ESG Investing

EdTech Adds Powerful Tools for Impact Investors to Achieve ESG Goals

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As schools went remote in response to the COVID-19 pandemic in 2020, they came up against the need to deliver distance learning almost overnight. Online, digital, and AI-based learning tools quickly entered the mainstream, where they continue to grow. Skip to 2021, and the world of education technology, aka “EdTech,” is still exploding.

That acceleration has spawned a growing interest in EdTech among impact investors as the field earns a role as another potentially powerful tool to achieve ESG goals across the board.

Achieving Sustainable Development Goals

For ESG investors, digital learning companies offer something uniquely attractive: opportunities to meet or at least get closer to UN Sustainable Development Goals (SDG) including closing poverty gaps, creating gender equality, and providing a quality education. Schooling lies at the heart of socio-economic development, linked to issues as far-ranging as income growth to positive health outcomes.

Schooling lies at the heart of socio-economic development.

Extending Education’s Reach and Inclusion

Many education technology companies use tech with an aim to increase educational access, diversity, and inclusion. Copenhagen-based Labster lets university students learn science in an immersive and engaging way in order to help democratize access to virtual STEM scientific experiments and reduce the cost of conventional lab experiences. In February, it raised $60 million in a Series C round. Separately, Mentor Collective connects students with mentors from similar backgrounds, targeting first-generation learners and other nontraditional students. Using feedback from students and schools collected during the pandemic, the company recently introduced a variety of changes, such as more sophisticated mentor/mentee matching and an expanded engineering team.

Retraining and Upskilling Employees

Put together, changes in business processes and the demands of new technology have created an urgent need to update employees’ skills. Having successfully raised $12 million in a Series A round last year, digital learning company TRANSFR uses virtual reality to help employers provide workplace training and skill development simulations. Year-old Learn In has technology designed to help employers choose from an online marketplace of courses, boot camps, and certificate programs aligned with in-demand skills such as data science and digital marketing.

Educating Girls and Women

Both for girls in school and women in the workplace, access to educational opportunities is critical to reducing gender inequalities. To that end, Vidcode’s platform teaches teen girls JavaScript using interactive video-creation software. Educational technology startup Entity Academy aims to close the gender wage gap through training, mentoring programs, and job coaching. Relaunched as a virtual program in 2020, the academy aggregates intensive online courses in various tech skills lasting 24 to 33 weeks.

Streamlining Logistical Tasks

Although they earn less attention than digital platforms for pedagogy, teachers also need systems to help run their digital classrooms. Class Technologies helps teachers using Zoom manage day-to-day tasks such as taking attendance, handing out classwork, and grading assignments.

Tracking Investment Capital as It Skyrockets

Education technology is experiencing an undeniably massive infusion of investment capital. US-based companies primarily targeting pre-k to 12, postsecondary, and workforce education markets raised more $3.2 billion in the first two quarters of 2021 alone—far more than the $2.2 billion in all of 2020 and $1.7 billion in the year before.

These investments also come from a wider array of investors, many of whom have grown to recognize the education gaps during the pandemic. This includes NFL quarterback Tom Brady’s support of startup Class Technologies. All told, the EdTech company has raised a total of $58 million in funding since its September 2020 launch.

This substantial infusion of capital and attention makes EdTech a particularly promising target for impact investors. Through this field’s growth, powerful and long-term tools for achieving a host of ESG goals can find the chance to come clearly into focus.

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