The EdTech sector accelerated during the pandemic as educational institutions and L&D organizations rushed to digitize education.
However, then came the period of disillusionment among investors. Research from Crunchbase shows that the total funding volumes nosedived by over 9X between 2021 and 2023.
Source: Crunchbase.
Indian EdTech unicorn Byju’s has lost over $15 billion from its $22 billion valuation last year, due to layoffs, lawsuits, executive resignations, and poor cash flow management. Another major player, Fresno, filed for bankruptcy in June 2023.
In Europe, EdTech funding slowed but remains above 2020 levels with back-to-back growth in half of 2023 data from Brighteye Ventures. The total number of EdTech deals in Europe also remained high.
EdTech also remains a booming industry in LATAM and APAC. In 2021, investment volumes in EdTech in LATAM were sixfold the funding in the previous year, according to JP Morgan. The overall funding in this region is a ‘modest’ $1 billion, compared to 68.6 billion globally. The APAC region, in turn, may lead the EdTech industry by 2030, some analysts say, due to significant user bases and fast economic growth.
Education has been (and remains) a multi-billion dollar market, growing at a steady rate year-on-year. After a slump, there’s likely to be a new peak in interest, especially for EdTech companies capitalizing on emerging technology trends.
Source: Yahoo Finance
6 EdTech Trends to Watch in 2024
This year, EdTech funding will likely increase, especially for generative AI-enabled EdTech tools, corporate microlearning LLMs, and new education financing solutions — key EdTech trends our team has identified for 2024.
EdTech Companies Rush to Launch Gen AI Assistants
ChatGPT is now everyone’s favorite study buddy. Half of UK undergrads use AI for assignments and 1 in 5 U.S. teens get homework help from ChatGPT.
By combining conversational interfaces with extensive ‘knowledge’, foundation models can perform various tasks like explaining concepts, validating responses, and generating new outputs (like an essay). These capabilities directly threaten many EdTech companies.
Chegg’s stock plummeted by 40% in May 2023 as the company’s leadership admitted that ChatGPT is “having an impact on our new customer growth rate”. Soundly, business leaders rapidly turned the disruption to their advantage and started integrating foundation models into their products, rather than trying to outcompete them.
Chegg signed a partnership deal with OpenAI to integrate the GPT-4 model into its personalized learning platform and train it on the company’s repository of 100 million study questions. Korean corporate learning platform Elice also rapidly launched an on-site chatbot powered by the GPT-3 model. Duolingo Max, a premium subscription tier, also includes AI abilities.
At the start of 2024, Udemy announced it’s building an entire “gen AI-powered ecosystem” to power personalized learning solutions for professionals. The AI learning assistant will help learners discover the most relevant content, summarize course content, and offer personalized feedback. A separate AI Skills Mapping tool will help organizations better evaluate and determine the required skill sets for different roles. The gen AI-powered Thematic Analysis for Cohort Learning feature is designed to facilitate discussions and other group activities and ensure better collaboration between educators and students.
The EdTech industry has a long history of applying AI for other use cases: Student analytics, test scoring, and adaptive classroom technologies among others. Generative AI is yet another group of technologies that can offer a new degree of interactivity and real-time feedback for learners.
New technologies like RAG and Langchain also enable companies to fine-tune open-source models like GPT to better work in their domain. Effectively, these allow infusing extra data or connectivity with third-party tools into the model for it to provide more tailored responses. In 2024, we expect more EdTech companies to experiment with custom gen AI assistants and fine-tuned LLMs — an area where 8allocate AI & ML team can help.
Generative AI Streamlines Educational Content Creation
Apart from delighting students with instant feedback, gen AI models are also becoming great content co-development partners for educators. Standalone or embedded into a learning management system (LMS), generative AI models can:
- Do simple design tasks e.g., generate charts, visuals, text, or video examples for training.
- Create standardized tests, assessments, quizzes, and other testing materials, based on previous versions.
- When pre-trained on existing educational content, produce new similar content to personalize classes.
For example, GoSkills, a popular LMS and provider of online business courses, launched Genie — an in-built Gen-AI assistant for course authoring. The tool can suggest the optimal lesson formats, based on the target audience, planned number of lessons, and preferred lesson length. It can also generate everything – from the course titles to the syllabus, lesson content, and integrated quizzes.
Docebo, another popular B2B learning management system, acquired Edugo.AI, a gen AI-based technology platform, to expand its capabilities in the domain. With gen AI, Docebo plans to further automate e-learning course content creation, enable real-time feedback for learners to practice soft skills, improve content discoverability and accessibility with semantic search, and enable other hyper-personalized learner experiences.
In 2024, we expect more gen AI acquisitions by larger EdTech players, seeking to reduce time-to-market for new features. At the same time, we expect more gen AI course authoring tools to emerge and harness great support from investors. For example, a new startup Mindsmith enables course authors to use existing educational materials to generate lessons. Users can also fine-tune content with an in-built AI assistant and add AI audio narration. Then sync all content with an LMS. ScormHero, a course authoring platform, also launched a spin-off gen AI tool, LearningStudio AI.
Morgan Stanley expects that generative AI could generate an extra $200 billion in value for the global education sector by 2025. So clearly, it’s a domain worth exploring.
Corporate Microlearning LMS Solutions Gain Momentum
The LMS market remains on a growth streak. It’s expected to reach $28.1 billion by the end of 2025 and surpass $70 billion by 2030, growing at a CAGR of 19.2%. Increased adoption of digital learning among corporations has been one of the contributing factors.
Over 600 million people globally will need to be upskilled or reskilled by 2030. Employers, however, don’t want to take people off work for extensive training, while workers are reluctant to complete administered training outside of their regular hours.
Several LMS companies are working to solve this dilemma. Ireland-based Zika Learn developed a new LMS for creating text-based courses to reach learners through their preferred mobile chat apps. The idea is to provide learners with bite-sized lessons they can read on the go, as well as various interactive exercises to improve information retention. The company claims the average lesson completion time is only 3 minutes, while the course completion rate is 85%, much above the industry averages.
EduMe, another popular corporate microlearning platform, specializes in training design for frontline, gig workers, and other “deskless” employees. The LMS lets users create social-media-style video lessons and seamlessly share these across popular business products like Microsoft Teams, Workday, ADP, BambooHR, and more. The platform also includes robust learners’ analytics, course completion data, and real-time performance insights, allowing you to easily measure course efficiency and identify knowledge gaps.
Belgium-based MobieTrain is developing a similar mobile LMS but for customer-facing teams. The tool helps create personalized onboarding flows and training materials for different roles and then administers these through an employee app.
Microlearning helps companies administer fast, precise, and personalized training for various roles at a fraction of face-to-face training cost. According to Ray Jimenez, author of the “3-minute eLearning” book, micro-courses can be developed 300% faster and cost 30% less to deliver than other learning formats. Students love them more too, with 82% being highly satisfied with the experience and 87.5% being open to recommending microlearning to others.
Data Science Helps Orchestrate High User Engagement
EdTech companies need to demonstrate high user engagement and retention to rekindle investors’ confidence. But learners’ motivation is fickle, especially in self-paced learning.
Companies have already tried many creative user engagement strategies: from gamified guilt-tripping to cash rebates for full course competition. However, many also need a better understanding of how to magnify the different drivers of learner engagement. That’s the task data analytics can help with.
Take it from Duolingo, which created a data-based growth framework for increasing its number of daily active users (DAUs) by 4X between 2019 and 2023. Duolingo’s analytical model classifies all users into 7 mutually exclusive categories (new, current, reactivated, resurrected, at-risk weekly active users, at-risk monthly active users, and dormant users). The model monitors the % of users moving between different categories and alerts the team about current dynamics.
Based on the available user data, Duolingo then created a predictive algorithm to identify new metrics that were likely to increase DAU if optimized. The largest impact on DAU could be gained by increasing the Current User Retention Rate (CURR) by 2% month-over-month, so that’s what the product team has focused on.
The team later expanded its data science model to predict other individual drivers that can impact DAUs and set quarterly and annual goals for teams, above and beyond anticipated movement in the metrics.
Progressive educational institutions also rely on data science to identify students at risk of drop-off. Western Governors University in Utah used predictive models to recognize at-risk students and re-engage them with early intervention programs. Between 2018 and 2020, the institution increased the graduation rate for the university’s four-year undergraduate program by five percentage points, thanks to the model.
Historical student data already has answers to low (and high) engagement. Different data analytics models and machine learning techniques help uncover these patterns and transform them into new product features or tailored interventions for different student archetypes.
Immersive Learning Solutions Will Become More Mature with AI
Pioneer adopters of AR and VR technologies in the classroom have a positive sentiment. Employers are also eager to use more VR for corporate training but are often deterred by high training development costs.
Generative AI can dramatically decrease the cost of content generation, while analytical AI models can improve training efficiency.
VR allows recording and analyzing reactions, e.g., whether a person is distracted versus paying attention to external stimuli, events, or conversations. With AI integrated into the immersive learning experience, L&D organizations can track how individual and collective learners interact with the experience, allowing them to customize it and provide continuous improvement.
Verizon developed a VR-based training program, using Strivr learning platform. The fully immersive experience teaches associates how to act in emergencies like a robbery. After a series of pilots, where Verison noted the high engagement and solid learning outcomes, the company scaled the training program to 1,600 stores across the country.
Virtual Speech, in turn, uses AI to generate role-play exercises in VR and provide learners with instant feedback. The platform currently supports 25+ different workplace scenarios, ranging from difficult customer conversations to sales pitches and job interviews.
Ultimately, gen AI can also help with world-building in VR, generating more realistic environments and 3D-based replicas of complex manufacturing systems or medical equipment employees need to learn how to operate. Generative tools can also help with personalizing VR scenarios, based on the learner’s profile, to achieve even better outcomes.
Solutions for Financing Education Become a New Thriving Niche
Students struggle to pay off educational debt or access affordable loans in the first place. Employers seek the best way to upskill their staff without shouldering all of the expenses.
On this nexus of FinTech and education, emerged new companies, seeking to fix access to education reimbursement, co-funding, loans, and grants.
ClassWallet is building a digital wallet-based purchasing and reimbursement platform for better distributing public funds. Because of compliance-related bureaucracy, governors and policymakers fund programs based on perceptions of demand but find themselves months or even years later with unspent funds.ClassWallet aims to streamline fund distribution by providing better technology for every step of the purchasing and reimbursement lifecycle.
Singapore-based EduFi, in turn, wants to improve access to funding for students. The startup recently closed a $6.1 million pre-seed round to develop an AI-based study now, pay later (SNPL) lending platform for students in emerging economies, where traditional lending products are inaccessible.
On the other side of the globe, US-based Candidly is building an embedded educational loan repayment product that allows users to repay their debt faster by partnering with employers, retirement recordkeepers, and financial services companies. The company has UBS, Fiserv, Lincoln Financial Group, and Vanguard among its partners. In 2022, the startup experienced a 10X revenue growth and a 3,600% increase in transaction volumes, signifying a strong demand.
In 2024, we expect further synergies to emerge between the EdTech and the financial industry, with the former aiming to tackle one of their biggest barriers to user acquisition — high education costs. As a technology partner, experienced both in EdTech and FinTech domains, we’re particularly excited about this trend.
Final Thoughts
Global governments ramp up support for digital transformation projects and advocate for further integration of technologies into the classrooms like the updated National Educational Technology Plan in the US or the EU Digital Education Action Plan. Larger corporations, in turn, increase L&D budgets to battle skills shortages. Both factors are good news for EdTech companies in respective sectors and markets.
Likewise, learners’ interest in digital learning remains high, especially in emerging markets, which are still largely untapped by existing players. Overall, we expect 2024 to be another promising year in terms of sector growth and are excited to be part of it through our ongoing partnership with EdTech companies. Get in touch with our team if you’re looking for a technology partner who can help you integrate innovative features into your educational products.
Frequently Asked Questions
Quick Guide to Common Questions
How is generative AI transforming EdTech in 2024?
Generative AI is redefining education by automating content creation, enabling adaptive learning, and powering AI assistants for personalized tutoring. EdTech companies are integrating fine-tuned LLMs into their platforms to provide contextual support, generate quizzes, and personalize coursework, reducing educators’ workload and enhancing student engagement.
What role do AI-powered assistants play in modern learning platforms?
AI-powered assistants help students by answering queries, summarizing lessons, and providing instant feedback. Platforms like Udemy and Chegg have already embedded AI tutors, improving learner retention and engagement. With advanced models like RAG-enabled LLMs, these assistants can deliver more domain-specific and context-aware responses.
How is data science improving user engagement in EdTech?
Data-driven learning platforms analyze user behavior to predict drop-off risks and personalize content. Companies like Duolingo use predictive models to refine engagement strategies, ensuring higher daily active users (DAUs). By leveraging data analytics, EdTech providers can optimize course design, track learning progress, and enhance student retention.
