Reskilling & Upskilling: An EdTech Opportunity

There’s a growing opportunity brewing for EdTech founders to expand their focus on large companies, rather than just K-12 and higher ed. The need for reskilling and upskilling in corporate America and beyond is gaining significant traction, as all eyes are on a potential $8.5 trillion talent shortage predicted by 2030, during which more than 85 million jobs may go unfilled globally.

EdTech companies could be well-positioned to fill this need, with many already having the infrastructure, platform, knowledge, and tools to aid companies in their push to train and retrain employees for future needs.

What’s driving the demand for upskilling and reskilling?

There are key drivers behind the substantial stats calling for more support in skill building and training. Forbes recently called skill gaps ‘the biggest threat to your future.’ Of learning and development professionals, 64% of respondents to a LinkedIn Learning report said that reskilling the current workforce to fill skill gaps is a priority now.

In addition, the large majority of companies worldwide (87%) are aware that they either already have skill gaps or expect to within a few years, according to McKinsey, which has reported extensively on the importance of building skills-first organizations. Recent data suggests that employers think this situation is actually getting worse — possibly making it a good time to provide solutions to concerned companies through EdTech opportunities.

The rapid and dynamic technology advancements, including pandemic-based progress and AI improvements, mean that since 2015, the necessary skill sets for many jobs have changed by 25%, according to a LinkedIn Workplace Learning report. In just four years, some employers estimate in an World Economic Forum report that number will be closer to half of employees. In addition, an EdX survey in 2023 predicted half of the current workplace skills won’t be necessary in just one year.

These numbers point to employee retention concerns, as those who aren’t sure where their future might lead can rest assured that their current employer is investing in enhancing their skill sets — a mutually beneficial investment. In addition, as AI owns more of their core workflow, increasing anxiety around AI overtaking their position opens the door for training good employees towards more relevant skills and may relieve them of automated responsibilities AI can and will take over, for improved efficiency.

What types of training should EdTech founders consider investing in?

In a world where the future is undefined and there seems to be no known bounds to how far AI will impact necessary skills, it can help EdTech companies to zero in on the types of training most valuable to corporations. This could inform EdTech founders of where they share the most overlap with corporate training and how they could possibly expand into serving that audience for their own future growth and for potential M&A opportunities.

For a sample of what’s possible, consider what already exists, such as Medium’s 40 major players in EdTech-based workforce development, which includes names like OnDeck, TestGorilla, STRIVR, CareerKarma, and others. Of these, nearly half are European-based, but all sell globally. Most have been around for an average of 5 years, and 18 are new to the field and considered ones to watch.

Their upskilling and reskilling categories generally fall into six areas, including:

• Coaching: Leadership and management education to help employees reach full potential
• Career Navigation Infrastructure: Talent mobility, which is important on a societal level, includes platforms helping employers invest in scalability with their own teams without breaking the bank by sending them back to school or to costly training programs
• Skill Assessment: Going beyond an end of module quiz, the future of skills assessment can use AI to dig deep into true analysis and comprehension of a new skill, even into application
• Skill Development: Teaching vocational, technical, and managerial skills to help with retention by helping employees become stronger employees and managers
• Collaboration: Helping existing and future teams to stay connected, organized, and on the same page while also improving their ability to work together
• Applied Learning: Personalized pathways and modules often help employees apply specific skills to their current duties or future capabilities.

Many EdTech companies have the technical foundation and educational processes to deliver on needs more specific to corporate training, as it’s essentially just another form of education. Founders who consider these training categories and see the overlap within their own technology could open the door to potentially larger audiences and prospective M&A opportunities.

What current trends impact EdTech M&A?

Those looking to buy or invest in this current landscape, where upskilling is becoming non-negotiable, are looking for EdTech solutions with specific attributes that are aligned with newly expected trends.

• Corporate universities - These are gaining momentum, functioning much like vocational training but tailored to the needs of major companies (like Google). In today's rapidly evolving job market, these on-going internal educational programs offer a compelling solution as corporations strive to attract and retain top talent. These programs are particularly appealing to those seeking skill development that aligns directly with industry demands, making them a relevant and timely trend.
• Configurability - The ability for an EdTech offering to customize a program and adapt to certain needs is key, rather than more generalized education as corporations needed in the past. Virtual reality and AI functionalities have been increasingly helpful with this, ensuring the ability to customize, adapt, and easily replicate training based on each employee and company’s needs.
• Learning management systems - LMSs are improving at delivering more engaging content, a necessity as corporate training continues to move far beyond in-person conferences and basic modules. AI has allowed increased customization, and immersive, AI-based simulations are much more dynamic and interesting than traditionally unrealistic role-play-based education.
• Verticalization - Finally, more niche and industry-specific options can deliver targeted value, as long as the financials of specific investments make sense to EdTech founders (namely, that they are replicable enough to prove profitable).

EdTech founders considering the threats and opportunities of expanding their audience to include the growing corporate training sector should take these types of training and current trends into account. The key is that an educational or training platform should be configurable enough to address a company's specific needs, but replicable enough across industries that they can address a significantly larger audience, seeking to drive more growth and attract M&A interest.

Final tips on timing

As the EdTech and upskilling possibilities come together, moving faster than predicted, EdTech founders might consider making a move to a possible M&A transaction earlier rather than later in this market. There are many potential winners and success stories in the future of using EdTech for upskilling and reskilling, so EdTech founders focused on developing these capabilities and moving into the corporate world in the next 2-5 years may be early enough to capitalize on this trend, while also leaving time to do so in an intentional way that would be more likely to attract future potential M&A possibilities.

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