It’s quite the contrast: Colleges are laying off personnel, cutting entire academic departments, and otherwise struggling with budgets battered by lower revenues and higher costs. Meanwhile, investors are pouring billions into companies that sell education technology and related services to colleges and schools — and into investment funds themselves.
That imbalance could spell trouble.
Ed-tech companies raised a record $2.2 billion in venture and private-equity capital across 130 deals in 2020, according to EdSurge, which tracks those figures in its funding database. Last year’s total was up nearly 30 percent over the $1.7 billion invested in 2019, across 105 deals. And that doesn’t count the additional hundreds of millions invested already in 2021, or the potential gusher of new capital being raised by education-focused private-equity funds or by the now-trendy Wall Street vehicles known as SPACs, or special purpose acquisition companies, that have no actual operations (yet).
We’ve heard this story before. Heck, I’ve written this story before — initially two decades ago, when the bubble first burst on “education dot-coms.” Ed tech, of course, is a more mature industry now than it was after the boom-and-bust in 1999-2000 (and subsequent booms, in 2008 and 2015). Many colleges, too, have become savvier consumers, better able to hold their own as a growing number of companies look to get in on the action.