# The next generation of unicorns will come from the European edtech space
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-09-29
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: How to Catch a Tech Unicorn in the EdTech Sector
Meta Description: Discover why scaling internationally from day one is crucial for European edtech startups aiming to become unicorns in a market dominated by US and Chinese
URL: https://financedigest.com/the-next-generation-of-unicorns-will-come-from-the-european-edtech-spacehtml

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How does one catch a tech unicorn – those elusive startups with phenomenal valuations worth north of $1 billion? It’s no mean feat. 2016 was reportedly a damp squib for such ventures, not least for European based startups, and possessing a knack for spotting rapidly developing companies of this ilk requires a rare level of intuition, nouse and luck.

One thing seems certain; the next corporate behemoth of the same [power as two of the world’s](https://www.financedigest.com/world-coal-power-demand-to-hit-new-high-after-china-india-u-s-surge-iea.html "World coal power demand to hit new high after China, India, U.S. surge – IEA") most successful tech brands (in Google and Facebook) – will almost certainly emerge from the European edtech space. The [global sector itself is already dwarfing the $200m digital](https://www.financedigest.com/the-global-digital-label-printing-market-will-grow-at-a-significant-cagr-throughout-2020-2030.html "The Global Digital Label Printing Market Will Grow At A Significant CAGR Throughout 2020-2030") adverting space, and the market is still in its infancy. [CBI Insights reported](https://www.cbinsights.com/blog/global-ed-tech-deals-funding-q2-2016/) that edtech is forecasted to grow 17% year-on-year to become worth a $255bn sector by 2020. Last year, funding of edtech startups peaked at $3.3bn.

Though the figures are promising, asserting that an edtech unicorn will almost certainly [emerge from Europe](https://www.financedigest.com/exclusive-europe-ready-for-baltics-emergency-switch-off-from-russian-grid.html "Exclusive: Europe ready for Baltics emergency switch-off from Russian grid") might seem like a bold bet when, of the 15 edtech unicorns currently in existence, all of them originate exclusively from the US or China.

As an entity, edtech still remains a relatively new concept for all – from teachers to pupils, ministerial bodies to parents – everyone is still testing the [waters and grappling with the technology](https://www.financedigest.com/the-water-heater-market-to-have-a-technological-escalation-in-its-armor.html "The Water Heater Market To Have A Technological Escalation In Its Armor"). And while the transformative effects of tech-enabled learning have been widely touted to democratise quality education – it’s clear that edtech’s [potential to effect measurable and positive](https://www.financedigest.com/grab-and-go-containers-market-anticipated-to-have-positive-potential-during-the-forecast-period-fmi.html "Grab and Go Containers Market anticipated to have positive potential during the forecast period.: FMI") social change on a wider scale has still yet to be realised.

Yet it’s this very transformative potential that has beguiled China to become one of the biggest investors and pioneers in [education technology](https://www.financedigest.com/impact-of-technology-on-education.html "Impact of Technology on Education") in the world, second only to the US; and this enthusiasm has shown no real signs of abating. In 2015, the Chinese government invested [around $1.07bn USD](https://www.financedigest.com/supercapacitor-market-size-to-worth-around-usd-5979-67-million-by-2026-tmr.html "Supercapacitor Market Size to Worth around USD 5,979.67 Million by 2026 – TMR") into funding edtech deals, and has other plans invest at least an additional $30bn into such ventures by 2020.

For a long while, the US has pioneered developments in this sphere; their dominance in edtech largely buoyed by the power of [Silicon Valley](https://www.financedigest.com/kpmg-stands-by-audits-of-silicon-valley-bank-and-signature-bank-ft.html "KPMG stands by audits of Silicon Valley Bank and Signature Bank – FT"). But as China works hard to futureproofits positioning as a global player, education technology appears to form part of its longer term strategy to shift from its manufacturing-based heartland to a service-based one set out to nurture and attract the very best brains in the world. After all, behind every successful [country lies an educated populous with marketable](https://www.financedigest.com/industrial-degreaser-market-2022-by-global-key-players-types-applications-countries-industry-size-and-forecast-to-2030.html "Industrial Degreaser Market 2022 by Global Key Players, Types, Applications, Countries, Industry Size and Forecast to 2030"), exportable skills fuelling the economy.

So how then is Europe _the_ place to catch an edtech unicorn when the current edtech ecosystem has seen so many outstanding European ventures stall in the layby while their US and Chinese counterparts accelerate past to achieve true scale?

The ventures, the answer lies not in seeking money from the Chinese and US ‘gatekeepers’ but in thinking and acting [internationally from day](https://www.financedigest.com/bloom-uk-celebrates-500-new-members-as-it-looks-ahead-to-international-womens-day-and-launches-its-2022-mentoring-scheme.html "Bloom UK celebrates 500 new members as it looks ahead to International Women’s Day and launches its 2022 mentoring scheme") one. Because European edtech startups cannot [become unicorns](https://www.financedigest.com/gostudent-becomes-europes-newest-ed-tech-unicorn-at-a-e1-4b-valuation.html "GoStudent becomes Europe’s newest Ed-Tech unicorn  at a €1.4B valuation") without scaling internationally, they have to begin this process right at the very start of their long journey.  Whilst their US and Chinese cousins sit back and focus purely on their [home market](https://www.financedigest.com/the-irrevocable-innovation-to-drive-the-ready-to-move-in-luxury-homes-market.html "The Irrevocable Innovation To Drive The Ready To Move In Luxury Homes Market"), European edtechstartups think bigger. They can think [global and play the $255bn market](https://www.financedigest.com/anti-microbial-nanocoatings-market-global-industry-analysis-size-share-growth-trends-and-forecast-2025.html "Anti-Microbial Nanocoatings Market Global Industry Analysis, Size, Share, Growth, Trends And Forecast 2025") to succeed in the long term.

By analogy, we could look [back 15 years at the instant messenger market](https://www.financedigest.com/stocks-claw-back-as-markets-calm-after-evergrande-led-slide.html "Stocks claw back as markets calm after Evergrande-led slide") – a sector once dominated by the big three: Microsoft Messenger, Yahoo! Messenger and AOL Instant Messenger.  Then in 2003, NiklasZennström, from Sweden, and Janus Friis, from Denmark, launched Skype and disrupted these incumbents completely.

While Microsoft, Yahoo! and AOL were battling it out in the US, Skype slowly took over the rest of the world and, by 2010, had acquired around 660 million users. Skype did have better technology. But, arguably, they won not because of the technology, but because they didn’t [focus on the US market](https://www.financedigest.com/organic-fertilizer-market-where-should-participant-focus-to-gain-maximum-roi-exclusive-report-by-future-market-insights.html "Organic Fertilizer Market | Where Should Participant Focus To Gain Maximum ROI | Exclusive Report By Future Market Insights") and succeeded everywhere else first. Would Skype have enjoyed the same success had they started up in the US? Perhaps not, as they would have likely wasted their [limited](https://www.financedigest.com/digestion-resistant-maltodextrin-consumption-to-rise-at-6-7-cagr-through-2029-supply-disruptions-driven-by-coronavirus-likely-to-limit-market-growth-future-market-insights.html "Digestion Resistant Maltodextrin Consumption to Rise at 6.7% CAGR Through 2029; Supply Disruptions Driven by Coronavirus Likely to Limit Market Growth – Future market Insights") marketing funds trying to gain a foothold in an already crowded market place.

One unexpected consequence of Brexit was that the UK [stock market](https://www.financedigest.com/bitcoin-falls-to-22-month-low-as-stock-markets-tumble.html "Bitcoin falls to 22-month low as stock markets tumble") surged in value. This strange phenomenon was a result of a weaker pound and the fact that 77 per cent of the revenue of the UK’s [top 100 companies](https://www.financedigest.com/immunology-drug-market-growth-by-top-companies-trends-by-types-and-application-forecast-analysis-to-2030.html "Immunology Drug Market Growth by Top Companies, Trends by Types and Application, Forecast Analysis to 2030") is generated outside of the UK.  Indeed, Europe has a long history of [creating global](https://www.financedigest.com/global-cryogenic-submerged-motor-pumps-market-to-create-an-absolute-opportunity-of-us-714-4-million-by-2030.html "Global Cryogenic Submerged Motor Pumps Market to Create an Absolute $ Opportunity of US$ 714.4 Million by 2030") giants.  ARM Holdings, a UK [company that develops and designs microprocessors and is one of the world’s leading](https://www.financedigest.com/surgical-imaging-market-2021-global-leading-companies-analysis-revenue-trends-and-forecasts-2027.html "Surgical Imaging Market 2021 Global Leading Companies Analysis, Revenue, Trends and Forecasts 2027") semiconductor IP providers, earned $1bn of revenue last year – 98 per cent of which was generated internationally.  Whilst the US and [China are naturally the world’s two biggest](https://www.financedigest.com/chinas-biggest-air-show-to-display-self-sufficiency-drive-military-prowess.html "China’s biggest air show to display self-sufficiency drive, military prowess") local edtech markets, there are 12 other countries in the world with populations exceeding 100,000. Moreover, many [developing nations](https://www.financedigest.com/four-reasons-why-smes-in-developing-nations-should-embrace-a-cashless-society.html "Four reasons why SMEs in developing nations should embrace a cashless society") have disproportionately large younger generations. Vietnam, for example has 20 million people under the age of 14.

The UK is the third largest market for edtech investments outside of the US and, along other [growing edtech markets](https://www.financedigest.com/dental-implants-and-prosthetics-market-market-to-grow-at-robust-cagr-by-2028.html "Dental Implants and Prosthetics Market Market to Grow at Robust CAGR by 2028") like India, is rapidly stealing thunder and excitement from US-led ventures. That said, the unforgiving UK school procurement ecosystem, which has presented itself as an almost insurmountable barrier to entry for edtech startups, have forced many educational [software vendors to focus their efforts on cracking more amenable international markets](https://www.financedigest.com/document-management-software-market-to-expand-at-a-value-cagr-of-12-3.html "Document Management Software Market to expand at a value CAGR of 12.3%") where appetite, adoption and usage of such technology in teaching is markedly stronger than that seen in Britain.

Considering the lack of accountability and clear inefficiencies apparent in the way government, local authorities and schools spend on educational resources, this is a pity. But as bright UK edtech businesses start proving efficacy and [demand in international territories where the sheer scale of the student population dwarfs that of the US market](https://www.financedigest.com/all-terrain-vehicle-market-demand-supply-growth-factors-latest-rising-trend-and-forecast-to-2027.html "All-Terrain Vehicle Market Demand, Supply, Growth Factors, Latest Rising Trend and Forecast to 2027"), these ventures – bolstered by the powerful community of Silicon Roundabout – could well become the next generation of unicorns. Even in the face of a looming Brexit, the ease with which these businesses and products can be scaled and distributed globally will ensure that the very best of these UK edtech businesses will flourish and thrive despite [economic uncertainty](https://www.financedigest.com/why-a-liberated-cfo-and-fintech-solution-are-a-dream-partnership-for-navigating-economic-uncertainty.html "Why a liberated CFO and fintech solution are a dream partnership for navigating economic uncertainty").

The European and UK edtech scene is impressive, and there is [huge demand](https://www.financedigest.com/title-interventional-pulmonology-market-shows-huge-demand-and-future-scope-including-top-players-2031.html "Interventional Pulmonology Market Shows Huge Demand and Future Scope Including Top Players 2031") for edtech providers across the world. These [opportunities lie](https://www.financedigest.com/new-kids-on-the-block-what-threats-will-neobanks-face-in-2022-and-where-will-the-opportunities-lie.html "New kids on the block: What threats will neobanks face in 2022, and where will the opportunities lie?") particularly in Asian territories where edtech is being used to upskill vast working-class populations. E-learning, online courses and MOOCs are optimizing and democratizing education in ways never before seen. China’s almost unparalleled investment in edtech speaks volumes about its approach to the future – education fuels knowledge, which in turn becomes power.

Education is the key to [driving social](https://www.financedigest.com/tmwi-appointed-by-zeiss-vision-care-to-drive-integrated-paid-social-campaigns.html "tmwi appointed by ZEISS Vision Care to drive integrated paid social campaigns") mobility in a low-skill, industrialized world. It will fuel the success of the individual and drive prosperity for the [global economy](https://www.financedigest.com/imfs-georgieva-sees-darkening-outlook-for-global-economy-rising-recession-risks.html "IMF’s Georgieva sees ‘darkening’ outlook for global economy, rising recession risks"). Edtech is the enabler and its potential is truly vast. [Investors should be excited by the opportunity to invest in European edtech ventures and seek](https://www.financedigest.com/anti-static-foam-packaging-market-booming-segments-investors-seeking-growth-2030.html "Anti-static Foam Packaging Market Booming Segments; Investors Seeking Growth 2030") founders with global visions for their businesses and scalable products. As the edtech market picks up steam, new [global edtech megabrands will undoubtedly emerge](https://www.financedigest.com/global-fuel-injector-cleaner-market-emerging-economies-expected-to-influence-growth-until-2031.html "Global Fuel Injector Cleaner Market: Emerging Economies Expected to Influence Growth until 2031"). Given that the [growth in the market](https://www.financedigest.com/interesterified-cbe-market-growth-future-prospects-and-competitive-analysis-2022-to-2032.html "Interesterified CBE Market Growth, Future Prospects And Competitive Analysis 2022 to 2032") shows no sign of receding, these companies are likely to become, not just unicorns, but some of the most valuable companies on the planet.

For these very reasons – whether social or economic – edtech ventures are not only worthy of additional attention – they are deserving of investment.


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