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June Cartoon - Drone

This is the 2nd edition of the X Report, and is the last one before our EdTechX Europe summit on 18th June 2019 in London. The report aims to provide you with a bite-sized summary of what is happening in the world of learning and training. This month we look at the Golden Years of education start-ups as well as providing a mini-primer on Brazil, where the online higher education market is opening up big time!

XPurple100Now and Next

The key trends impacting education and training today.

XRed100-02Global All Stars

Learn how innovators of today are shaping the edtech of tomorrow.

XGold100px-03Market Roundup

A global snapshot of the edtech market

X100Teal-04Valuation Benchmarks

Global trends and innovation across the sector

X100Greenpx-05M&A Highlights

Summary on mergers, acquisitions and fundraising





The key trends impacting education and training today.

The Golden Years
The push to launch new education companies is over, we look back to when there were more than 2 new education start-ups a day. In the mini-decade from 2011 to 2016 something strange was happening in education. Across the globe, new education companies were being founded at an unparalleled rate; more than one a day. The peak was reached in 2013 with 768 new education companies being launched, by comparison 2018 could only muster 1/6th of this tally.

Golder Years
Perhaps this heightened activity had its origins elsewhere. Heightened cosmological activity? In 2013, we had the most powerful meteor to strike the Earth’s atmosphere in more than 100 years, over the Russian city of Chelyabinsk. Or perhaps the release a year earlier in 2012 of the K-pop global phenomenon “Gangnam Style”?
However whatever the reason, what we do know is that online learning during this period achieved a tipping point of public awareness, even greater than that of Korean pop stars. Primarily through the rise of the MOOCs. This awareness focused the attention of both entrepreneurs and importantly investors, who realised that change was finally coming to education.  In the space of 18 months from late 2011, we saw the launch of Coursera, FutureLearn, Udacity and EdX.  All in their own way opening up access to education.
Back in 2013, we also saw the launch of the first EdTechX Summit in London. With the help of London Business School, we were keen to bring together the key elements of the ecosystem to help propel 21st century learning. Seven editions later and now ten times the size, it is good to see who else is able to join us today from that cohort of golden era Thinker Robot_1education start-ups.  So just as a taster for 18th June 2019, we have the lifelong learning platform Degreed (founded 2012) who will provide a keynote in track 1 – Now & Next. Minerva and the Flatiron School, who have both been re-inventing higher education (founded 2012) will be speaking in track 5 – Future of Work.  Ubongo, Africa’s leading edutainment company (founded 2013) will be  competing in the Super League on track 1. Adaptemy (founded 2013) will be sharing their thoughts on adaptive learning and AI in track 4.
Anyway you get the idea. The children of the golden era are coming of age and they are heading to EdTechX Europe 2019.  We hope that you will be there too.  The world faces many challenges and how and what we learn will be key to addressing them. It is for this reason that the 2019 theme is “Learning is the New Tech”.



 Learn how innovators of today are shaping the edtech of tomorrow.

Market Feature: Brazil
Key Facts and Figures:
  • Education world ranking1: 33/80
  • Government spending on education2: $12bn
  • Basic education student numbers2: ~57m
  • Upper secondary education completion rates3: ~49% 
Scholarly Robot_1Brazil’s young population (nearly 40% of Brazilians are under the age of 24) represents a significant opportunity for education providers. It is the fifth largest higher education market in the world and the largest and fastest-growing in Latin America. Brazil has an interesting higher education system, with a relatively small number of public research universities and a large number private institutions. Over 70% of higher education students are currently attending private institutions, largely due to a lack of capacity and poor quality at public universities, and the Government has come to rely on private institutions to meet the growing demand for higher education.
This demand has attracted big players such as Brazilian-based Kroton Educacional, the largest for-profit education company globally, which is expanding rapidly through acquisitions and recently completed the high-profile acquisition of Somos Educação for $1.7bn. Arco Platform, a recently listed Brazilian educational software provider, is following a similar strategy, with the acquisition of Sistema Positivo de Ensino announced in May.
Recently, online learning has emerged as a lucrative market, with the reduced costs and flexible delivery driving strong demand from a growing, underserved working population. According to Udemy’s Skills Gap Report, a staggering 64% of Brazilians surveyed have turned to online courses to advance their learning and careers. Descomplica has leveraged this demand to become the largest digital education company in Brazil, offering quality and accessible education at both school and higher education level. It is supported by a number of Silicon Valley funds, and in 2018 it acquired PaperX, with the aim of completing several further acquisitions to continue driving rapid growth.
Investors will find Brazil to be encouraging of foreign investment, offering a range of FDI-related tax incentives, and the country is often considered a gateway to LatAm. Brazil’s education market offers an interesting proposition – with the magnitude of the addressable market and the failings of the public sector, its an enticing opportunity for local and international players alike.

1: US News global education rankings
2: US ITA commercial guide published 15 March 2019
3: OECD; Percentage of adults aged 25-64





A global snapshot of the edtech market

Pre K12 & K12


Netflix acquires kids’ educational content co. StoryBots

The streaming service giant is expanding its educational offering. Source: Tech Crunch. [2 min read]


Glimpse K12 Analysis of School Spending shows that two-thirds of software license purchases go unused

Measuring education Return on Investment is critical to ensuring that technology translates into improved student outcomes. Source: Glimpse. [4 min read]


Westminster School enters China’s education market

The British education brand is planning to open six new schools in China. Source: China Daily. [4 min read]


Meet the EdTech grantees of Google’s $25 million AI Impact Challenge

20 non-profits and educational institutions are receiving grants to harness the power of AI for social change. Source: Edsurge. [5 min read]


China’s Governmental strategy and school-enterprise co-operation on AI education

AI is being included in China’s secondary and tertiary education curriculums for the first time. Source: Medium. [7 min read] 

Higher Education


Germany dominates most innovative universities ranking

When ranked on original research produced, technology created and overall contribution, German universities are consistently outperforming other countries. Source: University World News. [3 min read]


Businesses and universities team up on a new digital technology credential

This new credential reflects the growing demand from employers for graduates with fluency in core tech subjects. Source: The Washington Post. [6 min read]


Why every university needs an Africa strategy

Africa’s global importance is on the rise. Source: Inside Higher Ed. [5 min read]


Brazil education freeze spurs biggest protests yet against Bolsonaro government

An education system in turmoil as Brazil’s Government implements a spending freeze. Source: Reuters. [2 min read]


IBM grows computing initiative with new partner universities

New partnerships are being formed in an effort to drive innovation. Source: Education Dive. [2 min read]

Corporate Training, Lifelong Learning
& The Future of Work


The Future Of A Multi-Generational Workforce

A five-generation workplace, each with its own skills and knowledge offering, may become the norm. Source: Forbes. [4 min read]


New partnership launched to drive uptake of STEM careers

The partnership aims to encourage interest in STEM through a variety of outreach programmes across the UK. Source: WISE. [3 min read]


China's Burgeoning EdTech Industry: Will it disrupt corporate HR?

Insight into three key areas where the systems and practice of HR are likely to transform in the coming years. Source: Bangkok Post. [5 min read]


Salesforce and OpenClassrooms announce partnership to prepare the workforce for the jobs of tomorrow

The training programme introduced by the partnership is the first fully digital diploma course recognised by the French government. Source: PR Newswire. [3 min read]





Global trends and innovation across the sector

Where do investors see the big opportunities as compared to 2013?

RoundupIcons40pxCoinWe have been tracking transaction data since 2010 across the global education and training sectors, to identify the changes in investor attitudes. We thought it would be interesting to compare last year 2018 to 2013, the year when more new education companies were founded than any other year in history. As the below graph illustrates, there has been a dramatic surge in interest for higher education and human capital development. The response to the reskilling requirements for the 21st Century have driven student and corporate demand, which in turn has attracted the smart money. Currently businesses focused on developing human talent and skills are amongst the most valuable on the planet. In 2018, on average these business were valued at 4.6x their annual revenue. A big change from 2013, when on average they were valued at 1.6x revenue.


1: US News global education rankings
2: US ITA commercial guide published 15 March 2019
3: OECD; Percentage of adults aged 25-64
4: 2017 Udemy Skills Gap Report

Graph - Enterprise

Education M&A: Valuation Multiples by Life Stage

Key Points:

Median transaction multiples in the education industry have increased over the last 3 years, although there is little consistency between the life stages in the year-on-year trends. EdTech companies in particular are drawing increased attention from private equity, and many of the larger players are following acquisitive strategies in order to drive growth.
K12 valuations jumped in 2017 when a number of APAC companies attracted premium valuations, including Virscend Education Company (14.8x Revenue; 31.5x EBITDA), Bulang Ruizhi International Educational Technology (8.0x Revenue) and Nord Anglia Education (24.8x EBITDA). The corporate training and higher education sectors peaked in 2018, with transactions such as Callidus Software (9.6x Revenue) and Humansoft (6.2x Revenue). Interestingly, EV/EBITDA did not seem to follow this trend, with the only standout valuation belonging to Navitas (25.6x).
Source: Capital IQ; only transactions with disclosed multiples were included in the analysis
EV Revenue Graph


Significant Fundraising Activity
Spotlight on IPOs


GSX Techedu Inc., one of the largest online K12 after-school tutoring providers in China, has filed for an initial public offering on the NYSE of up to $220 million. Revenue for the 12 months ended 31 March 2019 amounted to $92m.

Click here for  stock exchange filing


Meten International Education Group, which provides English language teaching in China, has filed for an initial public offering on the NYSE to raise up to $100 million. Sales of $203m were booked for the 12 months ended 31 March 2019.

Click here for  stock exchange filing





Summary on mergers, acquisitions and fundraising

1Deals sourced from Capital IQ and Mergermarket
2This deal was a merger; both companies’ shareholders will retain 50% of the new company
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