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Over optimism12/1/2023 “They are going to have to tighten their belts and get ready for what’s coming if they want to be one of the companies that survive through this and become one of the larger organizations in this space come 2024 and beyond,” he said. Frances Messano, CEO, NewSchools Venture Fund Without extra federal money bolstering district budgets and with a fiscal cliff, that will pose challenges. In many cases, education companies ramped up staff and growth to meet the current demand from districts. With the challenges facing ed-tech firms ahead, Kaluarachchi has been dishing additional words of advice to those startups. The answer always tends to come back the same - an emphatic “yes.” But the reasons vary.Īt last week’s session, he said, most company founders responded that they believe they have an ed-tech solution that’s going to solve a big problem. At every gathering, he asks the same question of startup leaders: Is it a good time to be an ed-tech company? “Not every venture-backed education business will make it.” Belt-Tightening, ConsolidationĮach month, Ash Kaluarachchi, CEO of ed-tech accelerator StartEd, hosts a virtual “Shark Tank” session with entrepreneurs. Global venture capital investment in education fell sharply last year from record highs during the pandemic. “There are enough sources of funding for professional development, and a sufficiently steady tide of district demand, that his organization believes it’s on solid footing, he said.Įxamining the broader landscape of K-12 product and service providers, Kennard, who worked in venture capital and private equity, predicts there will be business casualties in the industry over the next year or two. “We’re doing multi-year deals,” with districts, he said.Īnd professional development provider BetterLesson isn’t bracing for a huge drop-off in business when school budgets are affected by the oncoming storm of financial pressures, said CEO Matt Kennard. Student engagement is a “supertrend that’s not going to fade away,” and gamified educational apps have carved out a place with educators, said Sean D’Arcy, vice president of Kahoot!’s school business. EST, EdWeek Market Brief will be hosting a webinar looking at the pressure school systems will face in managing the federal “funding cliff,” student enrollment declines, and other budgetary challenges. Likewise, educational gaming provider Kahoot! is also confident that the company’s product won’t be on the chopping block in many districts when financial conditions require schools to heavily scrutinize what to keep. And they have prioritized education spending as they continue focusing on learning recovery, and student and staff mental health. Many states are currently in strong fiscal positions, thanks to robust tax revenues. Buoyed by State Revenuesīehind that optimism, he said, is a huge need in schools for early-learning curriculum programs and a sense that governors and state lawmakers around the country want to increase education spending. But he’s confident that “ed-tech is a growth area” long term. In the short term, changes in the industry are likely while education companies weather a financial slowdown, Gunderia said. “Every company is evaluating what resources they have, what they need for now, and what’s sustainable for the future,” said Sunil Gunderia, the chief innovation officer at Age of Learning, which sells a math and reading curriculum product for grades pre-K-2 to school districts. Teams of company officials flocked to the SXSW EDU conference in Austin, Texas, this week with a strong sense of optimism for the future, given the steadily skyrocketing adoption of digital tools by districts ever since COVID upended traditional learning models in March 2020.īut there was a clear recognition at the four-day event that more austere times are coming for companies that sell products and services to school districts.ĮdWeek Market Brief talked to education company executives, investors, ed-tech entrepreneurs and nonprofit leaders at SXSW EDU about some of the challenges they expect the industry to face in the near term. It begs the question: Is the current ed-tech boom coming to an end? That means districts facing pressure from various financial headwinds will be forced to make tough decisions about what programs and contracted services to cut - soon. Many education company execs at SXSW EDU said they see headwinds coming in the market, but they believe their organizations are prepared to withstand a downturn.
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