Amit Patel: What Does it Take to Survive the Challenging Edtech Markets?

“There’s a billion more students that are going to need to be educated, and education technology is going to play a very significant role, and how that is possible.”
– Amit Patel
The Edtech landscape is quickly evolving, and with alarming headlines that claim 2023 is the ‘Funding Gap Year’ for the sector, our podcast guest takes us behind the curtain and shows us that despite challenging markets, the growth potential that exists is remarkable. Amit Patel is the Managing Director at Owl Ventures, one of the world’s largest dedicated Edtech venture funds, with over $2 billion invested in the global Edtech ecosystem, and has led investments with some of the most well-known Edtech brands. On this episode of the On Work and Revolution podcast, Amit’s forward-thinking perspective sheds light on the confluence of factors that promise a bright future for the sector, including government support and escalating demand for digital education solutions.

Debbie & Amit dig into:

✓ The current state of the Edtech market and its potential for growth.
✓ Factors influencing the Edtech market, including increased government support and the shift toward digitization & personalization.
✓ What makes a good investment bet in today’s market, and how has that changed over the years.
✓ Insights and strategies for entrepreneurs navigating this competitive arena.

About our guest, Amit Patel:

Amit has been deeply involved with a variety of firm-building and investing activities across Owl Ventures since the firm was founded. He has served on the board of directors and led investments in many of the world’s leading education technology companies, including Codecademy (acquired by Skillsoft), RaiseMe (acquired by CampusLogic), Securly (acquired by Golden Gate Capital), Thinkful (acquired by Chegg), and Whitehat Jr (acquired by BYJU’S). He works closely with Amira Learning, Apna, Authoritive, BYJU’S, Fiveable, Genially, Honorlock, Kuali, Leap, Mighty Networks, Panorama Education, Splashlearn, SV Academy, Swing Education, and Tinkergarten, including being a board member for some of the companies. Amit has experience scaling several education companies and is actively involved in helping Owl’s portfolio companies reach a global audience, create high-quality solutions, and become world-transforming. He takes a hands-on approach in helping companies across numerous functions, including distribution, strategic partnerships, talent, fundraising, M&A, exit planning, and outcomes measurement.

Before joining Owl Ventures, Amit founded Personal Academic Trainers, an afterschool tutoring company, and created the quality assurance program and institutionalized sales training for Mathnasium Learning Centers, an after-school math learning center franchise with 1,000+ locations in North America, South America, Europe, the Middle East, and Asia. Amit also served as the Director of Technology for Success Academy Charter Schools, a premier charter school network in New York City with 45+ schools. Amit sits on the National Board for uAspire, a nonprofit organization ensuring that all young people have the financial information and resources necessary to find an affordable path to and through college.

He received a B.A. in Mathematical Economic Analysis from Rice University and studied theatre/film at The New York Conservatory for Dramatic Arts and New York University. Amit was an Education Pioneers Graduate School Fellow, a Pahara-NextGen Fellow, and he earned an M.B.A./M.A. in Education from the Stanford Graduate School of Business and Graduate School of Education.

Helpful Links:

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Open for Full Episode Transcript

Open for Full Episode Transcript

Debbie Goodman  00:00

Welcome to On Work and Revolution where we talk about what’s shaking up in the world of work and Edtech. I’m your host, Debbie Goodman, and I’m the CEO of Jack Hammer Global, which is a global group of executive search and leadership coaching companies and I am an advocate for creating amazing workplaces where people and ideas can flourish. And today, I am joined by Amit Patel, who is managing director at Owl Ventures, one of the world’s largest dedicated Edtech venture funds, with over $2 billion invested in the global Edtech ecosystem. And Amit has led investments with some of the most well known Edtech brands out there, Code Academy RaiseMe, Securly, Thinkful, Whitehat, which have all now been acquired by other companies, they have all exited. And now he’s involved as a board member, for the next wave of growth companies Amira Learning, Honorlock, Leap, Mighty Networks, Panorama Education, it’s a long list. But Amit is not your typical venture guy, he’s actually founded and operated companies. So he’s been in the trenches, which is probably what makes him such a compelling investor. Before joining Owl Ventures Amit founded Personal Academic Trainers, an afterschool tutoring company. And you also work with Mathnasium Learning Centers. Now, I was not surprised to see that Amit has an MBA from Stanford GSB. Because that’s just like a rite of passage, right. But I was a little surprised, hold on a second, to know that Amit you studied theatre and film at the New York Conservatory of Dramatic Arts and New York University. So I’d love to know about that journey from theatre to education. But I’m gonna have to save that question for a bit later, because we got a lot to talk about. Today, we’re going to be talking to Amit about the current state of the Edtech markets, what his take is, what he believes are the key variables that will determine who is going to survive these somewhat challenging, tricky, tricky times and tricky markets. So welcome, Amit. 


Amit Patel  02:14

Well, thank you, Debbie, thank you very much for having me. I’m excited for the conversation that we’re gonna have today and really appreciate you kind of putting all this together. 


Debbie Goodman  02:22

Well, let’s get right into it. So where are we on the Edtech growth trajectory? Because I’m seeing headlines like this is Edtech’s funding gap year, and valuations are at an all time low, and other alarming headlines like that. So we went through this massive spike during COVID. Where are we now? 


Amit Patel  02:47

That’s a great question. And I think the way that we kind of continue to believe in the sector as well as you know, kind of think about it is, if you take a step back, like education is the second largest industry in the world, it’s second just to healthcare. That’s the first thing and right now, maybe a single digit percentage of the spend in education is on digital technology. And if you look at other more mature sectors where technology has had the chance to be kind of involved in that sector for a longer period of time, you see the fact that tech spend on technology is significantly higher than that. And so the runway that is kind of left in the Edtech sector is quite significant. And I think you combine that with the fact that second, you also have a number of governments around the world, that are both shifting budgets, as well as policies to kind of further support education technology. And what I mean by that, just to kind of give a few examples of that is, you know, let’s say in the US market, for example, right, you rewind the clock back to 2010 and it’s less than 10% of US K12 schools had access to high speed broadband internet. Now, if all of us think about, well, where was the direct to consumer market at that time? Or what do we expect in the corporate sector at that time? And it’s kind of mind boggling to think about like that was the current state of what the US K12 system looked like at that time. You fast forward to 2020. And, you know, high speed broadband Internet access is much, much more ubiquitous at that time. Also, you know, kind of over this last decade, you’ve had things like Chromebooks and iPads and Kindles and other mobile devices kind of enter into school systems. And so that has kind of basically only over the last decade, you actually have the infrastructure in place for education and technology to actually be adopted. Right. And we’re not only seeing this in the US market but if you start to go overseas and you look at, let’s say, Germany, and you look at how they’re thinking about allocating budget, or you go to places like India, and you think about their national education policy, and there’s real dollars that countries are putting behind the digitization of schools, as well as policies that they’re putting into place that are further supporting increased spending on digital tools, and kind of further supporting the education technology sector. So I think that’s the second point that I would make in terms of where are we on this like trajectory for Edtech. And then the third thing is, there’s just a fundamental, you know, kind of shift in student population that’s going to occur over this coming decade. And what I mean by that is, over this next decade, you know, there’s going to be something like 800 million plus K12, students like more than what we have today, there’s going to be close to something like 350 million post secondary students more than what we have today. So you know, there’s a billion more students that are going to need to be educated and education technology is going to play a very significant role, and how that is possible. Because the way that that’s been done to date is, is going to have to shift and a lot of that has to do with the fact that, you know, we are living in much more of a digital economy, we’re living in much more of a global economy than we ever were. And the pace of change that’s happening right now, is causing somebody who’s thinking about having a multiple decades successful career to say, Hey, I’m not just done with like, kind of learning what I need to learn in order to remain competitive in the workforce, when I’m done with, you know, K12 education or when I’m done with college or something like that, you actually have to think about becoming upskilled, and re skilled and continuing to keep up with all of these advancements. And that’s another place where education technology is going to play a very significant role. And so, something that will add up, what I would say is like those macro tailwinds, that kind of support this sector are still quite strong, and we believe, paint a picture of, you know, kind of having this type of multi decade opportunity, still very exciting for for this sector. 


Debbie Goodman  07:20

Okay, so you just painted a picture that, first of all, I haven’t heard much in the media lately, that definitely sounds extremely bullish and exciting and obvious. I mean, if you look at the numbers, and you look at the percentage of uptake in terms of digital technology in the sector as a whole, even in the US, nevermind everywhere in the world, why then the latest round of I wouldn’t say pessimism, but just deflation, it seems around investments, valuations. Are the markets just oversaturated for where they are right now, why the current state of affairs? Yeah, I think the current state of affairs is I would say that’s not unique to Edtech, right? I think if you’re looking at just the general state of what is happening in investments, what is going on with IPOs? What is happening in the m&a world right now. And I think, you know, let’s just take the IPO market, for example, in the US now, this is not true everywhere in the world. Like I think different markets are reacting differently. But, you know, in general, you’ve seen like this general pause that’s happened when it comes to all sectors like relatively going public. Similarly, you’re starting to see that kind of happen at more growth, stage investing, and things like that, as well, too. And, you know, I think when you view markets, you have kind of a few different ends of the spectrum, where on one end of the spectrum, and this tends to be in very kind of bullish types of markets, you are seeing a lot of investors that will value growth, kind of at all costs. And that’s like, kind of what is prioritized and what tends to get funded. And then I think in a, in a market that we’re in today, you’re seeing this play out in the public markets, is the fact that folks are not saying just grow at all costs, but it’s yes, we want to see growth. But we also want to see what is capital efficiency look like? What is potentially profitability look like? And what is the path to self sustainability look like? And so there is that kind of dichotomy that exists right now. And a premium is actually placed on companies that are able to showcase the fact that they’re not only growing, but maybe there’s a path to profitability, or maybe there’s a path to self sustainability and things like that. And again, I think it’s a little bit different based on whether you’re talking about the US market, or let’s say other parts of the world. And then also what sub sector of stage of investing, you’re talking about as well, I think that like kind of you’re seeing what’s happening in the public markets, and that’s starting to influence what’s happening in the private markets and the growth stage tends to kind of mimic more similarly, what’s actually happening in the public markets because that’s the stage that’s actually the closest to going public potentially and so you’re seeing that have the greatest impact and then you’re seeing that kind of start to play out in, let’s say, middle stage and early stage investing as well. 


Debbie Goodman  10:06

Okay, so we’ve got on the whole, a very bullish positive outlook on the sector, in terms of the macro outlook, sort of balanced by a bit of a more a more realistic view on what a good investment could look like for a venture fund, or any other investor for that matter. Based on, you know, a few years ago, if you just had a good growth story, that would be enough to attract investment and get a great valuation. But now we’re seeing actually, you kind of need to show how you’re going to monetize this stuff, we kind of want to see what your revenue is looking like, and maybe even, tadah… profit, wouldn’t that be a nice idea. So sounds like there’s a good balance of realism coming into the market to a degree. But that does make it a little more tricky for those innovators out there who are really who’ve got the amazing ideas and haven’t yet figured it all out and haven’t yet got a track record and haven’t yet got product market fit. So my question is, has your investment thesis changed at all in terms of what looks like a good investment bet? 


Amit Patel  11:13

Yeah, I’d say we’ve actually been fairly consistent on this. And it’s not that kind of this year or last year, we’ve meaningfully changed exactly what that specifically looks like, I think some of the qualities that you just mentioned stand, were true, you know, let’s say several years ago, and still remains to be true today in the types of investments that we’re looking at. And so what I mean by that is, you know, there’s, I would say, three overall categories that we’re looking at whenever we’re actually making an investment in any company. And so the first category is the business fundamentals. And I think our philosophy when we are looking at companies and thinking about investments is, you know, what does that growth trajectory look like? And what has that looked like, historically, as well as what are you thinking about from a projections basis? I think to balance that out, we are thinking about, well, what is the capital efficiency of the business or what is the scalability of the business look like? And so we are interested in things like unit economics, we are interested in things like retention metrics, and what is NPS score look like with your customers, because that’s probably going to be indicative of how many of them are going to actually continue with you in the future. I think we also couple that with like, kind of what is the thesis around the long term competitive advantages that this company has, right, because in some cases, you might be a first mover, and then you’re going to assume that there’s going to be others that might enter the market that look similarly to you. Or in other cases, you might be going up against incumbents, and you’re trying to actually replace them. And so kind of having a strong thesis in terms of what does it actually mean, in terms of that long term competitive advantage. And then the other category is, the way that we think about it is, so we’re not only investing in the idea, but we’re also investing in the founder. So what I would say is like that, that second category is like the the team that’s founding this company, who is it that is starting this, what’s inspiring them to start this if there’s multiple founders, like kind of what’s the relationship between the founder, and we very much view this as a long term partnership between ourselves and the founders, as well. And, you know, on average, it’s like, you know, most venture investments are held for seven or eight years, in some cases can be longer than a decade. And so that is something that that we also look at. And then the third category, I would say, is, you know, a thesis around efficacy or outcomes, you know, it’s our belief that the companies in the sector that will be the most valuable, the most scale, the longest lasting, are going to have some type of direct impact on learner outcomes. Now, you know, at an early stage company, we certainly don’t expect them to have some type of RCT, third party study or anything like that. But we want to understand what does that look like? How important is that to the company? And what is their belief and kind of what they’re doing to actually have some type of outcomes and efficacy. And so those in general, I would say is like, kind of what we’re what we’re kind of thinking about. And that framework has remained relatively consistent since since we started out and one that we kind of still adhere to today. 


Debbie Goodman  14:16

Okay, so just to summarize there, just to make sure that I’ve understood it, is business fundamentals and the idea, okay, we’ll put those together, then the founder and the founding team, the people who are going to drive this forward. And then the fact that the product or the service or whatever the business has to actually make an impact in the sector in terms of learner outcomes, it can’t just be nice to have thing. How does that differ from having impact on learner outcomes differ from the business fundamentals? 


Amit Patel  14:44

Business fundamentals is I think that’s true. You could be looking at a category that’s like outside of Edtech, and you could be talking about things like unit economics, or you could be talking about things like retention metrics. I think what is true specifically for the Edtech sector is the fact that you are also interested in kind of outcomes and measurement and things like that, right. And so I think like, that’s how we kind of distinct, make those two distinct. And what I would say is like the tricky thing is, you know, maybe finding something that at the early stages might show some type of promise on the business outcome side. But then in the long run, the question is, like, does it actually have the type of impact that you want the company to have? Or on the learners outcomes journey and things like that? Or is this a company that is going to be able to get to some level of scale, but then because of let’s just say, retention issues or things like that, it’s going to be tough to actually scale this beyond a certain point. 


Debbie Goodman  15:43

Okay, so now I have to bring in the conversation around generative AI, I was wondering if there might have been a way to avoid this, but no, we have to have this conversation because when we talk about learner outcomes, perhaps an investment that may have looked amazing in 2020, or 2021. Now with the possibilities, the opportunities, the capabilities of generative AI, potentially are being leapfrogged by newer products and offerings in the market? How are you handling that with your current portfolio where they clearly are now being outpaced or you can see that unless they somehow manage to incorporate some kind of AI generative AI offering they are dead in the water? What are you doing about that? 


Amit Patel  16:28

The intersection of AI and education is something that we have actually seen for quite some time right now and in fact, we have companies since our first fund that have actually sat at the intersection of AI, and education. Now, the innovation that’s come with generative AI is obviously newer. And so that type of innovation is something that is something that we are seeing now kind of being incorporated into new companies that are getting started, as well as existing portfolio companies that we funded previously, I would say we are we’re definitely very much at the beginning stages of what’s going to be possible with generative AI, but like some of the applications that as you think about the education sector, which I know you just kind of cited that are actually going to be possible. One is obviously content generation and kind of the impact that generative AI can have on content generation. The second I would say is on personalization. And the idea of actually creating a more personalized journey for a learner that takes into consideration what is the next topic that that might be most appropriate to introduce them to? Or what is kind of the way that we should think about their proximal zone development and kind of how to take that in consideration. I’d say a third area that you know, kind of is the use case that does come to mind is, you know, some type of assessment and kind of taking significant amount of analytics, or a significant number of data points and kind of having that come down to being understood by the educator or whoever the instructor is, and kind of helping them assess what is comprehensively going on with the student, rather than having spending hours of time themselves analyzing it, leveraging this technology to help them do it in a relatively short period of time. So these are just some of the use cases that we’re seeing emerge right now, what I would say is like, I think we are at the beginning stages of understanding what’s actually going to be possible with this technology. And what is going to be kind of some of the most exciting applications of how this is going to be leveraged in the education sector. I think we have been excited from our perspective. And we’ve made a number of investments at the intersection of generative AI in Edtech. And, you know, what we’ve been excited to do is back companies and teams where there is a founder there that does have deep understanding of what is possible with generative AI as well as a deep understanding of the sub sector that they’re applying that to within the education sector. And so looking for that kind of expertise to exist on that founding team is something that we’re we’re particularly excited about. And like I was saying before, I also think what we’re seeing is our existing portfolio companies. And this is not just, again, unique to the Edtech sector, but the technology sector, every technology company out there is thinking about how to incorporate generative AI into their tech stack. And that doesn’t mean just user facing as well like that’s internal facing as well. And how are your employees interacting with that and how are you thinking about again, becoming as capital efficient as you can be, or as process efficient as you can be so that you can continue to remain competitive?


Debbie Goodman  19:43

Okay, so, I mean, that really makes sense. But then to dovetail into the, what do you look for in terms of new founders, perhaps entrepreneurs who are now in the capital raising phase? Is that one of the key variables that you are looking for, an awareness and insight, at least an intellectual curiosity, some kind of exposure to what generative AI can do for that product or service. Somebody in the leadership team who’s got some additional insight into the current wave of AI progress? Is that a question that you ask? Is it part of the evaluation criteria or because I, so here’s what I see. I mean, we’re an executive search firm, I would have expected by now that when boards are appointing CEOs, or CEOs are appointing anybody in their leadership team, that that by now already should be a capability that we’re looking for in our leaders, and certainly in entrepreneurs, and certainly in the tech sector. you can’t, to me, it feels absolutely obvious that we have to be developing skills as leaders and founders and leadership teams that have awareness, insight, knowledge, ability to see how this technology, even if it’s not a fundamentally core part of your product, you need to know about it. So that was a long winded way of saying, Are you asking these questions of the new wave of entrepreneurs who come in with the, with the begging bowl?


Amit Patel  21:12

So I think we are moving actually so fast in this particular category, that we are quickly moving to a place where AI is almost becoming expected and table stakes in. And so I agree with what you’re saying in the sense that, like I said, it’s not just the new companies that we’re seeing that are kind of talking about how they’re going to incorporate AI into their offering, but it’s also every single existing company that is thinking about that. So what I would say is, it is certainly part of the discussion. And it’s almost surprising if it’s not something that someone is kind of talking about. However, it’s also in a lot of cases, it’s not the like the only distinct factor right now there are some companies where it is really sitting at like the kind of intersection of AI and EdTech, where there is something specific to AI and the way that they’re approaching it and what they’re doing. And so it’s more of what I would call like an infrastructure play, as opposed to like kind of leveraging other tools that maybe others have created. I do think that there is that little bit of distinction. But you know, if I look at other trends, like I think we’re quickly migrating to a place where shortly after AWS became very popular, mobile applications became very popular. It wasn’t like, you know, entrepreneurs were coming in and saying, oh, and we’re gonna have a mobile app, right? Like, it’s just like, of course, you’re gonna have mobile app like, that’s, of course, you’re gonna be on, you know, some type of cloud infrastructure, like that’s expected, right. And so I do think we are moving into a world where it’s like, of course, you’re going to incorporate some type of AI into your offering. Now, let’s have a discussion about it. But that can’t just, it can’t be that I’m incorporating AI as my differentiating factor. 


Debbie Goodman  23:00

Right. Okay. So that sort of phrase, it’s just table stakes now is so interesting, because usually, we see a much longer trajectory in terms of a new technology becoming, becoming a trend, and then slowly working its way into the ecosystem in some way. Now, it’s like table stakes. If you’re not already thinking about using somebody else’s plug in or having your own thing, then you’re like way behind. So it’s a bit like saying, Yeah, we’re using the internet to communicate. 


Amit Patel  23:27



Debbie Goodman  23:28

Okay. Last question, in your mind, for entrepreneurs who are already VC funded, who are worried about the next rays are starting to burn through cash, are really struggling to pivot and pivot and pivot. What do you think, are the key variables that determine survival in a market like this right now, despite the fact that the big picture looks amazing, we’re in 2023, the markets are tough, and there’s less cash going round. So and there’s less exits there, fewer exits, and the IPO market still hasn’t, I know, there were three new IPOs this month, but that’s not you know, there’s not enough. So what are the key variables in a nutshell? 


Amit Patel  24:13

Yeah, so I think first and foremost is understand what is the current situation of the market, right. Now whether that means where are folks placing premiums on and I think as as we discussed before, it’s not a grow at all cost mark like market anymore. It’s yeah, they want to see growth but then they also want to see some type of path to profitability or sustainability, especially when you’re talking about like, public markets. The second piece on that is like understand where multiples are today, right. I think we are in a different market, when it comes to multiples across all industries compared to where we were a few years ago. The third I would say is kind of course correct in terms of understanding that information and then setting yourself up for success when it comes to the fundraise that you’re going to do so in some company’s cases that could mean, hey, how do I think about growing my revenue to a higher number? Because, you know, these are the goals that I had in mind and amount of capital that I wanted to raise that are the valuation that I was hoping to raise that and like, make sure that you’ve taken that information in consideration, as you’re thinking about, when is the right time to actually go out and do that fundraise and, and kind of get those data points and benchmarks so that you can make that informed decision and you’re not surprised when you go out to market and be like, Oh, well, I clearly there’s a disconnect here and where the market is today versus my expectation. So that’s, that’s point number one. I would say point number two is, every company is thinking about runway and spend at the moment. And one of the biggest components of that is usually talent. Right? And so really thinking about what talent do you have on board? And if there are significant changes that you are making right now? Do you have the best team possible to help you make that change in the fastest time possible, and in the most capital efficient way possible? 


Debbie Goodman  26:06

Okay. Can we just pause there a second, I would just like to applaud and clap to that one. We’re an executive search firm. Yes to talent. Okay. Yeah. All right.


Amit Patel  26:16

Absolutely. That’s the second place that that that I would say, you know, kind of think, be thoughtful. And then the third, and I think this, this is true in this market. And this is also true in let’s say, a more bullish market, is continue to really understand what it is that your customers like want, right. And I think, you know, you can almost never like kind of spend what I would say is like too much time really understanding that in detail, because those insights are going to be critical in terms of a allowing you to retain those customers for a longer period of time, b potentially expanding with those customers, because, you know, the best thing that you could almost have happen is your customers are coming to you and saying, Hey, we love you so much. You’re doing such a great job at this. And this is the other things that we would love for you to build for us. And if you did, we would buy those from you, right? And so like kind of having that type of insight is going to kind of continue to deliver dividends when it comes to how you think about creating and continuing to sustain long term competitive advantage, which is that I think one of the most difficult things to do as a company. 


Debbie Goodman  27:29

Well, lots of challenges, the market has shifted, but it does force entrepreneurs to really dig deep and make sure that it’s not growth at all costs. I know we had a time when that was just fine. But that has passed, that wave has passed us now. Possibly gone for the next however long, maybe forever. What we’re left with is an amazing sector that has got such an incredible big picture growth story. I loved what you said at the beginning of the conversation just around how much runway there actually still is how what a huge trajectory there still is. And so I think for entrepreneurs who are listening and who, you know, I’m an entrepreneur myself, and there are times when you just go Can somebody just give me a break? Or why is this taking so long? Or really another pivot? And yeah, the opportunisties. stick to it and keep digging deep and keep doing all the things so it’s really great to to hear your very, very bullish view on things. So I mean, thank you so much. It’s been a great pleasure to have you thank you for sharing your insights. Hope to have you on the show again. 


Amit Patel  28:34

Thank you. Thank you for having me. This is great and really enjoyed the conversation with you as well.


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