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4 Reasons I'm Obsessed with Ed Tech Acquisitions
December 13, 2010 - 10:00pm

"Why are you beating this horse to death? I mean how many blog posts about Blackboard getting bought can you possibly write?" (Tim Roberts, comment at 12/13/10 post)

Fair question Tim. I'm not actually only flogging the Blackboard horse. Truth is, I'm obsessed with what the next 5 years will hold in terms of acquisitions and mergers in the ed tech space.

Here are my reasons:

1. Market Growth: Global higher ed is poised for the sort of growth that is hard for us to imagine. The combination of rapid industrialization and economic growth, combined with the incredibly young age structure, translates into a huge growth in demand for post secondary education outside of the U.S. and Europe. India, to take one example, only has enough spots for 7% of college-age citizens. The opportunity to provide higher ed services to the people of Asia, South America and other fast growing regions will be staggering.

2. Small Companies: The ed tech vendor ecosystem can be characterized as fragmented and dynamic. Many of the most exciting technologies come from relatively small companies. TechSmith, ECHO 360, Kaltura, ShareStream, Sonic Foundry, Desire2Learn, DyKnow, LearningObjects, MoodleRooms, Panopto, Respondus, are all amazing companies - but will they be able to survive the vicissitudes of the ed tech industry? I'm betting we will see an accelerated path of mergers and acquisitions over the next five years, as companies seek to build market share, increase revenues, and lower costs in order to ensure long-term viability.

3. Scale: The 3rd reason I think we will see accelerated merges and acquisitions is one of scale. Small companies will find it difficult to work in a world market, and big companies will need the ideas, technology and people of small companies to grow beyond traditional businesses. Microsoft, Google, Cisco and others will grasp the potential of the educational market, and look to acquisitions of small ed tech companies to quickly meet these opportunities.

4. Risk: The coming wave of ed tech acquisitions and big company strategic investments is not all positive. It is at the small ed tech companies where innovation is occurring and the new products are being developed. Being acquired can be the surest way to kill a culture of experimentation. But the other side of this story is that big companies can afford to take big risks. Who amongst us has not thought that Google could disrupt the ed tech market in the same way it has disrupted the market for productivity applications (Google Docs) - funding free learning management tools via search advertising?

This is a good time to invest in the ed tech sector. This will be a great time to work in educational technology.

 

 

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