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?
Here are five solutions:
1. Startups: Conduct research before you launch.
Cell-Ed, which teaches low-income workers literacy and other skills through mobile phones, conducted a two-year pilot study to prove effectiveness before launching. Apprendis, which has developed a virtual science lab and automated assessments for middle schoolers, grew out of a decade of research and recently received a grant to continue its R&D.
2. Corporations: Partner with startups.
Many education corporations are pouring money into R&D, and also want to be connected to startups as future potential partners or acquisition targets. For example, McGraw-Hill estimates that it spent $175 million on digital development and operations in 2015, in part from a large R&D office in its Boston headquarters. It also acquired at least four edtech startups in the past four years, which would then have access to these resources.
3. Students: Link up with edtech startups.
There are thousands of education PhD students who need to write a thesis in order to graduate. By matching them with promising startups, they can conduct research for free (or at a low cost) and provide startups with data to demonstrate efficacy. If the data is not positive, startups can use what they learned to iterate.
4. Universities: Create school pilot consortiums.
As entrepreneurship gains traction nationwide, schools are eager to connect their students to job opportunities. Most startups don’t have the budget to recruit on college campuses but only 14 percent of college grads want to work at big companies. By creating a school partnership, vetted startups could be matched with colleges and universities that are willing to serve as product development test beds while also providing students with internships, jobs, and knowledge.
5. Investors and Government: Build R&D into funding structures.
A new model of investment would earmark some of the capital a startup raises for R&D. Having a new structure that both incentivizes investors (through tax write-offs, such as the R&D Tax Credit) and startups (by earmarking funding ) would allow companies to get the validation they need early on for user acquisition and retention.
TThe good news is that educators are eager to get involved in the product development process. Events like EDUCAUSE and the LearnLaunch conference bring educators and startups together in the same room, often helping startups create products that educators actually want.
While there has been some progress, more emphasis needs to be placed on R&D for early-stage startups. By rethinking current investment models and moving towards one that mirrors what is being done in other industries like healthcare, the edtech industry could improve the way it incentivizes startups to grow.
And maybe, if we’re lucky, the robots won’t win.
