Edtech Investment Panel, 3 Nov

Relena Sei (CEO of JumpStart Media) facilitated this panel with two edtech specialist VCs:

  • Matt Greenfield, Managing Partner, Rethink Education
  • Bill Ning, Founding Partner, Blue Elephant Capital

Nature of Edtech Investment: Greenfield and Ning highlights the importance of government regulations in the ed tech arena. Ning points out that good education companies are labour intensive businesses and therefore growth would be slower than a typical tech venture. Investors have to be more patient.  Both speakers emphasize that founders of edtech businesses should have strong vision and values. Matt reckons that edtech investors have to start with what their values are.  Rethink Education only invests in edtech ventures that could make a difference and narrow the gap between the vulnerable and the privileged. They have elaborate requirements and rubrics on the beneficiaries, the benefits and the theory of change.

Strategy for Novice: For investors with no prior experience, Greenfield suggests that they piggyback on the experienced ones. It is essential to understand the customer needs to get the product-market-fit. Successful startups are often those with a social mission working on a peripheral innovation to solve a problem that no one is working on. The social mission could also help attract talents. 

Co-investment Consideration: Ning remarks that great content, talent and time are in short supply. They look for co-investment partners that could bring good content, resources and connections to entrepreneurs. Rethink Education likes to work with family offices and foundations that have a different time horizon. They have the legacy consideration and will not panic easily if something goes wrong. Whilst the return takes longer to realise, the loss ratio is also lower. For Rethink Education, only one out of 20 investments flopped.

China Market: Ning shares the phenomenal growth of edtech in the Chinese Mainland market. Education is an RMB $7 trillion business, at 6-7% of China’s GDP. Families are willing to spend a lot on after school tutoring. There is also a great deal of money flowing into edtech with 4-5 unicorns, attracting talents (engineers, designers and educators) into the sector. Whilst the current focus is on K12 , he envisages that the market would shift from K12 to Y12, including universities, vocational training and distance learning. The digital content market will be big,  fueled by the development of AR and VR.

Role of Hong Kong: Ning believes Hong Kong and other Greater Bay Area cities are well placed to develop education technology in the next 10 years. The region has an abundant supply of talents, the hardware/manufacturing supply chain and strong government support to education. Hong Kong could play an important role with an international talent pool and a good education system. There is a lot that the rest of the GBA can learn from Hong Kong. Greenfield reckons that Hong Kong could play the role of “translating’ languages, culture and legal systems.  There is also abundant capital in Hong Kong that could be recycled from successful entrepreneurs to ‘missionary’ ventures.