EdTech and the pivotal role of learning innovation in Southeast Asia

Compared to students from 20 or even 50 years ago, today’s students have a completely different learning experience. In the past, students learned from lectures and books, spending hours in a library researching for assignments or projects. Today, students often still have a similar classroom experience but their world has opened up in a massive way.

Students are gaining more immersive experiences, moving through websites and apps on laptops, tablets or smartphones. They are faced with a rapid-fire, often staggering amount of information across a vast array of resources that they must choose to consume. It has become clear that learners approach education very differently today.?

Quality education is a key SGD

Identified as one of the United Nations’ 17 SGDs (sustainable development goals), SDG 4 Quality Education is aimed at achieving a better future and world for all. It is described as “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all”. As such, this is a pivotal SDG as its targets are key to the achievement of other SDGs such as personal, societal and planet wellbeing.

As pointed out by Kaizenvest , the asset manager focused on the future of learning and work, the three problems facing SDG 4 are access to, quality of and relevance of education, and the needs and priorities to achieve the objective of SDG 4 can be viewed through one of these three lenses.

Role of EdTech globally?

This is where Education Technology (EdTech or EduTech in short) comes in. EdTech concerns the application of technology and digital infrastructure to help an individual to learn better, by making learning more affordable, more efficient, more effective, more engaging or a combination of these factors (as defined by Dealroom ).

The Brookings Institution outlines the four benefits EdTech solutions bring:

• scaling up of quality instruction
• facilitating differentiated instruction
• expanding opportunities to practise
• increasing learner engagement

Like every sector, the EdTech sector has sub sectors, such as language learning, tutoring and homework help, learning management systems, and curriculum production.

The below, not mutually exclusive, subsegments are just one type of segmenting the EdTech market and institutions and companies use different types:

EdTech solutions aim to transform the way people learn, and work to improve access, quality or relevance of learning experiences. For example, European EdTech Bookr , a research-based edutainment tool for English language learning for children, is increasing the fun and engagement factors for language learning for kids. Growthtribe 's platform provides an engaging, cohort based courses for adults to upskill in digital skills, and Moodle from Australia aims to increase the learning experience for teachers and learners through a customizable learning management system. And StudyStream from the UK, is addressing college students’ need for increased accountability and social connection during study-time, by offering online shared study spaces.

Across all segments and solution-types, we see the use of new technologies such as AI and VR/AR emerge, which enable hyper-personalised and immersive learning experiences. Geniebook , for example, offer personalised, adaptive learning support for school subjects through AI-generated worksheets.

EdTech has taken flight

In particular, EdTech solutions that assisted in the adoption of online learning have seen tremendous growth in 2021. Not surprisingly, the COVID-19 pandemic has fuelled growth in the sector, as it forced kids and adults to continue learning and operating from home, adopting new technologies and digital infrastructure to make remote learning as efficient as possible.

As a result, EdTech globally has taken flight. In 2021, the global EdTech sector saw nearly USD 21bn in equity investment, 3x pre-pandemic investment levels. The global EdTech industry was valued at USD 89.49 billion in 2020 and is expected to witness a compound annual growth rate (CAGR) of 19.9% from 2021 to 2028.

In 2021, the global EdTech sector saw equity investments 3x pre-pandemic levels

Despite tremendous growth in 2021, the market for learning innovation solutions is still young as compared to FinTech and HealthTech. For example, EdTech equity investments in 2021 comprised only 1/6th of the amount invested in FinTech over the same period.

This can be attributed to particular challenges that arise with making changes in the education sector. Things are known to be notoriously slow to move, thanks to bureaucracy and red tape, slow adoption rate, resulting in sales cycles of 6-12 months. The industry also suffers from the ‘wait and see’ attitude that many venture capitalists have towards the EdTech sector in general. These factors can begin to add up when the current economic downturn and global political tensions are taken into account.

State of EdTech across Southeast Asia

Global statistics may not provide an accurate picture when region-specific traits, needs and priorities are examined.

The 6 Southeast Asia countries in scope of the research

Southeast Asia is fundamentally different from the US or Europe, due to its diaspora of languages, income levels, regulations, government frameworks and particular ways of doing business. If we add specific challenges with education and learning in Southeast Asia, it becomes clear that this region calls for specific EdTech solutions.

Let's dive a little deeper and look at some of the specific issues in this region and solutions that aim to address these effectively:

For large groups of youth, access to quality education is hindered by lack of access to capital. In Philippines alone, 18.5 million youth can not afford higher education. EdTech/ Fintech InvestEd makes college more accessible to the bottom-of-pyramid youth in the Philippines through capital injection and counselling.

Access to quality education can also be hindered by lack of infrastructure. In large countries with vast rural areas such as Indonesia (271 million inhabitants) and Philippines (108 million inhabitants), internet access is patchy and overall internet penetration is below 50%. Solutions that help schools without internet access come online, such as Kipin in Indonesia, help increase access to quality education for school kids.

Not surprisingly, those countries with lower internet penetration are the ones that are hit hardest by the effects of the Covid-19 pandemic. Learning losses have amounted to 147 million children (globally) missing class time, resulting in an estimated combined loss of lifetime earnings of a staggering USD 17 trillion. Now this is also where Edtech comes in: even as schools are now reopening, online curriculum-aligned tutoring platforms like Ruangguru in Indonesia complement the learning in school, helping students make up for incurred learning losses.

As a last example, class sizes are typically higher in this region – public school class sizes can add up to 40-60 kids. The multiplier effect that a teacher therefore has, is enormous. Now factor in that in certain Southeast Asian countries, anyone with a highschool diploma can become a teacher... Unnecessary to say that the upskilling of teachers and helping them become more effective through the use of tech has an actual impact in this region, which is recognised and acted upon by companies such as AkadAsia and HeyHi .

A nascent sector

What are some of the key facts to understand about the EdTech sector in Southeast Asia?

First and foremost, the EdTech sector in Southeast Asia is a nascent sector, as outlined in Singapore: State of EdTech Report 2022 , which presents an in-depth overview of the EdTech landscape as well as key developments affecting Singapore and Southeast Asia:

• 67% of the active EdTech companies in Singapore, Indonesia, Vietnam, Philippines, Thailand and Malaysia have not received angel or VC funding (yet). Of the 33% of the companies which have received funding, nearly 70% are in Seed-stage, and 96% of all SEA EdTech companies have not reached Series A yet
• The EdTech startups in Southeast Asia that do find funding, are mostly funded by venture capitalists from oversees (primarily US)
• 75% of all capital invested goes to solutions designed for 3-18 year olds. Interestingly, in terms of number, there is a near equal split between EdTech solutions that focus on child-learning vs adult-learning
• LingoAce , the personalised and interactive language learning platform for kids, aged 3 - 15 years old, is the only Southeast Asia-bred unicorn

Number of EdTech startups in Southeast Asia by number and stage

A sample of EdTech startups in Southeast Asia, per sub segment

The time is now for EdTech

How might EdTech and learning innovation further develop and thrive across Southeast Asia and the rest of the world?

2021 saw an increase of 1.7x in the number of Southeast Asia EdTech investors. 2022/2023 will have to prove whether the EdTech trend stays strong. Two scenarios are possible:

1. As the pandemic recedes and schools re-open, the demand for online solutions declines
2. A true paradigm shift has taken place in how we believe learning occurs. Much as we can never go back to believing that the world is flat, we may never go back to thinking about learning as an activity that requires a teacher, pre-selected content and a classroom.

There are many robust arguments in favour of the second scenario and further advancements in the EdTech sector:

Learners (both child and adult learners) have realised that learning online is more effective and engaging than classroom learning

The World Economic Forum reported in 2020 that, on average, students retain 25-60% more material when learning online compared to only 8-10% in a classroom. A study by IAL (Institute for Adult Learning) Singapore found that over 85% of adult learners who had undergone online learning found it effective and over 77% were able to apply their new skills in their current job.

Life-long learning is necessary

Life-long learning is required in order to keep up with the increasing rate of change and, especially for adults, to stay relevant in their professions. To that end, learning innovation plays an increasingly pivotal role in delivering on that need.

Address learning loss

The medium to long-term impact of learning loss as a result of COVID-19 related school closures needs to be addressed. Improvements in access through the availability of learning innovation tools and solutions allow for a hybrid approach. This may entail online remote learning in addition to back-in-the-classroom learning which allow for more efficient learning and improvement in learning outcomes.

Much as we can never go back to believing that the world is flat, we may never go back to thinking about learning as an activity that requires a teacher, pre-selected content and a classroom

Conditions are favourable, as according to a report by Bain, Google and Temasek , Southeast Asia is entering its ‘digital decade’ as the internet increasingly becomes an integral part of consumers’ daily lives. The region now has more than 440 million internet users, of which 350 million (roughly 80%) are digital consumers,

A successful EdTech ecosystem

Besides global acceptance of online learning and a digitally savvy population, what else might we need to successfully develop the EdTech ecosystem?

Consistent flow of good talent

As with every emerging industry, talent comes first. It takes great founders to find the next big opportunity, which will then develop the next decade’s “sunrise sector”. Promising sectors will not emerge by themselves (also listen in to Yinglan Tan from Insignia Ventures Partners discuss innovation drivers in Southeast Asia in this podcast ).

Access to capital

Similar to other sectors, funding is key for startups in the EdTech sector to hire top talent, invest in technology development and enter new markets and grow. That said, hypergrowth is not always suitable for every company, and this goes in particular in the EdTech industry due to the reasons mentioned above. However, the ‘wait and see’ approach of venture capitalists towards EdTech is not always helpful for further acceleration.

Success stories amplified

Examples that show how possible it is to build a thriving EdTech company, such as LingoAce , Ruangguru and Cialfo , to name a few, are hugely encouraging for equity investors and talent to gain the confidence to venture into the space and contribute to developing the ecosystem.

Frameworks, platforms and standardisation

From a technological, operational and legal angle, standardisation and frameworks can help the EdTech sector become more efficient and quicker to execute. These aspects also enable more collaboration on a larger scale. For example, we see many blockchain hosted micro-credentialing options coming up, such as Accredify or Edufied , yet steps yet need to be taken for these solutions to fit into a larger framework.

Accelerate to innovate learning

It seems to be that now is the time to accelerate the investment of capital, talent and time in learning innovation. It will benefit accessibility, quality and relevance of education, help make up for pandemic-related learning losses, and speed up lifelong learning efforts which are needed for adults to stay professionally and socially relevant.

Apart from solving very particular problems, new frontier technology prioritises learning being fun, engaging and hyper-personalised. It is suited to the needs of those born and raised in the digital era, who experience learning on a whole new level.