The handwringing over America’s growing skills gap and the impending dangers of an automated future has coalesced around an increasingly panicked question: “Are robots going to take my job?”
It’s a legitimate concern in the U.S.: More than a third of the workforce is currently freelancing; a quarter are considered low-skilled; and a third of jobs could be lost to automation by 2030.
But it’s not time to worry yet, because when there’s a gap in the market, entrepreneurs will step up. In fact, a whole class of education technology startups has already emerged to address these challenges.
There are more than 1,500 education technology (“edtech”) companies in the United States, many trying to solve these exact problems. They’re often small companies tackling big problems related to adult education— whether it’s helping working parents complete college degrees or retraining Uber drivers to work in sales.
But they’re hampered by a specific challenge: their customers tend to be big institutions (universities, school systems, or corporations) that often want to support bold new ideas but are wary of purchasing untested products.
That’s the catch-22: Edtech startups can’t scale effectively without customer feedback, but the customers often demand that the kinks are worked out before they make a purchase. For example, Upswing provides virtual services to community college students to decrease drop-out rates. With research, they could better prove their model and scale faster. But buyers aren’t going to provide the resources for research and development (R&D).
So startups like Upswing have to do it themselves. But although edtech entrepreneurs recognize that R&D is important, it’s rare for them to do it well. They are often short on cash and only 2 percent of venture capital funding goes to edtech startups. (This actually represents a huge increase compared to even five years ago, but is still tiny.) In my role at Village Capital, an early-stage investor, I’ve seen that many traditional funders are reluctant to back edtech startups because they have long and complex sales cycles and lower and slower investment returns.
This is a shame because these companies are transforming education, both for young learners and adults. For instance, they are retraining low-income workers, helping college seniors find jobs based on psychometric assessments, and are customizing textbooks to reach special needs students. So how do we get around this catch-22?
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Here are five solutions:
