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New York – It’s a tough moment for education technology companies.
The stock market has taken a hit over the past few months, and the tech sector in particular has been hit hard. Meanwhile, colleges are seeing enrollment decline at the same time as coronavirus relief funds are drying up, which could restrict the amount they can spend with vendors.
Still, CEOs and tech investors I remain optimistic on the future of their private sector during a conference in New York on Thursday held by HolonIQ, a market analysis firm. Here are three directions they say come down from a shaft.
Ed Tech will overcome difficult market conditions
Stocks have been trending downward for most of the year, Reaching a new low Friday after the Federal Reserve raised interest rates again in an attempt to combat rising inflation.
Ed Tech shares were feeling the pinch. Shares of 2U, which owns the MOOC edX platform, closed at $5.78 Friday, down from about $35 a year ago. Shares of Coursera, a prominent MOOC platform, also traded around $35 in September of last year. On Friday, they closed at $10.25.
These market trends have important implications for educational technology companies, especially those that have been considering an initial public offering, according to investors who spoke at the HolonIQ session on Thursday.
“We are seeing the IPO window closed for a long time,” said Shoshana Wernick, managing director at Avathon Capital. “If you’re a company that needs cash and it has to raise money now, it’s very difficult.”
However, speakers cited reasons to expect positive long-term trends. Just over 10 years ago, only about $500 million of venture capital and growth was pouring into the educational technology market, said Michael Cohen, partner at GSV Ventures.
This compared to More than 20 billion dollars in 2021. Despite the uncertainty about the future, Cohn predicts an “upward trajectory”.
Chip Paucek, CEO and co-founder of 2U, acknowledged the challenging market conditions.
He said, “I come at cocktail parties now, and people go, ‘How are you? “Because, obviously, it hasn’t been nice lately. We take that very seriously. Our shareholders represent a community that is critical to the company.”
However, Paucek said 2U’s recent moves – which included The acquisition of edX last year To transform into a company with a consumer-facing platform – it is prepared for the long term.
“This company is much stronger than it was when we were at our peak pricing,” Bauchek said.
Micro credit is the future of top ed
CEOs at two major technology companies in education touted the new micro-credentials available on their platforms, emphasizing that these smaller offerings will be an essential part of the future of higher education.
In May, Coursera Launched Career Academy, a skills training academy where users can get entry certificates from companies like IBM and Meta, the parent company of Facebook. Coursera sells the platform to colleges, who can make it available to their students.
Jeff Magioncalda, CEO of Coursera, likened the Career Academy to Shopify, an e-commerce platform that enables merchants to quickly create online stores. Colleges can use Career Academy to launch their own branded skills academy.
“When they graduate, they have a college degree, and they have a Google professional degree,” Majioncalda said. “This graduate will do better than someone who just earned a college degree, or someone who never went to college and just earned a professional degree.”
2U also doubles down on the smaller dependency. The company announced Thursday Two new credentials called MicrobachelorsThese are programs consisting of a few semesters that can lead to college credit from edX partner institutions.
The two new undergraduate degrees, which focus on statistics, will be offered through the London School of Economics and Political Science, part of the University of London. The school has also launched an introductory math course on the platform which is free to proofread.
Students who have completed an undergraduate program and have been accepted into certain programs at the University of London will be eligible for credit for two semester courses. Programs are pending credit recognition by Thomas Edison State University in New Jersey, according to the edX website.
“This is an ideal stack path,” said Paucek, CEO of 2U. “Achieving this is much more difficult than most people outside of higher education might realize.”
Paucek described the offerings as “great for business”, saying they would improve the marketing funnel for University of London’s online bachelor’s degrees offered on the edX platform.
Companies will continue to offer educational benefits
Investors and Ed Technology companies expect learning and work to become more intertwined in the future.
Coursera, for example, sells access to its content libraries to companies, governments, and other organizations interested in training their employees. In the second quarter of 2022, this portion of Coursera’s business generated $43.7 million, 55% more than last year.
Magioncalda said these efforts could help the company reach learners it might not otherwise attract.
“There are a lot of people who don’t know about Coursera. They are not going to come to Coursera,” he said. “But they may be in the government workforce development program, where the organization can direct them to where the job opportunities are and can guide them to use Coursera in a certain way.”
Cohn, of GSV Ventures, echoed those comments, saying he expected companies to continue to offer certain educational benefits. GSV Ventures has invested in Guild Education, a tuition fee benefits platform that connects employers to its online college platform.
“If it’s like, ‘Oh, here’s the $100 for MasterClass,’ it would probably get rid of — you know, thin surface learning as a feature.” Cohen said. “But if learning is what drives the future audit of an organization — upgrading, upskilling people in a way that can be measured and verifiable against business goals — then we believe that will be a long-term trend.”