Edtech Should Mind the Gap
Top Edtech Solutions Will Address the US Skills Gap Issue
Over the next two months, I will share insights associated with the methodology and outcomes of my 3 (edtech, fintech, real estate tech) updated investment theses. The goals of “Notes on a Thesis” are to 1) present my research, 2) connect with relevant founders, 3) cultivate a discussion around the thesis, and 4) provide templates for aspiring VCs.
The digital age has not only changed the way we interact and share information with one another, but it has also impacted how we learn. Classrooms are not the barrier they once were thanks to the emergence of online learning tools. MOOCs, such as Coursera and Udemy, have redefined how people obtain skills and credentials. However, more access to information has not led to a nation of overqualified workers looking to address the future needs of companies.
In the figure above, we see how the “skills gap” has grown exponentially from 2009 to 2015. There are approximately 5.8M jobs available in the US, but hiring has not followed suit. So why have job postings increased by nearly 140%, while hires have increased by less than 40% during the same time period?
Technology drives supply of roles
The trend points to a gap in what employers want and what employees “appear” to offer. One reason this gap has grown is due to the technology’s impact on various industries. The increase in computing power has (& will) inevitably eliminate jobs that can be automated and there will be a need for a workforce with new skills. This causes employers to search for individuals who can effectively use these new technology tools. But, this won’t have a negative impact on the workforce opportunities because historically technology creates better jobs than the ones it eliminates.
Demand impacted by workforce preferences
There are a number of factors contributing to the hiring numbers underperforming over the last 6 years. Education is still seen as the key to socio-economic mobility. However, with student debt rising to $1.3T, many aspiring students and current employees are limited from obtaining more traditional credentials. Therefore, qualified individuals may not have the traditional prerequisites that are noticed by employers who could leverage their relevant experience.
Additionally, the workforce preferences have changed thanks to the ability to work remotely. In fact, 82% of millennials are optimistic about the future of freelancing. In these cases, qualified applicants prefer to only work on a contract basis and as a result, do not fill the full-time need of the company. Another result is that the increase of contractor professionals that managed their own hours and need to constantly adjust their skill sets to meet the needs of remote employers.
Edtech has an opportunity to address the skills gap
These macroeconomic trends in the economy, workforce, and education open the opportunity for edtech startups to address some of the most critical transition points in someone’s career — identifying the ideal educational resource or company. There is so much user-generated data in the world now. Why can’t this data be used to help predict the best career path or educational journey for an individual? This is why I believe startups that build data analytics platforms that recommend optimal courses, tools that provide transparency in employee capabilities, or marketplaces that match talent to roles will be essential for the next three decades.
Earnest Sweat is an Entrepreneurial Engineer for Camelback Ventures and an Investor in Residence for Backstage Capital. If you have any questions or requests please connect with Earnest through LinkedIn, Twitter, or AngelList.
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