What is EdTech?

The term EdTech derives from the acronym “education technology” and is the organizational sector that unites technological tools with educational methods, in order to obtain a better way of teaching that seeks to facilitate learning. EdTech is not based exclusively on the educational experience, but also in other disciplines such as psychology, sociology, AI (artificial intelligence) and communication.

As a sector, EdTech is booming in the Latin American region, occupying the 4th place internationally according to the annual growth rate, this being 14% since 2013. Because of the pandemic the educational sector was strongly affected, therefore, EdTech startups became essential tools.

Edtech startups?

The incessant search to provide an educational guarantee made this market accelerate its growth. Technological solutions in this area were already under way before the pandemic, however, once it arrived, it went from depending on the choice and capacity of educational institutions and countries around the world, to becoming a necessity.

Any company that provides technological solutions with a vision to improve education, either in one or in different areas of knowledge, calls themselves Edtech startups. Some of the most recognized worldwide are those that provide platforms where we can take online courses, such as: Platzi, Coursera, Lingoda or Open English, the latter to learn new languages.

The success of these startups is due to the solutions they offer to users, many of them have high quality standards, are much more flexible, adapting to the times of each student and at a lower cost compared to “usual” education. Today they even cover sectors that were considered exclusive to university education, with higher education and learning of technological resources.

Is there EdTech investment in Latam?

Currently, Latin America derives a higher percentage of GDP from the education sector when compared to countries such as the US, India and even China, however, there is still a large gap for improvement, such as increasing the quality of education and, above all, facilitate its massive access. As an important piece of information, 58% of schools in Latam have internet access, compared to the United States, which has 98% accessibility.

According to data released in a recent Grand View Research report, EdTech was valued at USD 89.49 billion as a global market in 2020, and it is estimated that it will reach the amount of USD 106.04 billion in 2021. However, this projection remains in growth over the next several years: EdTech as a global market is expected to grow at a CAGR of 19.9% ​​from 2021 to 2028 to reach $377.85 billion.

Many brands show a strong interest in investing in EdTech startups, we see it reflected in data such as:

  • The sum of USD $500 million of Venture Capital was the amount invested during the year 2021, this figure represents more than 6 times the average accumulated in the previous 5 years.
  • Descomplica, Crehana, Platzi, and Trybe are some of the Edtech companies in Latin America that have raised more than USD $10M.

Although it is true that these figures show an improvement in the sector, they are still small amounts when compared to the investment capital received by the E-Commerce and Fintech sectors. Seven out of ten Edtech startups stated that the real challenge was raising capital due to how complex the sector is, according to the LAVCA Education Startups Survey (2021).

 Where are the opportunities in Latam?

These are the trends that promise a positive impact in the region, according to a study conducted by the IDB and HolonIQ in 2021:

  1. Education with greater access (24%): Provide solutions so that people have better access to education to facilitate their participation in it.
  2. Correct learning focused on results (23%): Solutions that provide optimal results for learning.
  3. Improvements in administration and execution (20%): Provide support for better management of the institutions, obtaining more efficient processes.
  4. Presence in the student experience (17%): Improving the student experience is possible with the correct tools.
  5. Performance Oriented Competencies (9%): Trainings in current jobs focusing on a better future.
  6. Digital instruction (7%): Train both students and teachers of the institutions in the correct use of the tools offered by the digital world.

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