Leaders in education technology and investment were asked a simple question in early 2015: what is the prognosis for edtech companies, in the short term and the long term? Two leaders from the investment world and one company chief executive gave answers that, read today, describe the moment when education became a mainstream market for private capital, along with the cautions that came with it.
For district and school leaders, the answers are worth more than a look back. The companies schools buy from depend on investors, and how investors see the market shapes which products survive, how they are priced and how long they are supported.
Capital for edtech companies was not the problem
Clement Erbmann, Managing Director of First Analysis, said there was capital available for funding edtech companies. “Whether it’s short term or long term depends on the time horizon of the investors,” he said. “I think there is ample capital to fund the different initiatives that are going on.”
The real challenge, in his view, lay with the companies themselves: “not all companies have an ability to distinguish what they are selling and what the market is for their product.”
That observation still applies when a district evaluates a vendor. A product that cannot explain clearly what problem it solves, and for whom, is a risk whatever its funding.
A dramatic change in a decade
Joseph Olchefske, CEO of Flex Academies, described how quickly the investment picture had shifted. “Ten years ago there were no significant investment companies devoted to education and the education industry,” he said. “Today, many, if not most, private equity firms have a specific practice around education. It’s been a dramatic change in the past decade.” He added that there were “hundreds of millions, billions of dollars now available in the marketplace for education companies.”
He also drew a distinction between sectors. Investors in higher education, he said, “have probably gotten better returns than those that have invested in K-12 thus far,” because “K-12 has been a slow mover” and “a slow adopter of online and digital tools.” Even so, he saw opportunity: “I’m seeing clear movement around adoption at the school district level of digital tools.”
Was the market a bubble? “I don’t think so,” Olchefske said. Some people would make bad investments, he acknowledged, “but that’s a marketplace.”
A strong but selective market
Bill Bavin, Partner at Chessiecap, described the funding environment for edtech companies as “really very strong.” He said he had logged more deals in 2014 than in any year of his 20 years working with companies in the marketplace, and “the vast majority of them were ed tech companies.” By his estimate, companies raising funding outnumbered companies being sold through a merger or acquisition by about four or five to one.
He expected the funding stream to remain strong, with an important qualification: “It won’t be universal. I still think there’s a degree of pickiness in the market. So that’s a good thing because that means the market’s not overheated yet.” His conclusion: “I think the prognosis remains great.”
Reading the prognosis for edtech companies today
The market these three described has been through several cycles since. The last federal pandemic relief funds for schools had to be spent by March 2026 at the latest, a Congressional Research Service report notes. The basic dynamics the speakers named have not gone away: plenty of money at some moments and less at others, a K-12 market that adopts carefully, and companies that succeed or fail on whether they can say clearly what they offer.
For school and district leaders, that history points to a few practical habits when choosing a product:
- Ask what problem the product solves and for which students and staff, and expect a clear answer.
- Find out how the company is funded and whether it has been acquired, since ownership changes can affect pricing, support and data agreements.
- Plan for the possibility that a tool will be discontinued, including how student data and course materials would be retrieved.
- Judge value by what happens in classrooms, not by the amount of money behind a product. edCircuit’s article on educational technology investments beyond ROI looks at how districts can measure that.
Olchefske described K-12 as a slow mover from an investor’s point of view. From a district’s side, careful buying is also a form of protection. Bavin’s “pickiness” works in both directions: investors choosing which companies to back, and schools choosing which products deserve a place in their classrooms.
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