Edtech startups: Where’s that unicorn?
It is every parent’s favorite time of year: Children are going back to school. However, beneath the excitement of buying new lunchboxes is an undercurrent of worry this year. Will we face weeks of distance learning again? It’s likely. The good news — like it or not — is that education technology is having a major moment in the Middle East and North Africa. EdTech startups: Get your highlighters out.
The pandemic gave a boost to online learning, but it seems the habit is here to stay. Shireen Yacoub, CEO of Edraak, the first Arabic open online course program backed by the Queen Rania Foundation, saw a 158 percent uptick in users from March 2020 until year end. They now cater to over 5 million adult learners and about 70 percent are logging in on smartphones. In a region with high smartphone and internet penetration (over 90 percent), EdTech has a major opportunity in a part of the world with a social media-savvy, young population. Sounds great, right? But there are systemic issues that need to be addressed before we pass out the gold stickers.
“Imagine a family with four kids: Who gets the smartphone? Access to devices, data bundles and reliable internet are crucial to access platforms, solutions and content,” said Yacoub. “This is what deepens the equity gap and why it’s critical to leverage public-private partnerships.”
Despite additional challenges including fragmentation and digital payment blocks, there’s a ripe opportunity for EdTech startups looking for government or VC funding. My research led to staggering figures: 50 percent of the world’s out-of-school children — that’s 150 million kids — are in the MENA region, according to a 2021 Global Ventures report.
Nafez Dakkak, managing director and CEO of the Queen Rania Foundation’s UK office, writes that “the total addressable market is significantly larger if we factor in the reskilling and upskilling of adult workers needed across MENA as a result of the fourth industrial revolution.” This is particularly true in the Gulf, where rapid digital adoption demands an agile future workforce.
Dakkak says that “global EdTech platforms like Coursera and Udemy also have over 15 million users from the region alone — and this demand is translating into investment activity.” Last year, five regional EdTech startups received over $20 million in total funding, according to MAGNiTT. And yet, we don’t have an EdTech unicorn in the Arab world yet.
“We are yet to see a significant number of exits in education (certainly in MENA, but also globally),” explained Dakkak. “That is starting to change more rapidly (not least because of the pandemic). Examples include Coursera’s IPO earlier this year and Duolingo’s impending IPO.”
Local startups, including Noon Academy, Lamsa and Baims are taking note. Lamsa, which caters to young children, has the largest reach with 17 million users to date.
“The market size of the pre-school digital learning opportunity is no less than $2 billion with only a handful of players capturing it,” said Badr Ward, CEO of Lamsa. “I am extremely optimistic that ‘EdTech’s sleeping giant’ is about to wake up. I expect 2022 to be a disruptive year for the EdTech landscape across the region with mass adoption, consolidation, and deals similar in size to fintech.”
Ward projects the market size of digital learning to reach $1 trillion in 2026. Between now and 2050, the world will have 2 billion more learners, according to the Global Ventures report. With all this promise and change, there’s no doubt that regional EdTech startups are poised for growth. We just have to be ready for the pop quiz.