What Makes EdTech a Profitable Business Model?
EdTech is nothing new, although that is how the majority of write-ups published on the internet would like you to believe. To break it down for the understanding of all, an ecosystem where technology is deployed to assist the delivery of education is referred to as EdTech.
Come to think of it, even a conventional computer lab at a 90s something school qualified as an EdTech.
Yet, few people realized back in the 90s that the Industrial revolution 4.0 would pack more gigabytes in a smartphone than computers. Therefore, if the devices of today dawn a new-age, compact, and pocket-friendly outfit, shouldn’t the same rule apply to education and its delivery methods.
Turns out that it does and that is one of the benefits of education app for kids and organizations and why entrepreneurs are throbbing the gates of venture capitalists to fund the future, or shall we say the present, of 21st-century teaching, EduTech.
The EdTech app business models – both educational apps for kids and organizational learning – have shaped up to be one of the most lucrative (for innovators) and luring (for investors) models of businesses over the years. It’s one of the few industries that could survive this COVID-19 pandemic and honor its promising growth. What makes us say that?
As per Grand View Research, the global education technology market size was valued at USD 89.49 billion in 2020 and is expected to witness a compound annual growth rate (CAGR) of 19.9% from 2021 to 2028.
The global digital expenditure in the Education industry would be worth $341 billion by 2025 as per HolonIQ – a contributory factor behind the rising of education startups and kids education app startup ideas.
Yet, of the overall expenses that the industry would make, this amounts to a miser 4.4%, during the projected time.
If you are full of Edtech startup ideas or even education startup ideas, great, but it has to be approached systematically. Anyone searching for an educational app development company , or for that matter, freelance educational app developers must first classify their business model for education startups.
Does the Elearning app development company have the talent pool to provide AI, ML, and robotics support?
Does the education app developers have the expertise to integrate conversational AI and AR/VR features into the app?
And last but arguably the most important factor, what does the portfolio of the educational app development services have to say about them?
Online business opportunities appear profoundly great on whiteboards but turn into a nightmare when you get to the execution stages. Consider the following sub-verticals that e learning startups are modeling their educational app development portfolio on. You can also read them as the education app ideas which are bound to be successful in the time to come.
Upsurging Interest in EdTech
Technology is affecting every aspect of our lives and changing them by the day. But it’s not just our life, its businesses as well that are transforming and can’t afford to look away. The Organization for Economic Co-operation and Development (OECD) projects that 1 billion jobs, that is approximately 1/3rd of all jobs in the world, would be transformed by technology in the upcoming decade.
According to the ‘World Economic Forum Annual Meeting’, by 2022 around 42% of all core competencies deemed essential for jobs are expected to change. Such a fast-forward and unavoidable upskilling revolution can be delivered feasibly only through technology.
As per the Education Data Initiative, schools in the US spend an average of $12,624 per pupil, which is the fifth-highest amount per pupil among the 37 other developed nations in the Organisation for Economic Co-operation and Development (OECD).
According to reports by Reach Capital’s analysis of data from Pitchbook, during the the first six months of 2021, U.S.-based education technology companies raised over $3.2 billion in investment capital.
But could it be a fluke? What if coincidently there had been a hype bubbling somewhere thanks to venture capital rumor mills. We can run this assessment through a litmus test.
For our experiment, we choose three well-established education startups that are opportunistically building their Edtech app business models. A measure to gauge public demand for their services would be to see how their virtual education startups have played out during the COVID-19 pandemic.
It is an education tech startup with a product suite replete with digital learning solutions. At a time when businesses are clamoring for government aid to survive, Chegg recorded US $132 million in revenue in Q1 2020.
The most recent investment made by Chegg was on Apr 13, 2020, when Frank Financial Aid raised $5M.
At the end of 2020, they had a 6.6 million subscriber base.
K12 is an education management company that promotes online learning as a substitute for classroom training for students covering the curricula for kindergarten to 12th grade. Their vision makes them one of the best learning apps for kids.
Their revenue model for edtech business for the first 3 months of 2020 was U.S. $257.2 million. It’s marginally higher than their earnings for the same period last year which were U.S. $253.3 million.
Amongst all of its business units, the online public school program raked in the U.S. $228.3 million.
K12 CEO Nathaniel Davis shared insights into user query trends for registration, which were high for both February and March, reinstating how it is one of the best educational apps for kids.
Read more about edtech business