Investors are showing clear signs of interest in education technology after investments in the field jumped 55 percent in just one year.
Venture and equity financing for educational tech companies soared to roughly $1.87 billion last year, a report from CB Insights revealed.
From the medical industry to the financing industry, technology is constantly being heavily integrated in both major and emerging businesses today, but education always seemed to stand as the last frontier for technological advancements.
While tech entrepreneurs have introduced many great tools and apps that could revolutionize classrooms across the globe and possibly improve the overall quality of the time spent in the classroom, education technology has not been a very profitable business.
Many argue that it also hasn’t been proven to be as effective as some entrepreneurs would boast.
The opposing side to that argument would say that it’s hard to prove technologies are effective if it seems nearly impossible to get them widely implemented.
Whatever the reason may be, investors are continuing to pour money into the tech education space regardless of concerns about how profitable the industry really is.
“Education is one of the last industries to be touched by Internet technology, and we’re seeing a lot of catch-up,” Betsy Corcoran, chief executive of EdSurge, an industry news service and research firm, told The New York Times.
It’s important to note that there is still a lot of catching up that needs to be done in the education technology space.
Notable education technology companies like Pluralsight and Remind garnered much attention after raising $135 million and $40 million respectively.
Other consumer technology companies, like Uber, blow those numbers out of the water with investments totaling up to $2.7 billion last year.
Reports indicate that the greatest problem for tech education is getting entire schools to implement new technologies and give unconventional methods of grading, teaching and issuing assignments a try.
Instead, many of these entrepreneurs are forced to contact individual teachers, and proving the technology’s effectiveness becomes even more difficult.
Investors also tend to shy away from dishing out larger checks in the industry because many emerging companies do not have a clear business model that explains where revenue will come from.
Since many educational technologies will need to be free for most students or teachers to even consider them, discussing profits can certainly be a tricky conversation for both investors and emerging entrepreneurs.