Benjamin Vedrenne-Cloquet (pictured) and Charles McIntyre are co-founders of IBIS Capital, a London-based investment manager split across various operations, partly investment and partly giving advice. But the whole focus of the firm is on media, health and education technology.
It is on the last that Vedrenne-Cloquet has focused, establishing the EdtechXGlobal platform, a whole ‘ecosystem’ play for EdTech globally, from which the firm not only produces research, thought leadership and networking events, but also originates and executes investment opportunities.
The platform and ‘ecosystem’ play mean that Vedrenne-Cloquet gains access to the decision makers and a proprietary deal flow in the EdTech space, he says, with recent news that he is linking up Google Education and nine other organisations to set up a new London EdTech Week (19‑23 June).
Other investments from IBIS Capital include Primo Toys, which creates toys for toddlers to learn the rudiments of coding, where Vedrenne-Cloquet is chairman and invests alongside Randi Zuckerberg, Mark Zuckerberg’s sister, and former development director of Facebook. Another investment in the portfolio is Learnlight, an online learning company, chaired by Charles McIntyre and backed by Beechtree Private Equity.
Vedrenne-Cloquet says: “We do the EdTech deals on a deal by deal basis and we are planning to create a specific listed vehicle which invests in both Education and EdTech. We think it is largely under invested by institutional investors, if you look at the USD5.2 trillion education market globally.
“In comparison, it is three times the size of the entertainments sector and growing at 8 per cent a year, driven by fundamental macro trends such as demographics, emerging markets growth and accelerated obsolescence that creates a need for upskilling and lifelong learning.”
“Within education, the sub-set of EdTech is 2.5 per cent, (ie USD130 billion globally), of this big market which is small compared with what we observe in other industries such as media, where digital spend is already 30-40 per cent. There is huge 15 times potential growth.”
“I think education is one of the last content industries being disrupted by the digital revolution and tech reinvention. The takeaway is that everything that has happened in other content industries will happen in the education industry going forward, so it is all very predictable.”
Vedrenne-Cloquet predicts that organising platforms such as Netflix and Amazon will move into education.
“Platform players will recommend personalised content,” he says. “And another example is the globalisation of content and curriculum. With digitalisation comes global competition and the opportunities for brands to compete and expand globally, in the same way as we saw global brands merging in other industries. Education is embarking into an unprecedented phase of simultaneous consolidation, globalisation and digital reinvention. This creates a unique window for investment opportunities.
If the tip of the iceberg in digital education is the emergence of global online higher education platforms such as Edx or Courser, there is even deeper and more disruptive innovation happening in the primary/secondary school markets and in the corporate training market.
McIntyre says: “The profit comes in a number of different ways. Historically, there is always profit in education, but the modern version is the supply of tools supplying schools or universities, teachers or individuals. Digital mobile learning and distant learning are so much greater than it ever was. We have an environment where we will have an additional enrolment of one billion students in the world by 2035.
Vedrenne-Cloquet says: “What people don’t see is if nothing is done to make education more fluid and personalised then the massive skills gap is going to impact the global economy. It could be a USD10 trillion threat to the global economy from lack of marketable skills and people now need lifelong training and are willing to pay for it.”
He sees two segments of the market which offer early digital transformation opportunities. Firstly, the international school market is not only a large, fast growing and profitable global niche, but also an early adopter of EdTech on an international scale.
The international school market is a USD36 billion market, and fragmented, with much higher profit levels than any other segments, he says. This market will double in the next 10 years, driven by demand for international education in emerging markets and the globalisation of curricula. The spend in technology per student in this segment is 10 times more than in any other schools, so this is a good proxy to capture both stable earnings plus the upside potential of technology disruption in education, he says.
Secondly, he points to the technology bootcamp market. “Tech skills are hot and scarce skills everywhere in the world and so new generation training centres focused on those are blossoming everywhere,” he says.
“Bootcamps focus exclusively on skills that are in demand in the job markets such as coding and digital marketing. They use a blended learning approach, combining a mix of short stay residential training with innovative digital delivery. They deliver a much higher ROI for students. Some of them have truly disruptive business models where the tuition fee is deferred and calculated as a percentage of the student’s first job salary. This is a USD3 billion, fragmented and profitable global niche likely to multiply by three or four times in the next 10 years.”
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