Recently, I spoke to investor Jessica Millstone about valuations and "Is there a bubble?" in edtech.

When posing the question on LinkedIn, Adam Buchinder, Director of Sales at Listenwise, offered the following (make sure you catch my note at the end...):

At least in K-12, I'd say there is definitely not a bubble.

If you look at deal flow across the sector in the last three years, there is more capital flowing to fewer companies but fewer investments overall. In general, this shows maturity in the sector, which isn't a bad thing.

Investors in 2010-2013 took a lot of bets on Freemium companies based on growth in teacher signups and the rate of device procurement. Many investors were floating $1-$3 MM series A rounds for companies that didn't yet have recurring revenue. Many of those companies failed and there was a realization that tech adoption alone wasn't going to be the holy grail as some predicted and that there were many more important metrics to consider like daily, weekly, and monthly active teachers and most importantly, annual recurring revenue!

There is a significant opportunity in the space for post seed/pre series A companies that are growing without outside capital but could use some acceleration. Most of these companies are in the $1-$3 MM ARR space. 

To pull out some main points:

• As the K12 EdTech market matures, there are fewer, more valuable deals
• Companies are moving away from the risky freemium model towards proving they can get sales early
• There's room for innovation in how and when EdTech companies are funded

Adam's comment gave me several insights about the current market in EdTech. Learning from people who have been doing the work of selling to schools for years and following the space is incredibly useful.

But I actually highlight Adam's comment for a different reason. A few days earlier, we were talking about his company's product, Listenwise. And during the conversation, he seamlessly, naturally referred to several things that revealed his deep knowledge of the current teacher experience. He mentioned recent education legislation, touched on a few common instructional strategies teachers use in the classroom, and could discuss important trends among American public school students.

This is what is awesome about education technology in 2020. It requires a deep knowledge of multiple domains: sales and education, finance and education, tech and education, marketing and education, data analytics and education, etc etc etc.

You can probably at least get started with just the skills or experience in one domain (either education experience or a business skill). But any real success requires developing a deep knowledge of the education world as well as insight, skills, and knowledge in business and/or tech, depending on your role.

I wanted to highlight Adam as a case study because those two conversations we had clearly elucidated this point.

In what ways do you think you are a double-threat in EdTech? OR Which side of the equation are you working on developing? How?

Thanks for reading,

Gerard Dawson

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