Global education, ripe for disruption by digital technology, is a hotbed of investment opportunities, Credit Suisse says
- The market for education technology is projected to grow 11 per cent annually by 2025, according to global education market intelligence platform HolonIQ
- Last year, US$142 billion was spent on education technology, less than 3 per cent of global expenditure in the sector
The US$6 trillion global education market is full of investment opportunities because the industry’s low rate of digitalisation makes it ripe for disruption, while a shortage of academic resources create potential for growth, said Credit Suisse.
“Education is one of the few sectors which has been very traditional, which means it is currently at a very low level of digital disruption, much more so than other industries,” said Credit Suisse’s Kirill Pyshkin, who manages a thematic fund of more than US$500 million focusing on companies that derive at least half of their sales from disrupters of traditional education. “It is like mobile phone penetration in 1998/99. [We expect] many years of growth … to get to anywhere near the decent level of penetration of digital [education],” he said.
That means opportunity for growth, especially where technology could be used to address some of the shortages and deficiencies in traditional education, Pyshkin said in an interview with South China Morning Post. Common problems in the industry include the remoteness of many communities from education infrastructure, and the overcrowding in many schools.
“Technology is the solution to many of the problems of traditional education. The growth in technology adoption is expected to be very strong,” said Pyshkin. “Education has been done – for many years – almost in the same way. It has some problems in reaching everybody at the right level, and also of scalability.”
In China, the world’s most populous nation and the largest market for education in the world, the outsize demand for quality education by single-child families attracted investments into tuition academies, distance learning, language classes, extracurricular activities, early education and a variety of smartphone-enabled applications to augment the industry.