Boom, Bust And Rebuild? What's Next For EdTech
Post by Dr Christine Côté, Associate Professor (Education) of International Business at the Department of Management at LSE, Professor Saul Estrin, Emeritus Professor of Management Economics and Strategy at the Department of Management at LSE, and Katie Nunner, LSE Alum (Development Management, 2016).
Educational technology concept, online connection of educational information.
In the early 2000s, Sam Paddock's father was a part-time law lecturer in South Africa spending hours commuting to and from campus. Sam built him an online system to deliver lectures remotely and allow students from across the country to enroll in his course. It worked - not only in terms of logistics, but economics. The income from his distance learning course quickly surpassed what his father earned from his law practice.
Sam's business GetSmarter, the focus of our recently published business case study, was born. It focused on 10-week online courses aimed at executives. Leading universities like MIT, Oxford, and Harvard became interested and the company set a new benchmark in the online learning space. Between 2011 and 2015, as demand for flexible, high-impact education exploded, the online higher education market grew by 130%. In 2012, The New York Times declared it the 'year of disruption' for higher education, with edX, Coursera, Udemy, and LinkedIn Learning all in on the boom in online adult learning. This was the birth of EdTech, (educational technology) using technology to enhance teaching and learning.
By 2017, GetSmarter had attracted major attention. 2U, an EdTech that specialized in partnering with universities to provide online graduate degrees and short courses, was keen to expand its global footprint and acquired GetSmarter for $103 million. The deal signaled a new phase in EdTech: one where acquisition and scale became the dominant strategic narrative. 2U pursued further acquisitions, including Trilogy Education in 2019 for $600 million and edX in 2021 for $800 million. All three firms addressed different student and education segments and also showed strength in student enrollment and retention, key drivers in an Ed Tech business. This aggressive vertical integration meant that 2U was betting on becoming the go-to intermediary between top universities and a growing base of adult learners. But that bet came with bigger risks.
When Covid hit, education systems across the globe were forced online overnight. For a moment, it looked like EdTech would boom. Enrollment numbers soared, and venture capital poured into the sector. But many platforms found it difficult to achieve economies of scale. Universities, once reliant on third-party providers to digitize courses, began building their own internal capabilities and student retention and completion rates fell.
For 2U, the post-pandemic period brought significant turbulence. Enrollments began to decline, while operating costs remained high, and long-term university partners such as University of Southern California (USC) began to question whether there remained value in the relationship. Additionally, questions arose about the sustainability of its business model from investors.
2U's value proposition needed to evolve and differentiate itself, including facilitating placements for students in specialized programs and leveraging data to help universities navigate the future of higher education. The high cost and long-term commitment of degree partnerships make them a tough sell compared to a traditional university credential.
While our case examines one of 2U's acquisitions, it demonstrates the increasingly competitive nature of the EdTech market and the dynamics and synergies of a merger between a developed country and an emerging market multinational in the platform space.
The EdTech industry is crowded. Companies must redefine their value propositions to collaborate with universities rather than just serve them, including making learners at the center of the decision-making.
The optimism of the last decade has given way to a more grounded phase. For entrepreneurs and investors, the next wave of winners in EdTech won't be those who grow fastest. Those that win will be the EdTech firms that truly understand the needs of students seeking accessible, high-quality education while at the same time adding value for top universities who might be considering bringing their online programs in-house or moving away from online delivery entirely
Sam Paddock's original idea that distance learning can unlock both access and opportunity still holds true, but who can best deliver this remains to be seen.
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