The New Learning Economy: It’s Time To Build in Education

Over the past decade, $20B has been invested into US edtech, yet only 3 companies have gone public last year in a hot IPO market: @Coursera, @Duolingo, @Udemy. Many have written off the space.?

??take: we are entering the decade of the “Learning Economy,” which spans way beyond traditional education.?

First, #edtech is much broader than we think. It's not just about academic tools and student/teacher tech. The Learning Economy, as we think of it, encompasses all the diff ways we develop as human beings, be it learning to be a better boss, parent, or friend, or a new hobby.

People have hypothesized all sorts of reasons why venture outcomes are difficult: limited TAM, lack of consumer willingness to pay, difficult b2b sales, growth trajectories different from traditional consumer internet companies…But these dynamics have changed since Covid.

Breaking down the ingredients of a successful startup, we see exciting opportunities for Learning Economy companies along funding, GTM, product, and founding teams:

Funding: There’s ~$190 BILLION in government funding for schools to spend on tech in the next 2 years! TAM and funding for education startups has dramatically increased with gov funding through ESSER. Note, ESSER = Elementary & Secondary School Emergency Relief Fund.

GTM motions and biz models are now better understood, thanks to Duolingo spearheading freemium subscriptions, Paper and Prisms innovating in K12 sales, Coursera and Reforge in b2b, and Outschool successfully leveraging PTAs as distribution.

Learning products are typically a combination of content, software, teachers/coaches/experts and curriculum. Playbooks developed by MasterClass Guild Reforge make this much faster and cheaper.

Zoom allows companies to tap a global supply pool and geographically arbitrage to hire the best and most cost-effective teachers. In fact, many of these businesses have SaaS-like margins.

Several macro trends are at play across all generations of learners:

1. Lifelong learning is now the norm
2. The gap between what schools/universities teach and what employers want continues to widen.
3. Parents have a newfound awareness of what kids learn (and don’t) in school

This all leads to the most important factor in early-stage startups: founding teams. Founders have taken notice of all of this and are eager to build. Complementary founders with both Silicon Valley product-building expertise AND education domain experience are pairing up.

The problem space is massive and the experience building consumer experiences from the current generation of iconic consumer companies such as Uber Lyft Airbnb are directly translatable to building in the Learning Economy.

We can’t wait to see the next decade of learning and education. If you are building a company focused on any part of learning - early childhood through adult, I’d love to chat!

Read on for the Learning Economy opportunities we’re most excited about: https://a16z.com/2022/09/16/the-new-learning-economy-its-time-to-build-in-education/