In this discussion from the Melbourne EdTech Summit 2020, David Linke and Maria Spies discuss a wide range of topics affecting the EdTech ecosystem, both in Australia and globally.
David Linke, Managing Director at EduGrowth, and Maria Spies, Co-Founder and Co-CEO of HolonIQ, discuss the global EdTech ecosystem and its future, the state of public versus private funding of education, emerging EdTech markets, and the adoption of new technologies in education in this session from the Melbourne EdTech Summit 2020.
The highlights of their conversation and the full transcript follow below:
Understanding the EdTech Ecosystem
Maria and David begin the discussion by weighing Australia’s place in the global EdTech ecosystem and education’s place as an industry both nationally and globally. Maria says that:
- Information about education is fragmented and harder to access compared to other industries.
- Innovation will thrive when data is more accessible, so working on clarifying information on education should be a priority.
The education industry pervades every other industry, so it benefits education to attract innovators from non-education and non-EdTech industries to incorporate their points of view.
“Others who are coming from a completely different industry can see things that you don’t see, and bring with them new ways of doing things or different ways of doing things from other industries.”
Maria Spies, HolonIQ
Future outlook for education and EdTech
Maria’s company, HolonIQ, gathers data about the education industry and makes predictions for the future of the field. She shares a few of their most recent insights following the COVID-19 pandemic:
- The global education industry is estimated to be a 7.3-trillion dollar industry by 2025 and 10-trillion by 2030.
- Growth in upskilling is leading the way, likely due to its low cost and increasing accessibility, while higher ed seems to remain stagnant but not shrinking.
- COVID-19 was a catalyst for moving education online, but the transition is not complete. In the coming years, education will shift more and more into the digital space as infrastructure, institutions, and governments catch up.
“You can’t really talk about EdTech without thinking about COVID and its impact on a predominantly face-to-face sector. The whole world of education is committing to digital or online.”
Maria Spies, HolonIQ
Private versus public spending on education
Maria explains that the education sector looks very different from one country to the next. Spending by governments and by private individuals or businesses also varies significantly across national borders. HolonIQ has found that:
- In most of the developed Western world, government spending far outpaces private spending on education.
- In Asia, Eastern Europe, and less-developed countries, private spending outpaces public spending on education.
- India, a country in which B2B and public spending has been largely absent, has recently introduced a national education policy which is revitalising the education space and paving the way for a massive influx of B2B products.
Maria explains that governments are reassessing how they spend education funds. In some cases, like in Germany, the government is choosing to build infrastructure to support remote learning by buying laptops and other tech resources for students.
“[Those places] where markets and governments, EdTech companies, and institutions are starting to have joined-up conversations, that’s where we’re seeing quite a bit of innovation.”
Maria Spies, HolonIQ
Emerging Markets versus Established Markets
The US, Australia, and China will always be massive players in the EdTech and innovation sectors, and produce very high quality products, but emerging markets can no longer be dismissed, Maria says.
- India and Indonesia are two of the fastest growing nations in both education and innovation.
- Emerging markets are forced to produce affordable and adaptable products, which make them competitive not only locally, but globally as well.
- Every region shows a distinct set of strengths: K-12 in the Nordic-Baltic region, upskilling in Southeast Asia, information systems in Russia.
The key takeaway is that every region of the world has something valuable to contribute to the global education ecosystem. The system is very large, and having different players become experts in different areas benefits the whole, as long as they share their advancements among the group.
Future tech innovations in education
Emerging technologies such as artificial intelligence, virtual and augmented reality, and robotics are finding their way into the education sector in impressive ways. Maria shares a few examples:
- Robotics is being adopted widely across all education sectors, but most commonly in K-12.
- Virtual reality training is expanding rapidly in workforce training and in labs as a way to conduct or watch science experiments remotely.
- Artificial Intelligence is most prevalent in language learning.
For many of these technologies, the barrier to entry is the high level of expertise required to develop content. But, as with web development, as platforms become available to allow the lay person to develop their own virtual reality and artificial intelligence products, the fields will expand much more rapidly and take on much wider adoption globally.
“Once the technology comes to a certain point where you don’t need the expert in the middle anymore, that really drives widespread adoption. We’re starting to see that, certainly in virtual reality.”
Maria Spies, HolonIQ
David Linke is going to be the moderator for the next session, which is around Australia’s place in the global EdTech ecosystem, and he’s going to be joined by Maria Spies. Maria is the Co-Founder and Co-CEO of Holon IQ. She’s had a 25-year career in education innovation, EdTech, and online learning, and has led digital learning features for a 40-million corporate venture fund. Welcome Maria, and over to you David.
I’m in Melbourne. You’re in Sydney. So I’m in full lockdown. This is actually the only room I’m allowed to be in in Melbourne at the moment. I wanted to firstly thank you for joining us, and I wanted to begin by ignoring the topic for a second and, in fact, actually having a bit of a conversation on Holon IQ. Holon IQ seems to be one of the most quoted sources of information around the education technology and innovation sector globally. I certainly see it a lot, and you’re certainly producing lots of really impactful EdTech insight. So I wanted to come back and ask where the idea came from? Why did Holon IQ get built?
I’ve been in education for a long time, and EdTech as well, and one of the things that over that long period of time, and especially over the last five years, that became extremely obvious to me and my co-founder, Patrick Brothers, was that, firstly, education is everywhere. It’s embedded in everything, all part of our lives, and COVID has really shown that. It’s never been so much in the news. But actually the data and information about education innovation is incredibly fragmented, right down deeply in its ecosystems and amazing people doing amazing things all over the place, but hard to find and hard to surface. A fragmented industry is not going to produce material innovation, and so we thought that we really need to do something about this. There’s this massive gap in terms of market intelligence compared with other industries. Of all the industries that need great market intelligence about who’s doing what and how things are innovating, it’s education. So that was the real beginning of Holon IQ. We’re around two-and-a-half years old now.
It is a really amazing journey and I wanted to actually pull out a piece that was in your bio, but I feel like it’s incredibly relevant. This idea of understanding education, like doing analysis of the market, is not quite the same as actually deeply understanding the sector. I know we won’t say exactly how many years it is, but a number of decades of experience in the sector, obviously, that gives you an insight that maybe some others aren’t picking up.
Our analysts and our partners all around the world have been working in education for a long time, and others have been working in investment or commercial areas, not in education. And actually that’s the important connection, and so sometimes, of course, to have deep domain expertise in a in a particular sector or industry is important because you can see and understand the problems that are occurring for the actors within that industry, whether it be a teacher, or a student, or a school, because you’ve been there and done that. You’ve been on the ground doing it, so that does provide some unique sort of perspective, of course. On the other hand, you can also get lost in that, and others who are coming from a completely different industry can see things that you don’t see, and bring with them new ways of doing things or different ways of doing things from other industries. It’s the combination of two things that makes it special, I think.
Holon IQ recently produced this report with some insights on a rescaling of the total education industry spend, and then an upscaling of the EdTech sector. Can you talk to us a little bit about this data and what’s driving it?
You know we do a knowledge analysis on the education market, and the very top point of analysis, of course, in any market is, “How big is this thing?” and, “How fast is it growing?” People want to know. The education industry globally is massive, and we predict that it will be a 10 trillion dollar engine by 2030. On the journey to 2030 we had previously sized the global education market, and this is spending by governments, by parents, by individuals, by companies on training, formal and informal, accredited and non-accredited, it’s the whole box and dice on education. So we have sized that too. By 2025 we had sized that to 7.8 trillion on its way to 10 trillion in 2030. We recast a couple of months ago for our sizing on global education. We reduced the overall spend, the overall market size of education, to 7.3 trillion so that’s a downgrade of 500 billion dollars, which is quite a lot. A downgrade in overall spending is really driven by a couple of things: one of the main things is higher education tuition deflation, which is what we expect. What we’re starting to see, along with faster, cheaper, credible alternatives to formal high cost education, and again we’re starting to see that already, and of course the more rapid digitization of education does drive a lower cost space overall.
Is that cost base coming from what I would think of as a traditional supplier being a university, or a TAFE? Or is it coming from new entrants in the market being able to deliver at a cheaper price point?
We are seeing a bit of both overall. Actually the proportion of sizing between informal upskilling, if you want to call it that, informal education in the adult space, and higher education. There is a movement of market share there, so we have estimated that we’ve got a growing unaccredited upskilling sector and not a shrinking higher education sector. But there’s market share movement there, and one is very expensive, i.e. higher education. And one is much cheaper. And therefore the cost is a bit of both of those things.
Again, you may not have all the data with you right now, but in this seven trillion dollars which is just big numbers, do you have a sense for private versus public spending there? Who’s driving that?
Government spend is massive, huge. Of course governments spend a lot of money on education. The private spend on education actually depends on which part of the world. In some parts of the world there is a big private spend on education and in others it’s not. Very broadly, emerging economies have a lower spend of GDP on education than developed economies, and a high parent or individual spend on education, on B2C education, on direct education, like after school tutoring, and test prep, and things like that.
I think you’ve got another slide there which has got an increase in the EdTech spend. I’m really interested in this too.
Yes, we also recast our thinking around EdTech spend, and you can see here it’s the opposite. So whilst we’re seeing a lower spend, generally, in terms of the education market where we’ve predicted a higher spend in EdTech over that period from now until 2025. That’s not going to shock anyone because COVID has accelerated the spend on technology, and it’s made up of a couple of things. There has been a relatively rough start to remote learning, but over the next couple of years we will definitely see digital infrastructure catch up where institutions and schools and governments, and someone saying, okay we’ve got to get our back of house. We’ve got to get the plumbing, the infrastructure organised. And learning management systems, student management systems, integrations of those cloud privacy security, all that stuff there’ll be a massive spend in this going forward, for sure. We are seeing as well, predicting a rise in the B2C EdTech models.
The traditional education technology has been there to service schools and universities, but actually we’re also seeing direct B2C growth, and so organizations and technology companies that are servicing students or learners directly rather than going through an institution of any type. At the advanced end, we are seeing a lot of growth in the Advanced Technology spend as well. In fact, of all the technology spends, Advanced Tech, and that’s virtual reality, artificial intelligence, robotics, and so on, that’s the highest growth. It’s about a 20 percent growth rate in those advanced EdTechnologies as applied to education, followed by things like management systems, which is digital infrastructure catching up. We’re predicting that’s going to be growing at nearly 20 percent.
Actually this afternoon I’m having a conversation with Abhishek Gupta from TVentures in India, and he and I met last year and he was adamant that India is 100 percent B2C market, and you’re wasting your time in the B2B space.
I was wrong. There’s a B2B market emerging in India as well. So we’ll just flag that. So just need to summarise the whole market’s shrinking a little bit, but EdTech’s growing. The expenditure in EdTech’s going to increase. I like it. I’m convinced. Pick the data that fits your worldview. I love that worldview, so I’m happy with that. Let’s move a little bit to the global EdTech ecosystem. I have great insight in the Australian sector. You have great insight in the global sector. I’m really interested in what you see are the big global drivers in the EdTech space based upon where we are today, and we might try and talk a little bit about some of the emerging markets in a minute.
You can’t really talk about EdTech without thinking about COVID and its impact on a predominantly face-to-face sector. That is the biggest impact at the moment, where the whole world of education is committing to digital or online. That is the greatest driver, and we’re seeing some absolutely amazing innovations. Helen from Deakin was talking earlier about some of the innovations she’s seeing in a university. But globally we’re also seeing some very interesting innovations occurring. What’s important here is that where, for example, governments are starting to think completely outside the square in terms of just making sure that students can continue learning, you’re seeing governments making partnerships with the likes of Netflix to deliver learning through Netflix because kids don’t have laptops, for example, or there’s no learning management system.
I read a post by, I think it was Belinda Tynan from RMIT, who’s the DVC of Education there and she talked about the fact that RMIT had to go and purchase laptops to help some students. We sometimes think about this rapid digitization happening in emerging markets where, in fact, there’s still some gaps that we’re seeing here too.
Just this month they determined that actually something that they could do, or one of the things they could do for students in K-12 in Germany, was to guarantee low-cost internet connection. So they’re spending 500 million Euros to ensure that kids have good internet for less than 10 Euros a month, because that was the blockage. In some cases it’s actually the infrastructure or the cost of that and so governments are starting to think differently about their responsibilities. In terms of education spending they’re going back down into infrastructure or across into non-accredited upskilling in order to upskill rapidly and put people into jobs. So governments are playing a very interesting role, and they’re thinking differently about funding and policy now. This could be great or it could be disastrous, depending on where you sit in the funding ecosystem.
Agreed 100 percent. I had a business that was operating in Singapore during the SARS epidemic of the mid-2000s, and I can’t remember the exact numbers, but the Singapore government spent many billions of dollars digitizing schools after that experience so that they didn’t have to repeat that experience. I’m hopeful that we will have some governments in our more established markets that may consider the same sort of thing, but if you and I get stuck in government policy then we’re wasting our opportunity to have you here with us. So let’s go back to this global market. I think we talked about the code thing driving some innovation and I think it was Beverley Oliver and Susan Elliot and Bev Hudson this morning who talked about the accelerant COVID has in this digitization. I’m interested in your view from a helicopter level about the markets that you think are interesting, that Australian EdTech entrepreneurs and education providers need to think about.
The geo markets. Where do you start? Because everyone’s doing a lot of things. But India has just launched its National Education Policy after 34 years. Very interesting, and if you’re an EdTech entrepreneur watching this session, look up the National Education Policy for India and read it. It’s super interesting. Even in higher ed, credentialing, micro credentials embedded through the ability to move institutions, they’re really revitalizing the whole thing. The other geography that we’ve been watching closely, and it’s been doing very interesting things, is Indonesia. Indonesia is a massive market, huge in terms of just population. And government, EdTech founders, and tech companies, and technology companies, and schools, and universities are all working together. Helen mentioned this morning, where markets and governments, EdTech companies, and institutions are starting to have joined-up conversations, that’s where we’re seeing quite a bit of innovation. I would say Indonesia is definitely one to watch, and India of course.
There’s the stalwarts in terms of innovation. For example the US, of course, is a massive market, and China for their different reasons, and the other markets we’ve been looking at are Eastern Europe, Ukraine and so on. They’re doing interesting things in the very deep tech upskilling space rather adult learning space.
As punishment in the previous life, I worked with a US software vendor, and from experience emerging markets like Indonesia or Ukraine just didn’t even get into a Geo strategy. There wasn’t even a document that says, “Hey, look! Indonesia is a market that’s emerging.” And it’s been a long time, so I’m sure that organization has much more detailed programs there.
But do you see, for example, the traditional competitors to Australia, in my view, would be the US and the European and UK based entities. Now obviously emerging in China. Do you think that the EdTech companies in those regions have even eyesight on what’s happening in Indonesia, or the Philippines, or Thailand, or Malaysia? Do they even think about those as markets?
Some do, but generally not. You use every advantage that you have as a company, as an organization, and your geography is part of that. If you’re an Australian EdTech company or if you’re an Australian in the education system, you know more about Asia than you think you know. We’re very closely tied for many generations to Asia, and so I would definitely look to that market. We’re much more culturally aware, and so in terms of international competition, yeah, I think there’s definitely an advantage there.
I absolutely agree, and the fact we share a time zone and you can produce a full solution, we should leverage the policy position of many decades of Australia really being seen as a market of aspiration for education. So I think that we can definitely use that.
I do sense a shift in that, though, and I think it’s a good thing, in terms of a mark of aspiration, and I know what you’re talking about. Absolutely, Australia’s got an amazing education system and countries in the region are building amazing education systems. So it’s not a given and we should learn from the innovations that are coming from those markets as well. Say, for example, in Indonesia the EdTech fundraising there has been phenomenal over the last six months. Very interesting models, low cost models because they have to. That’s part of the market, and so it’s not enough to rely, and I’m not saying people are, but it’s not enough to rely on high quality, high cost because we’re Australian. There are amazing, low-cost, high-quality innovations coming right out of those markets. They’re coming here as well.
That’s sort of the definition of innovation, trying to maintain quality or potentially even improve quality whilst doing it at a lower cost basis, but also engaging more learners and I think that Australia has always had this argument in my view of volume versus margin, and trying to understand that in a market.
I’m pretty sure Indonesia’s a couple of hundred million people. I don’t know, but that’s enough for my high school geography lesson. A couple hundred million people, and I don’t know how many of those students come to Australia to study, but I think we’re fully in agreement that the opportunity is to export Australian education in a digital model as opposed to bringing one more student from Indonesia to Australia.
I want to talk a little bit about how Holon IQ has been working around the world defining the top 50 or top 100 emerging tech companies in each market, and we’re about to partner on the Oceania region.
Have you seen something that you didn’t expect to see? And some emerging companies, or trends, or ideas that have come out that you thought, “Oh wow, this is really interesting. I haven’t seen this before.”
It’s been a fascinating process. We essentially call for submissions into regions. We’ve done China, Latin America, Nordic and Baltic countries, Southeast Asia. We’re just closing Sub-Saharan Africa right now. The Middle East and North Africa are coming and followed by other parts of the world. Those submissions come from companies all over, EdTech companies that are based in those particular regions, and we have experts in the region. Plus we’ve got a massive platform and human experts, plus machine learning to identify the most promising based on a whole criteria and so on. When you’ve worked in an industry for a while, you know all the types of organizations across the value chain, essentially. I was expecting to see similar-ish types of organization but what we found was that each region has got a very specific set of strengths, and that feeds back to what we were talking about before in terms of using your own strengths.
So, for example, in the Nordic-Baltic region there was a very heavy weighting to K-12 first. That’s interesting compared with other markets, which are more upskilling, but a very heavy weight into K-12 and a very heavy weighting right down deep in pedagogy. That won’t surprise anyone around Nordic-Baltic, but learning and pedagogy, STEM, coding, robotics teacher support. And so startups and innovations that are working in those areas were almost 50 of the 100, and they have their unique strengths, and that shows up in the mix of the 50s and 100s, whereas for example in Southeast Asia, to my surprise, there were many more in the upskilling space, in the in the digital skilling space, which is a big issue in that part of the world, as well as also a focus on K-12 and B2C after school support rather than a huge number in Learning Management Systems or things that are supporting institutions, a lot more in the B2C afterschool market and in the early years, zero to six years old type segment. Russia and CIS, a lot in extended virtual reality, and upscaling, deep tech, cyber, and all that sort of stuff, which again probably won’t surprise anyone. One of the things that we are seeing is more and more virtual reality simulation training both in K-12 and higher ed. K-12 a little bit, higher ed, and in upskilling that will form across a number of these.
Do you have thoughts on the level of adoption, or an understanding of where the adoption is greater, or the opportunity of new technologies in education, such as artificial intelligence, virtual reality, and augmented reality… Do you have a bit of a sense of the markets that seem to be doing that well? Are there markets that seem to be more open to those sorts of things?
It depends on the technology. For example, in the robotic space there’s widespread adoption all over, essentially, and especially in the early years, the K-12 or K-8 maybe. The robotics area, virtual and extended reality, is more prominent in workforce training, and so we’re seeing massive companies start to roll out virtual reality training for their speakers, and once you start to get that type of adoption at a corporate level then it starts to filter down into other parts of the sector. But even virtual reality, lab training for science labs, and things like that, I mean we’re seeing whole school systems like California Community Colleges signed up as a lab simulation company. The Nordics and their two million students in community colleges will be doing their science classes through this platform. That’s a significant system change. This is not some science teacher on the edge just having an experiment. This is a significant system change, and once that starts it’s not going to stop. I’m not saying it’s a bad thing. I think it’s great, and so we’re seeing that start to adopt all over the place.
Virtual reality has come. I kind of remember Second Life. We’ve moved past all that and now real, industrial, large-scale training that is proven to be effective using simulated or virtual environments is what we’re seeing. Once you start getting that massive adoption it’s going to become so mainstream, and one of the big issues for virtual reality is the content. You have to be able to develop virtual reality content, and that’s expensive, and only tech people can do it, and gamers, and now we’re starting to see EdTech startups come to life, which are platforms for creating your own virtual reality training content. It’s like the Canvas of VR training. You can do it yourself, and again, once the technology comes to a certain point where you don’t need the expert in the middle anymore, again that really drives widespread adoption. We’re starting to see that certainly in virtual reality.
Artificial intelligence is just embedded everywhere and it’s sort of a hidden thing.Virtual reality, you can see where it’s been used. Artificial intelligence is being used all throughout the whole value chain. We’ve done a whole piece on this. You can have a look on our website, but we’re seeing it in particular as it applies to much more personalised approaches to learning, adaptive learning, and so on in language learning. There is not one language learning company that doesn’t use AI these days to support language learning. We’re seeing more sophisticated uses of artificial intelligence, so I would say there’s a massive uptake, some more visible than others at this point.
Fantastic, Maria. I’m sure you and I could speak for the rest of the Melbourne EdTech Summit, but we will allow some other people to join our stage. Education’s got choice, this is your choose-your-own-adventure. You can pick the question that you finish on. The really easy one is, “How do you think Australia compares in terms of company growth, emerging companies, and investor activity, compared to the rest of the world?” The crystal ball question, you can choose, could be, “In three years time we’re doing a Melbourne EdTech Summit 2022 and you are coming back to visit us. What does Holon IQ look like in 2022?”
I’m gonna choose the first one because it’s more relevant for the audience in terms of the Australian EdTech. One of the things that I see in terms of Australia compared to the rest of the world is that Australia has got an amazing education system and very strong support for institutional delivery, and that is great. It’s awesome. But it can also hold us back because things have been set up for a long time and that can make it hard for EdTech. You know what, I don’t see as much of the sort of B2C opportunities for EdTechs that I see in other markets where growth is happening very quickly. What I would love to see is, for example, a lot more in the language learning space. Australia has got such a solid and strong language learning industry. It’s really sad to see that decimated because it’s pretty old-fashioned. I’d love to see some more growth in that space. There’s so much opportunity, and I think in terms of this, there’s just not enough activity. There’s quite a lot of activity, but compared with what’s possible, I’d love to see much more.
That’s a perfect point to finish on. Maria, I really want to thank you so much for sharing your insight with us this morning. It’s been fantastic.