Opportunities in the Education Market, According to a Venture Capitalist

On May 8 Jeff Busgang of Flybridge Capital co-wrote with Matt Witheiler a great post on the topic of education ecosystem, the potential opportunities existing in it, and investing into the education space.

What makes this particularly interesting is the move by the authors to reveal at least a part of their investment strategy in this market, or in their own words, to “’open source’ our thinking in the spirit of ‘hacking education’.” Certainly one of the goals of their move is to elicit feedback from everyone, and thus 1. potentially hone their own investment strategy; 2. encourage entrepreneurs to come forward with their solutions to the problems plaguing the education market (or even solutions no one has realized are needed).

The authors note that the $1 trillion education market continues to be aggressively explored and attacked by the entrepreneurs, and cite the widely talked about report by CB Insights (http://www.cbinsights.com/blog/early-stage-ed-tech-investment-review) to highlight the ways the investment scene in this market has been evolving: the average size of the early stage (e.g. seed or Series A) funding in the education market has increased substantially since Q1 2010. The authors do note that there is likelihood of bubble appearing, but they counter that with the fact that the education market is so large ($1 trillion is a large pie, after all), there is still much room to grow. The market is so inefficient, according to Mr. Bussgang, that it needs to be “fracked” in order to bring about the opportunities (and efficiencies) in the system.

The analysis starts off with a 3 by 4 matrix map of the education market, with two dimensions consisting of the market segments and target users. The market segments, as represented in this map, are: K12, Higher Education, Adult and Lifestyle Learning, and Professional.  The target users are categorized as Consumer+Student, Teachers, and Schools&Enterprise[1]. Additionally, a detailed breakdown of the whole education market was published in Prezi format (http://prezi.com/xguky7u7aur6/ed-tech-market-map/).


Source: Seeing Both Sides, http://bostonvcblog.typepad.com/vc/2014/05/hacking-education-fracking-education.html


A sharp reader may notice the light blue cells in the above table – these are the ones Flybridge believes represent the best opportunity in terms of market disruption and thus, investing potential. While this may seem to be a little counter-intuitive to us in the EdTech world (as we tend to believe other sectors are also ripe), Bussgang notes that according to their analysis, the grey sectors tend to be more challenging or to be already having explored by the market players.  One is left guessing just what sort of data does Flybridge have its hands on, and whether alternative assessments of the education market are developed or even exist currently.

This is an excellent starting source for anyone who wishes to start gaining insight and knowledge about investing in the education market – whether as an investor contemplating investing into ed tech company or an entrepreneur thinking about starting a company in this space. The Prezi slideshow is particularly useful for anyone wishing to dive deeper into the education market.
The Prezi slideshow is available at: http://prezi.com/xguky7u7aur6/ed-tech-market-map/
Photo by Andrew Sather

[1] Here at EdTech Times we actually refer to these groups simply as Students, Instructors, and Institutions, respectively.

Yevgeny Ioffe

Yevgeny Ioffe

Yevgeny Ioffe, or as people call him, Yev, has been working in both the startup world and established companies. His career spans from joining Xplana Learning as it launched to Cengage Learning to MBS Direct when it acquired Xplana in 2009. Yevgeny brings to EdTech Times his passion for start-ups and technology, along with his interest in the ever evolving world of edtech. Yevgeny obtained his BSc and MA from Brandeis University and MBA from Boston College.