Updated: Apr 27, 2021
A veteran tech consultant explains why international markets are opening up to blended learning solutions
There's no doubt that education technology is a booming industry. Earlier this year, Smart Learning Markets predicted that the edtech sector would post a compound annual growth rate of 19.5% over the next five years. According to Michale E. Spencer, there are two crucial reasons why much of that growth will happen outside the U. S.
Spencer, General Partner of Global Expansion Strategies, an international investment and advisory firm that helps early-stage education technology companies expand internationally, has decades of tech experience. His professional journey started in Silicon Valley, where he created and marketed consumer tech, then moved into founding and co-founding companies that he expanded aggressively, both domestically and internationally.
When the QuickPAD, a simple, portable electronic word processor he had developed with a friend, was enthusiastically embraced by teachers as a mobile word processing and typing tutor, he dove into edtech. His global perspective was broadened during the years he spend developing and executing international sales strategies for multiple education technology companies including edtech giant K12.
What Spencer sees in the current market is that American schools of all typles are facing a "continuously challenging lack of funds." At the same time, edtech companies are grappling with fragmented decision-making among their K-12 customers. As Spencer explains, "You've got decision-makers at the state level, at the district level, at school level."
The result is a lengthy sales cycle. The longer a sale takes to complete, says Spencer, the more likely companies are to find themselves at the end of that cycle and a have a customer say, "Sorry. We had the money before, but now we just don't have the money. " This sort of uncertainty can be devastating for edtech companies trying to earn enough regular revenue to stay afloat. Spencer's solution, in parallel to the US domestic market, is simple: look for sales overseas.
Growth of the International Market
As the middle class grows in developing countries around the world, so does demand for education. To meet that demand, Spencer says, many countries are relaxing their regulations on the use of education technology that isn't from their country. A prime example is countries now allowing local education institutions to offer multiple programs from outside education companies, giving students the ability to receive additional education in areas that they otherwise would not have access to.
As a result, where Spencer once advised clients to start their international sales efforts by approaching private schools that had more easily accessible funding, the much larger playing field of public schools is now opening. Still Spencer cautions companies against going to a new country and "hiring all sorts of people and spending a lot of money. You don't know what the outcome of that is." Instead, he counsels them to research the local education market and look for strategic channel partners that are already in the country they're targeting.
First, though, they need to seriously consider whether there is a real and sustainable demand for their product outside the U.S. "Many times, I've seen edtech companies with great technologies go internationally focused 100% on the academics, neglecting the business side of it," Spencer says. "They'll do a great job for a year or two, but befin to experience problems starting in year 3 - ultimately having to either abandon or revise the initial market entry strategy.
What Works Overseas
Spencer is especially bullish on products that focus on ESL, ELL, STEM, robotics, career & technical education and related certificate-based programs. That being said, an actual robot or any other physical component that has to be shipped presents challenges. "I really like to work with online companies," he says, "but if there are books, kits, or any other kind of hardware device that's attached to it, it makes it very difficult - but possible with local procurement or manufacturing options."
In order to finance the leap into international sales, Spencer recommends that companies have "a healthy net profit and two to three years of solid organic growth. Those two variables can offset each other as long as there is a commitment to invest in the roadmap, invest in the product, invest in the sales."
Spencers' other key to success in the international marketing is supporting a blended learning model. As cautionary tales, he cites online English-teaching companies that guarantee that they can teach users to speak the language within 90 days, but fail to deliver due to lack of human connection. "In order for any kind of technology to be used inside an education institution," Spencer says, "it has to be implemented in a blended learning model, where you have a combination of online and hands-on involvement. Purely online will not accomplish the most desired student outcomes. For those who are attempting to go internationally, it's very important that you understand that."
Spencer's parting words of wisdom to companies that are dipping their toes into the international market? "I would say understand the specific education market that you're going after and make sure that you're filling a need. If you're going to fill a need, make sure that your product has the features to truly accommodate the most desirable student outcomes."