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The recent acquisition of French e-learning company CrossKnowledge by US publisher Wiley for $175 million is another example of something that we at Edxus have been charting as a trend for some time: the apparent failure of European institutional investors to recognise the strong case for investment in European education technology.
In contrast, US investors are far more active, and Europe’s best education technologies companies are at risk of being controlled by non-European sources of capital. Another recent example is Danish company Area 9, a world leader in adaptive learning acquired by American education giant, McGraw Hill Education.
With more than 3,000 edtech and e-learning companies currently fighting for market share and investment in Europe, industry consolidation is certainly required. However, with US capital repeatedly appearing as the dominant force, the danger is that, long term, this will stifle European innovation and entrepreneurial attempts needed to drive the market forward, leading to a ‘one size fits all’ approach to e-Learning and digital content that would not suit the European education system.
Not only this, but many of the smaller players in the market are classified as ‘too small for investment’. Without the finance needed to support their commercial and distribution efforts in a European education market that is fragmented and relatively slow to adopt new products, they will falter and die.
What Europe needs is a consolidation vehicle to build European education technology “champions”, or an edtech fund that focuses on early stage funding for commercial opportunities and places an emphasis on companies with true European potential.
This would be sufficient to create scale in the market and will, in turn, attract institutional investors. Moreover, it would not require a huge amount of investment to make a vast difference in terms of the size and scalability of the players involved – a fraction of what is needed for renewable energy investment for example.
Picture “Mooki FAIL” by Chuck Olsen, Some Rights Reserved