The education technology industry is having a moment. When Covid-19 lockdowns sent 1.7 billion learners home, leaving teachers, schools and governments scrambling to figure out how to make sure students kept learning, online education resources like Khan Academy and Coursera suddenly became household names.
Some are already cashing in. Among them is Quizlet, a free digital flashcard and study tool site, which just raised $30 million in a series C round of financing that values the company at more than $1 billion.
In Silicon Valley parlance, that makes Quizlet a unicorn. But CEO Matt Glotzbach doesn’t want to be an imaginary flying horse. He prefers the analogy of a camel.
“They can survive in the harshest environments,” Glotzback told EdSurge. “They can go for long periods without food and water.”
And: “When camels do get to a watering spot, they can guzzle water faster than any other animal on the planet. But they make it last.”
Quizlet joins a small but growing group of ed tech unicorns, including ByJu, an Indian tutoring company now worth close to $6 billion, and Yuanfudao, a Chinese online homework and tutoring platform that in March raised $1 billion, the largest amount of capital ever raised in a single round by an education company anywhere in the world. In April, Coursera, the US-based online platform offering courses and credentials from more than 150 universities, raised $103 million, bringing it to a value of more than $1.7 billion.
Venture capital for ed tech has grown 14 times in the last decade, from $500 million in 2010 to $7 billion in 2019, according to HolonIQ, a market intelligence firm (it peaked in 2018 at $8.2 billion). That’s less than one-tenth of the overall venture market, which was about $100 billion in 2018, according to CB Insights.
Over the past decade, China attracted 50% of all the VC funds for ed tech, compared to 20% for the US and 10% for India. Europe represented only 8%.
Quizlet’s success may be due to its simple logic and slow growth. It was founded in 2005 by Andrew Sutherland, a 15-year-old East Bay high-school student who was trying to pass a French class. His dad offered to make him flashcards, but he opted to write a program for online flashcards. He aced the test, his friends loved the tool, and the company was born. It grew slowly with no venture capital or outside money and was profitable by 2009, Edsurge writes. In 2015, with 40 million monthly users, it raised $12 million in a series A round.
The camel metaphor apparently comes from VC Alex Lazarow, author of Out-Innovate: How Global Entrepreneurs – from Delhi to Detroit – Are Rewriting the Rules of Silicon Valley. His philosophy challenges the growth-at-any-cost mindset, calling instead for slow and steady growth, accompanied by cost management. As online education companies race to meet rising demand, picking the camel over the unicorn may well be a counterintuitive choice.