K50 Ventures
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K50 Ventures

K50 Venture’s 2021 Manifesto: Education Revolution

Previously, we shared our manifesto for a happier, healthier 2021, and today we dive into one of our key focus areas: education. As we continue to better understand the underlying and deeply rooted problems within our education systems, it has become increasingly evident that we need companies to build new alternatives to the methodology behind our teaching and learning structures.

Join us for a discussion on the future of education on April 7th at 7PM EST on Clubhouse.

After interviewing many students, teachers, parents, and founders, we believe now is the time to revolutionize both K-12 and higher education. As hundreds of universities are being forced to close and the digitalization of learning continues, this is the decade for companies in the education space to revamp traditional systems by creating new, frictionless, engaging formats. We require everything from modernized teaching pedagogies and curriculum content to stronger community and student life along with radically cheaper and more efficient delivery models.

It’s abundantly clear that education faces massive changes with opportunities for substantial improvement, and that students deserve better. “It’s not a question of if, but when,” says K50 founder Mitch Gordon, CEO of Verto Education. “Disruption lags in this industry because the institutions move slowly, but change is coming”. And as the COVID-19 pandemic urgently accelerated many of the trends that were already happening, we are ready for that change.

There are plenty of challenges but we wanted to highlight a few that startups are uniquely positioned to solve.

1) First, we need better digital learning tools. As schools grapple with reopening, online education continues to surge. Yet families, students, and teachers around the country have struggled to find tools to support their digital studies. “Knowledge is more accessible than ever. We now need new form factors that meet students where their preferences lie and maximize their educational value,” says K50 founder Ari Memar of Tract.

Why now? Like many factors in education, COVID made change in digital tooling possible. Before, digital tools needed to sell into schools to succeed — not an easy proposition. Investment was low and the options remained limited. But after being forced to go remote, schools and parents started to embrace the value of paying for learning platforms. It’s a huge opportunity: online learning was originally expected to grow 16% CAGR to reach $500B by 2027, tapping into 1.6B K-12 and higher education students and 2.6B learners in the workforce. The coronavirus pandemic has now doubled those predictions to $1T.

However, COVID isn’t the only driver of change. New technologies for learning are becoming accessible, and the demand for knowledge workers is growing. Dollars are pouring into digital learning, with edtech startups raising 27 times the cash in 2010–2020 versus the decade before. Coupled with strong market conditions and a renewed societal interest in education, digital learning startups are gearing up for sizable outcomes. As demand rises, we see more talent coming into edtech and working to expand access to education.

What are the opportunities? Generally for disruptive businesses to make headway, they must have a unique business model, technology, or market to tackle. For learning tools, we expect progress to come from new technology for remote learning, like better live streaming video. To simplify learning, we look for business model innovation such as group and project-based learning as well as on-demand help. We want to see companies that make learning ubiquitous within the work environment, at home, and at school through synchronous solutions.

Tract, the first peer-to-peer learning community for kids that just raised $2.5M, is a fitting example. Tract is at the intersection of new media, peer communities, the creator economy, and education. “The largest teaching platforms in the world are YouTube and TikTok. They demonstrate the power of creators, video, and user-generated content. Kids don’t want to be spoken at, they want to be inspired. The best education involves access to the best role models, mentors, and peer community. Tract finds more ways to connect teacher with student, and blur the line between student and teacher.” says co-founder Ari Memar. With Tract, the engagement factor of short video is overlapped with features to give feedback, answer Q+A, and create a social group to share the experience. By empowering non-traditional teachers, generally high school or college students, to teach, Tract creates deep links between teacher and student. This model also keeps costs down, creating a tool that is not only more affordable but also generates a community of kids who are learning the same material.

2) We need platforms that develop lifelong learners through upskilling, re-skilling, and training. Learning isn’t a one-and-done period of life anymore. Even if you get a degree, you might not be ready for the workforce, and once you’ve earned a degree and started working, the skills you need to stay competitive change quickly. Automation is on track to eliminate 800 million jobs worldwide, and the jobs that remain won’t be the ones for which we’ve trained people. In a pre-COVID study, it was already predicted that a third of the US workforce would change jobs over this coming decade.

Employers cite the skills gap as one of their most important challenges in staying competitive. This gap isn’t just the typical discussion of STEM-type skills either — the average student needs soft skills like communication and teamwork that aren’t prioritized in current education models.

Why now? There is a mismatch between the skills in our existing workforce and those that employers require. Simultaneously, early-career unemployment is at historic highs due to COVID, with over half of recent graduates and early career professionals being unemployed or underemployed. Those two factors create new pressure on labor and employers to use up-to-date skills and knowledge development models that teach people what is essential to get those unfilled jobs, whether it’s through upskilling, retraining, or new higher education models (which we’ll cover next).

What are the opportunities? Because today’s digital economy has surpassed the ability of the education system to prepare graduates, we expect employers to become tomorrow’s educators. Upskilling and retraining will be performed through enterprise solutions for career identification and navigation, work-based learning, and job-embedded training within the “flow of work”. We’d like to see models that advocate for blue-collar workers and those being impacted by technological innovations, support individuals to navigate the middle-skill pathways, and empower aging adults to have healthy, independent lives through lifelong learning.

3) We need new forms of higher education, focused on student outcomes and affordability. As we previously touched on, the workforce skills gap and early career unemployment contribute to the need for higher education focused on outcomes. And of course, cost matters here: the last 30 years, tuition has increased by over 400% while wages have remained stagnant.

Why now? Where the traditional four-year higher education degree used to be the expected denominator for a successful career, we see a current shift towards optimization for cost and outcomes. Today’s high schoolers see the generations before them saddled with unsustainable student loans and disengaged within the job market so therefore the return on investment for college becomes increasingly bleak. Leading employers are moving away from requiring a college degree, and digital education is not seen as a deficit (they’re even starting to offer one themselves). Fortunately, new models like income share agreements are starting to prove that other financings for higher ed can succeed.

What are the opportunities? As globalization continues and various education pathways emerge targeting different work domains, bottoms-up higher education models will prosper. At a foundational level, companies must shift to a cost-effective, outcome-driven model focused on independent, personalized learning as well as workforce and adulthood preparation. Some models we believe can achieve this are 1) global, subscription-based universities, 2) regional or verticalized models that leverage a sharing structure in order to create flexible, personalized, and localized learning experiences, and 3) entrepreneurial or enterprise education models that create security through employment pathways and upward mobility.

In an effort to further explore what makes the higher education system broken, we had our Venture Analyst, Sujude Dalieh, do a deep dive into the problem and some of the opportunities. To better understand how we think about the higher education market, please check out Sujude’s analysis on the space here.

Support is emerging in the form of companies like our portfolio companies Savi and ScholarMe which help students save on traditional education. But radical forms of education delivery are really where we visualize the opportunities, which look more appealing with every university fee increase. Companies like Top-E from our portfolio, which offers an MBA for just $1K through online micro-learning and masterclasses, show just how affordable education can be.

Verto Education is an example of a company that is rethinking how and where higher education happens. They allow students to apply to a marketplace of partner colleges with a single application, then deliver the first semester or year of college education abroad which significantly drives down costs. Students save on tuition, learn life skills along with their first-year curriculum, then transfer after this coming of age year. We’re excited about the prospect of models like this to decrease degree costs in the future.

Perhaps because this huge need for structural change at all levels of education has been thrown into the spotlight by COVID, alternative models and solutions are finally starting to make headway. With that comes responsibility. As Mitch Gordon loves to share with newly minted education founders, “the companies disrupting education must realize what a strong impact on society they have, and that’s a big weight to take on.” His point: understand the ramifications entrepreneurs create as they begin to change the way the world learns.

While there are many great companies already at work across all areas of education, we’d love to see more that are ambitiously addressing the issues in this crucial sector. If you’d like to discuss any of these areas or others that we missed please reach out to me at adriel@k50ventures.com!

🤝 JOIN US FOR A DISCUSSION ON APRIL 7TH @ 7PM 🤝

Help us create this change with the K50 Ventures community — we want to hear from you. These issues are far too large and complex for our small team or even our 140+ portfolio companies to tackle alone, and we want to hear from you. Join us on April 7th at 7PM EST for a Clubhouse conversation with K50 Founders Esther Wojcicki of Tract, Jan Krutzinna of ChatClass, Kelley Cambry of Blue Studios, and Mitch Gordon of Verto. We believe the time is now to back a new generation of mission-driven entrepreneurs in education, and if you (or someone you know) are focused on solving any of these pressing challenges, we would love to meet you there. RSVP

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K50 Ventures is the most trusted first-check investor for mission-driven founders building a better future for the 99% in the US and LATAM. We invest in founders improving access, affordability, and wellbeing across Health, Finance, and Work & Learning.

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Adriel Bercow

Adriel Bercow

Investing in mission-driven founders @K50Ventures | @Flybridge | @Cornell | New York City

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