower Enduring Principles
By Morten Vestergaard Andersen, EMEA Partner at LEGO Ventures

Over its nearly 90-year lifetime, the LEGO Group has been fundamentally rooted in the idea of learning through play. This is based on the conviction that children (and adults) learn best with curiosity, creativity, and most importantly, deep engagement. Being engaged in meaningful play and learning can facilitate the acquisition of critical skills such as problem solving, creativity, collaboration, and mental adaptability.

While the world has changed significantly since the initial invention of the LEGO® system, what and how we teach our children has remained surprisingly stagnant up until now. There has been a fundamental gap between what we know are important skills to equip learners with and the methods and content we use to teach them.

With the emergence of COVID-19 and a drastically changing education landscape, EdTech products hold immense potential as enablers of open-ended and playful approaches to learning. When based in strong pedagogy, these technologies can improve the accessibility and scalability of high-quality education significantly. This is why we at LEGO Ventures are so focused on supporting EdTech companies as one of our main investment areas.

Many of the key trends which have the potential to bring holistic skill development to students are based on the careful implementation of new technologies within strong pedagogies. Artificial Intelligence can empower personalized learning, serving strength- and interest-based challenges to help teachers keep students in a state of flow. Immersive technologies such as simulations, VR, or AR which, despite a slower adoption curve, offer a wealth of new ways to convey knowledge and set up more open-ended challenges. Or within classroom infrastructure, where better ways to capture, assess, and communicate learning activities can help bridge traditional school requirements with more diverse methods often conducive for skills-based learning.

These are just some of the ways that EdTech can help students, teachers, and school leaders on a journey towards facilitating more open-ended learning approaches. As we can safely expect recent disruptions caused by the COVID-19 pandemic to have lasting impact on the education sector, now more than ever is the time to be supporting the advancement of EdTech tools to ensure everyone, everywhere – even from home – has access to high quality learning.

Founded in 2018, LEGO Ventures is the strategic investment arm of the LEGO Brand Group focusing on the future of creativity, learning, and play. Learn more at legoventures.com.

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EdTechX on COVID-19: The [Great] Disruptor of Education and Work

On 12 & 13 May, EdTechX hosted the inaugural EdTechX Online Summit on COVID-19 and it’s great disruption on education and work. While the outbreak has led to catastrophic effects around the world, it has also created perfect conditions for the great digital leap in this space. In China alone 1.52bn learners were affected by schools closing. The pandemic was treated as a national emergency and created a national taskforce early on called the ‘National Online Cloud Classroom’. Google Classrooms saw a 400% increase in usage, +60% for BJU and Duolingo and +44% for Pearson. However, most of this growth is driven by non-paid adoption. Many companies reacted generously by providing their EdTech solutions for free, however, may have missed the opportunity to prove they can monetize their scale. How ‘sticky’ this adoption remains to be seen and will depend on the product. It can be predicted that learning management systems, in-classroom tools, digital content and assessment will stick while video conferencing will see less ‘stickiness’. All will be net winners versus a previous COVID-19 world.

Within the workplace, the rise of Zoom was just the tip of the iceberg. It is now considered to be the fastest digital service ever to reach 200m users. It achieved this milestone in 3 months - six times quicker than Fortnite (100m users in 18 months) and overtook Instagram which reached 100m users in 24 months. Slack has also seen a 20% increase in daily messages sent on the platform and a week on week growth by 3.7x in March.

However, disruption in the workplace will be much deeper than the mass usage of video conferencing and collaboration apps. COVID-19 has made the future of work the ‘New Normal’. There will be a range of approaches to work - from those never returning to the office again to those returning in staggered shifts with increasing flexibility. It is also anticipated that there will be large scale lay-offs but also large scale retraining and up-skilling, alternatively, there will be an increase in learning sabbaticals. This is particularly true for middle management. 

What we are seeing now is a digital transition in education and work. When digital becomes mainstream, live and experiential experiences become premium. This can be seen in eSports and music. Education and work will not be the exception. A survey of those who worked remotely published that 40% reported loneliness and missing the interaction with colleagues. COVID-19 is showing us this also. This is a sign of much greater disruption in 2020, where digital capitalism has become mainstream.

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It was the Best of Times, It Was the Worst of Times - Charles Dickens
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Education Delivery in COVID-19

Technology Expenditure in Education

EdTech has become crucial to education delivery during the COVID-19 pandemic. However, while most still equate EdTech with e-learning and lectures delivered on Zoom, additional technologies are aiming to transform the educational experience through the use of robots, blockchain, AI and AR/VR. These markets are still small (~3% of global EdTech market) but are attracting rising levels of funding and are predicted to grow at an average CAGR of over 27% to 2025. This is almost double the predicted growth rate of the global EdTech market over this period.

Immersive learning experiences like AR/VR are making up half of this market.There have been many positive reports of the effect of AR/VR use on retention, engagement and efficiency in education institutions and organisations. Research studies conducted by North Carolina State University show “significant improvement” in children’s (sixth to eighth grade) learning after using zSpace’s VR platform. Upskill, an augmented reality software training company, has cited seeing on average a 32% improvement in the workforce of their clients. Public speaking application by Virtual Speech reports that 92% of users said they felt more confident after practicing soft skills in the experience. In the higher education space, Canada’s Queens University and SimforHealth have partnered with HTC to open a VR training facility for medical students to let them experience real-time operations and a range of clinical situations in an immersive virtual environment.

Digi-Capital’s AR/VR Analytics Platform tracked $4.1 billion in AR/VR investment in 2019, the third-highest year on record after 2017 and 2018. Apart from Snap’s post-IPO private placement last year, the highest value investment stages for AR/VR in 2019 were Series F, Series A, Series C, Series B and Series D. Geographically, the US and China dominated AR/VR investment, followed by Israel, the UK, and Canada, with particular interest shown in AR/VR games, education, smartglasses, medical, and enterprise software/services. The market did not escape the effects of COVID-19 however, and the first quarter of 2020 saw AR/VR investment volume at a quarterly level last seen back in 2013. Good news for the market is that long term remote working may spark increased use of AV/VR - Microsoft has positioned its AR-based HoloLens as a way for everyone from surgeons to industrial workers to collaborate over long distances, and Facebook’s Oculus is set up for people to meet and chat in a virtual space. The biggest barrier to adoption is the high cost of these technologies, especially as organisations globally are under financial strain. Cost-effective options could allow for mainstream use over time, allowing all industries, particularly education, to benefit.

Source: HolonIQ; IBIS Capital/Cairneagle EdTech Expenditure Estimates; VRScout/BenToppin; Digi-Capital

EdTechX Global Report - 2020 Guide to Education & Training