EdTech – A Shining Star in the Startup Market

Monday, 13/11/2023 19:03 (GTM +7)

In recent times, the field of educational technology (EdTech) has emerged as a bright star, with a market value surpassing the $300 billion. This has triggered a powerful wave of educational transformation on a global scale. Notably, the United States, China, and India play pivotal roles in this entrepreneurial ecosystem, attracting substantial investment deals.

In terms of annual compound growth rate, the Asia-Pacific region boasts the highest figure, with a predicted CAGR of 16.1% from 2023 to 2030 (GrandViewResearch). In Vietnam, artificial intelligence (AI) and virtual reality (VR), etc. are gaining prominence as breakthrough factors, propelling rapid growth in the EdTech market. However, this growth is accompanied by challenges concerning project quality and investment.

Global EdTech Market Overview:

With a market value exceeding $300 billion in 2022, the EdTech industry is forecasted to reach $400 billion in 2023. It also anticipates a compound annual growth rate (CAGR) of approximately 14% from 2023 to 2032 (EdTech Agency, 2023). Othewise, some major EdTech companies worldwide have experienced less-than-promising revenue results, such as Coursera, Kahoot, and 2U (Dealroom, 2022).

The deteriorating business situation of these companies can be attributed to various factors, including staff layoffs, declining capital after inefficient investments and mergers, as well as governmental interventions and regulatory pressures. Despite these challenges, EdTech maintains growth potential due to the increasing demand for online education and workforce skill development (Crunchbase).

(Source: Grand View Research)

In terms of market share, North America holds the highest revenue share globally, accounting for more than 36% of the market. This dominance is driven by abundant investment capital from EdTech-focused funds in the United States. Additionally, the Asia-Pacific region exhibits the highest compound annual growth rate (CAGR), with a forecasted CAGR of 16.1% from 2023 to 2030 (GrandViewResearch). Furthermore, according to Rory Gopsill, an analyst at GlobalData, “Asia-Pacific is poised to become the world’s largest EdTech market by 2030.” This underlines the region’s remarkable potential in the field of educational technology.

EdTech Market Overview in Vietnam:

The EdTech market in Vietnam is estimated to reach about $3 billion in 2023 and is among the top 10 fastest-growing markets globally, projecting approximately 20.2% growth annually from 2019 to 2023 (VietnamPlus). Factors contributing to this growth include GDP growth rates, internet penetration rates, and education-related spending policies.

Vietnam allocates 4.9% of its GDP to education, second only to Malaysia’s 5%, surpassing other ASEAN countries, including Cambodia (1.9%), Singapore (2.9%), and Laos (3.3%) (VnExpress). According to Bain & Company, the average Vietnamese family dedicates about 20% of their income to their children’s education, whereas the range in Southeast Asian countries is 6-15% (VnEconomy).

Moreover, with 77.93 million users and an internet penetration rate of 79.1%, Vietnam exhibits substantial potential for technology implementation in the education sector. Additionally, the government’s budget allocation for education and training in 2022 stood at over VND 55 trillion, constituting 16.6% of the state budget, marking a 49.2% increase compared to 2021 (Vietnamnet).

EduSpace, Vietnam Investment Group, Northstar Group, ThinkZone Ventures, Do Ventures, RareJob, KKR, Antler, and Mekong Enterprise Fund III are notable investors in the Vietnamese EdTech market in recent years. Among them, Kaizen Investments stands out for investing $10 million USD into YOLA (a company providing English teaching services for adolescents) and $15 million USD into MindX

Notable Technology Trends in EdTech:

Cloud Services: Vietnam currently has 39 cloud service providers, 27 data centers, with foreign enterprises occupying over 80% of the market share (CafeF). Cloud computing is viewed as one of the most effective solutions for ensuring data integrity and continuous operation in online education institutions.
Personalization: Personalization is becoming an increasingly important trend in the field of education, as the value of tailoring learning to individual needs and preferences is being emphasized. ChatGPT is seen as an ideal tool to support this through engaging in conversations and providing real-time answers.
FTech, one of the leading companies in Artificial Intelligence (AI), has launched an educational technology product using the open-source code of ChatGPT. According to the plan, FTech will offer this experience through the FQA.vn website, with a user-friendly interface, allowing users to use it completely free from February 20th to March 20th.

(Source: FTech)

Voice Recognition: Voice recognition technology is increasingly utilized in EdTech in Vietnam, mainly to enhance pronunciation skills. Learners receive direct feedback and advice from various platforms. Notably, ELSA Speak, a Vietnamese English speaking app, has attracted over 4 million users from 100 countries, positioning itself as a top-five global AI app.

(Source: ELSA Speak)

AR, VR, MR, and XR Applications: Extended Reality (XR) encompasses Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR), and future technologies that blend the physical and virtual realms. Projects like the application of AR and VR in Vietnamese preschools and secondary schools are being implemented by UNICEF and CFC Vietnam, aiming to innovate teaching methods through technology (CFC)

(Sources: CFC)

Global and Vietnamese EdTech Investment:

The global EdTech sector saw significant investment growth, with a $500 million venture capital investment in 2010 surging to approximately $16.1 billion by 2020, nearly doubling the previous investment record set in 2018.

The COVID-19 pandemic in 2020 caused disruptions in education worldwide, leading to unprecedented global online learning. Simultaneously, advancements in technology fueled rapid investment growth in EdTech (Holoniq).

(Source: Holon 2020)

In 2022, Vietnam’s EdTech startups received eight investments totaling $46.8 million. While this is lower than the peak investment of $158 million in 2021, it still represents a considerable increase compared to 2020 and 2019.

(Source: Nextrans)

Prominent investors in Vietnam’s EdTech market in recent years include EduSpace, Vietnam Investment Group, Northstar Group, ThinkZone Ventures, Do Ventures, RareJob, KKR, Antler, and Mekong Enterprise Fund III. Notably, Kaizen Investments stands out for its significant investments in YOLA, an English language education provider, and MindX.

Notable EdTech Startups Worldwide and in Vietnam:

The overview of Vietnamese EdTech market

Across the globe, there are 28 “unicorn” EdTech companies, with the majority headquartered in North America and Asia. Notable countries hosting these startups include the United States (15 startups) and India (6 startups), while others are based in Taiwan, Canada, Austria, the United Kingdom, Australia, and Israel (Link). Southeast Asia, including Vietnam, has witnessed the emergence and growth of numerous standout startups.

Geniebook:

Geniebook, an online learning platform using AI technology based in Singapore, secured investments from Apricot Capital, East Ventures Growth, Lightspeed Venture Partners, and several angel investors. With remarkable tripled growth over two years, the platform has attracted over 220,000 users in Asia through its products GenieSmart, GenieClass, and GenieAsk. Additionally, Geniebook developed a Parent App to help parents monitor their children’s learning progress and support them in their studies anytime and anywhere (Geniebook).

(Source: Geniebook)

MindX:

MindX was founded in 2015 with the goal of equipping Vietnamese youth with technology skills, covering critical sectors like education, job placement, and entrepreneurship spaces. To date, over 35,000 students have graduated from MindX and are currently living and working in nearly 20 countries, including the United States, the United Kingdom, Japan, Singapore, and Australia.

The company recently successfully raised $15 million in a Series B round, led by Singapore’s Kaizenvest investment fund. MindX underscores the importance of imparting skills and critical thinking to empower young people to adapt to the rapid changes brought about by the Fourth Industrial Revolution (MindX).