Credit;PA
The importance of e-learning tools during the current coronavirus crisis was underlined once more this month as venture capitalist firm Prosus acquired educational tech company Stack Overflow for $1.8 billion. The site, which is a central learning hub for coders all over the globe and attracts over 100 million visitors monthly, is perhaps one of the most copy-pasted websites in history. As such, it’s clearly both a symptom and a driver of the digital economy and a sign of things to come in the educational sector.
It’s not the only indicator, either. Other investors have recognized the potential of e-learning early on and reacted promptly when the pandemic unfolded. One particularly notable case in point is SB Management, the asset management division of Japanese holding conglomerate SoftBank, who created headlines last year by purchasing a 9.7% stake in Norwegian games-based learning platform Kahoot! in October, later rising to 13.5% with a further deal in December.
SBM’s investment in ed-tech as a strategic bet ahead of the curve is testament to the long-term confidence in the sector – one that has changed forever. The concepts of learning have evolved over the past year, defined by a move away from static classroom attendance to more collaborative solutions made possible because of digitalization. This has made learning more flexible and accessible anywhere in the world. Indeed, experts believe education will from now on be defined by a hybrid approach combining “asynchronous online elements with synchronous elements, enabling students to interact with each other, their teachers and learning content, all at the same time.”
Stack Overflow expanding its horizons
Of course, this evolution is not limited to basic schooling, but to professional learning as well. It’s thus no surprise that Prosus napped Stack Overflow, a free-to-use Q&A website intended to aid both professional and amateur software developers hone their skills and share information. Stack Overflow has grown rapidly in popularity in recent years, raising $153 million in funding to date with a revenue model based on advertising space and its software-as-a-service (SaaS) platform, which is already being leveraged by big names including Chevron, Microsoft and Siemens. However, 85% of its SaaS clients are currently found in the US, which is why its acquisition by Prosus, among Europe’s most valuable tech firm and investors, makes perfect sense for both parties.
The takeover represents Prosus’ most lucrative spend since selling 2% of their stake in Chinese tech firm Tencent. After buying a 46.5% share in the company for $34 million in 2001, Prosus sold just 2% for almost $15 billion this year. Meanwhile, Prosus’ wide portfolio of clients and deep pockets, alongside a track record in helping to break new markets – the company successfully expanded into the exploding Indian sector with its online payment platform PayU – means Prosus should be the ideal fit for Stack Overflow to scale up its operations overseas.
SB Management eyes Kahoot’s consolidation and global conquest
It’s a similar story over in Norway, where SBM recently became the biggest shareholder in e-learning company Kahoot. Founded in 2012, the platform boasted 1.5 billion users in 2020 and announced its entrance into the main Norwegian stock market earlier this year – becoming Europe’s first major tech IPO of 2021 and boosting its share price 3% in the process. It earned $45.2 million in 2020, up 247% from the previous year and has projected earnings of between $90 and $100 million for 2021.
SB Management is now in a prime position to consolidate Kahoot! and grow the company as an ed-tech platform. Backed by premium content providers like Microsoft, Marvel and Disney, as well as cash funds like Northzone, Creandum and now SB Management, it’s currently valued at $6.7 billion – not only because of the pandemic, but also because it’s seeing increasing use in businesses for organizing work flows, delivering interactive presentations and meetings.
Like Stack Overflow, Kahoot is currently restricted by a predominantly Western user base. Yet the partnership with an experienced venture capitalist is intended to rectify that situation. SoftBank is a Japanese entity and has many ties with the Asian business world, so Kahoot’s board, now reinforced with SB Management expertise, will be able to leverage their new connections to break into the fast-growing Chinese and Indian markets. And while its rapid recent growth has certainly not been harmed by the logistical complexities of coronavirus-induced lockdowns, the company has a business model in tune with the new zeitgeist that promises to stay relevant for a long time.
Ed-tech’s shelf-life beyond the pandemic
In fact, the same could be said for the whole sector. The fact that 1.2 billion students around the world were kept out of the classroom at the apex of quarantine restrictions has certainly acted as a catalyst for e-learning, but it was already a market developing at breakneck pace. Global investments into ed-tech companies surpassed $18.5 billion in 2019, and Research and Markets projected it to reach $350 billion in total worth by 2025 – long before Wuhan became a household word in the western world.
That predicted growth is based upon a number of advantages which remote learning carries in comparison to its classroom-based counterpart. For starters, the costs of commuting and coursebook acquisition are reduced or eliminated altogether, making it more affordable for both students and teachers. Research has shown that students take up to 60% less time to learn information online than in person, retaining between 25% and 60% more of the data when they do so. Another study also found that it results in improved academic performance with regard to practical assignments when supplemented by gamification, while the individualization possibilities inherent in Big Data and machine learning mean the sky is limit for what can be achieved on a student-by-student basis.
Developments like the Propus-Stack Overflow and SoftBank-Kahoot deals indicate that the wind continues to blow in the direction of scaling the extant successful business models and expanding outreach to new and developing markets. With the initiative and innovation of ed-tech companies driving the sector forward and the investment of venture capitalists behind them, there’s plenty that the e-learning sector can teach us today, tomorrow and far into the future.
