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Education technology is heating up again. Yet edtech’s most fervent promoters may be masking the industry’s breadth by lumping everything digital under the monolithic label “edtech.”

Part of edtech’s bubble burst in 2016. After climbing to a widely heralded peak in 2015, venture investment in U.S. K-20 edtech startups (spanning kindergarten through college) collapsed by roughly a third the following year, from $1.4 billion to about $1 billion.

U.S. K-20 edtech funding peaked in 2015, but deal volume peaked in 2013. (Image: EdSurge)

But a solid, detailed analysis of 2017 full-year funding by the edtech resource site EdSurge has 2017 showing a recovery in total dollars (in line with earlier mid-year projections from CB Insights and Pitchbook that used varying definitions). In EdSurge’s calculation, that total is now up to $1.2 billion. However, the “recovery” may be sitting a bit too comfortably on its asterisks to be a full-fledged turnaround. The caveats:

  • Fewer deals. The total number of edtech startup funding deals peaked in 2013 and has held steady or decreased every year since then — even with 2017’s bump in dollar volume. That peak was around 230. It’s now at 126. It doesn’t take an A student to realize that the one-year increase in cash is now going to fewer startups.
  • Later deals. Early stage investment is cratering, and not just in edtech. There were signs of this a couple of years ago at edtech industry conferences when investor panels started to talk about the importance of revenue and profitability instead of a cool demo and free user growth. EdSurge’s analysis shows U.S. K-20 angel and seed-stage deals dropped from a high of 133 in 2013 to just 56 deals in 2017.
  • Whale deals. So who’s getting the extra 2017 money? Already-big edtech startups. Perhaps think of them less as unicorns (after all, unicorns are fantasy, and this is education) and more as STEM-friendly gas giants with huge gravitational pull. Three startups — EverFi, Hero K12 and Grammarly — account for $450 million of that $1.2 billion invested, or more than one-third.

So 2017’s dollar figures could be the start of an edtech recovery, or just a dead cat bounce. But isn’t a win a win? As educational television pioneer Sesame Street might opine, some of these things are not like the others.

Over time, the definition of “education technology” has, like curly red hair on a humid day, expanded to fill all available space. Two-and-a-half decades ago, when the internet was still young, major edtech conferences like NECC (the National Educational Computing Conference, later re-named ISTE) focused as much on computer hardware and Ethernet cables as they did on standalone educational software, like Carmen Sandiego or Knowledge Adventure. There were high-profile events like NetDay which had, as their entire volunteer-driven purpose, to simply wire classrooms to networks.

Back then, “edtech” was synonymous with the personal computer, floppy disks, and CD-ROM. This was before the mass digitization of content — that is, textbooks — into courseware, the easy automation of classroom and school office operations and administrative functions (think grade books), and the shift of everything digital to the web and cloud.

EdSurge, like many market researchers, sets its own startup company categories. (Image: EdSurge)

So today, you have at least three overarching, sometimes overlapping, categories of “edtech:” digital curriculum (the digital instructional content and platforms that teachers and students see, from textbooks to test prep), administrative software (back-office as well as teacher classroom management tools), and computer/network hardware (yup, that’s still a thing). Not everyone agrees on the names of these buckets or what goes into them.

This is definitely not last generation’s “edtech.”

It’s also worth an aside to point out that not all three categories and their reach are accurately captured by a focus on hot startups and their funding. Tech giants with edtech-specific offerings like Google (G Suite for Education) and Microsoft (Office 365 Education) are major forces in software used by schools and colleges. Hardware (like Chromebooks) tends to be tracked by others.

Hardware & OS school sales are tracked by other firms, like Futuresource. (Image: Futuresource)

To complicate categorization more, K-12 doesn’t operate the same way as post-secondary, though it’s often lumped together under K-20 in many analyses for the sake of convenience and the aspirations of companies covered.

Without going into painful detail, just think about the question, “Who purchases the textbooks in schools versus colleges?” Then you’ll have an inkling of the inherent differences in creating and selling digital products in both types of institutions. There are also edtech markets for corporate training, adult/lifelong learning, and parenting young kids, each with its own unique wrinkles.

It’s not only industry observers like me, who have worked with edtech companies since before the turn of the century, that lament this admittedly convenient shorthand, which is widely used by startups, investors, and the news media. It’s the educators themselves.

Recently, over coffee, the chief technology officer of a large school district in a nerd hub told me he was tired of being vaguely told there was a new edtech report he had to read, or a new edtech product he had to see, because the more appropriate staffer to see it might be the person responsible for curriculum instead of infrastructure. The recommendation always led to the follow-up question of what type of edtech was involved to determine if it was worth his effort.

And that’s why trumpeting an “edtech” rebound rapidly becomes a diffuse sound. Because not all of edtech is rebounding equally, nor represented in the same funding reports. In EdSurge’s analysis, the top dollar winner in 2017 is the digital curriculum category, and the biggest deal of 2017 falls neatly into it: EverFi, which raised $190 million, is known for online instructional courses on financial and career education.

EverFi scored the largest edtech funding deal in 2017, $190 million. (Image: EverFi)

So when you think of “edtech” while reviewing numbers in reports, think broadly. In a perfect world, better definition might save everyone — from schools to startups — wasted time and incoherent exchanges. Perhaps the solution is to use a more consistently descriptive triumvirate of, for example, digital curriculum, administrative tools, and edtech hardware.

But we don’t live in that perfect world. Because no startup wants to pitch a business plan that promises that it just has to capture X% of a smaller category to succeed, when it can claim a potential piece of a much larger — yet much harder to define, and be held accountable for — “edtech” product and services market.

Ultimately, it seems, the edtech industry is rapidly becoming more synonymous with simply “education.”

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