A Partnership Industry for Impactful Ed-Tech

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Educational technology, or ed-tech, shares some crucial similarities with fintech. In both markets, products and services are sold across B2B, B2C, or B2G models, and both markets draw on data (and increasingly AI data) to increase efficiency and reduce the costs of established processes. But there is at least one fundamental difference between ed-tech and fintech: for a technology to count as educational, the market needs to be run as a partnership industry, where developers, educators, researchers, and students actively work together to develop, implement, and scale what works. Such partnership not only fosters the kind of inclusive resource sharing that would prioritize marginalized groups and embrace diverse perspectives, but only through such collaboration can ed-tech be elevated to prioritize education over technology.

A failure to grasp the essence of ed-tech’s collaborative model has hindered the market’s ability to make a positive impact on students for the past 10 years, as outlined in a recent UNESCO GEM Report: Governance and regulation for all ed-tech, including emerging AI tools, is necessary to safeguard against the replacement of teacher-led instruction and ensure quality education. Moreover, ed-tech’s customers are often vulnerable users, particularly in the case of children with special educational needs or those from disadvantaged backgrounds. It is therefore imperative to provide them with high-quality products that have documented evidence of positive impact.

Unlike fintech, therefore, ed-tech quality is best secured through a dual approach of regulatory enforcement and financial support. Financing is important to ringfence money for researched impact before investing in business scaling, and regulatory enforcement for minimal quality standards is also essential before tools reach children’s hands. Yet the existing push and pull dynamics within the ed-tech market lack cohesion, resulting in an uneven distribution of decision-making regarding ed-tech’s impact. Indeed, the lack of public leadership and financial incentives has positioned investors as not only economic but also political actors whose investment priorities speak to quality questions of the entire ed-tech ecosystem. To ensure that educational impact becomes the focal point of investment decisions, current impact management in ed-tech needs to rely more on transparent research than on private hypotheses.

Fragmented Impact Ecosystem

The problem begins with data. How ed-tech funders demand, report, and define impact varies from investor to investor. For example, Owl VC assesses its portfolio performance using metrics related to scale, access, diversity, and outcomes. Another large US-based investor in ed-tech, Reach Capital, evaluates the impact through ratings from scale, access and quality. There is no standardization in reporting or collating impact data by ed-tech VCs, making comparison between reports difficult.

The demand for documentation of an ed-tech’s impact varies also from country to country and school to school. In the US alone, despite a nationally mandated ESSA framework of evidence, districts differ in how they procure ed-tech for schools. Some districts demand ESSA-certified products, while others don’t. Some request pedagogical evaluations of ed-tech quality, often checking for certifications like ISTE or Digital Promise. Additionally, some districts have piloted a health-care-inspired “value-based pricing” model (the so-called “outcome-based procurement”), by which an ed-tech company's contract is dependent on positive student outcomes.

Amidst numerous certifications, badges, and over 74 frameworks for evaluating ed-teech, there’s a risk of creating an evidence marketplace rather than an evidence-based market, in which certifications and quality evaluations become a numbers game rather than genuine commitment to researched impact. Moreover, if impact is solely determined by investments, there is a risk of imposing normative visions of education shaped by a privileged few (those with resources) rather than emphasizing the true purpose of education, which is to serve as an equalizing force to address inequities.

Here are four ways to unite the ed-tech impact ecosystem:

1. Align impact pathways with global imperatives

While optimal impact metrics need to be individualized to a company’s mission and product design, they should also contribute to more than one of the UN’s 17 Sustainable Development Goals (SDGs). The "5Es of impact," efficacy, effectiveness, ethics, equity, and environmental impact, are the key impact indicators in educational interventions and all five align with the SDGs. However, impact investors and auditors should consider the interplay of these pathways rather than concentrating solely on one impact goal: while a company may demonstrate excellent efficacy results, if its achievements lead to environmental harm or ethical concerns, its overall impact is compromised. Hence, achieving balance across these pathways is preferable to excelling in just one aspect.

2. Focus on the weight of evidence rather than its type

The US evidence market is shaped by the ESSA agenda, a state-mandated framework of evidence that categorizes evidence into four tiers based on the medical model of evidence. The highest tier or level is equivalent to a randomized controlled trial, which is considered the most reliable form of evidence that something works. However, this model is not universally preferred. Even within the US, where the ESSA evidence model has the longest history, many critics highlight the concern that the stringent RCT criteria undermine the role of teachers in influencing an ed-tech’s value in classrooms.

By contrast, the learning sciences model reflected in the Edtech Evidence Evaluation Routine model includes assessing internal and external validity, and is applicable to both quantitative and qualitative evidence. Funders should thus focus more on the quality of evidence rather than solely on the type of evidence when making investment decisions.

3. Favor responsive and relevant impact metrics

Impact is a two-way process: companies should be subjected to audits but should also be considered as partners who can contribute new ideas for impact measurement and understanding. Funders should therefore recognise and reward policy-related and innovative impact metrics, both those that are aligned with current standardized international assessment schemes such as PISA and also those that also accommodate the impact of latest GenAI tools. The Nordic Research Council introduced impact metrics to its grantees such as policy influence practitioner training, and contribution to a national consultation. Many ed-techs actively engage in such impact work, such as the LearnLab’s co-funding of the ARC Collaborative that brings together international ministries of education around educational innovation.

4. Prioritize collective expertise for impact

In the early growth phase of a company, there’s often a preference for advice from practitioners rather than from qualified researchers, driven by the belief that practitioner input enhances sales and the fear that research could impede scaling efforts (whether because of the time research takes or the risk of negative results that research carries).

However, it is precisely during the seed stage that the input of qualified researchers into impact metrics becomes crucial for companies. Successful ed-tech development for K12 requires a combination of expertise from curriculum specialists, UX and LXD designers, and psychological or developmental experts. A strategically coordinated pool of practitioner and research mentors capable of offering support at all stages of ed-tech growth (development, scaling, implementation, and validation) is essential for all impactful ed-tech initiatives, and should be more systematically embedded in ed-tech accelerators, incubators and venture studios.

An Ecosystem of Impact

Aligning return on investment (RoI) with learning impact (return on education, RoE) and social impact (return on community, RoC) can ultimately help the ed-tech environment become an ecosystem—or even a distinct biome—which clearly differentiates it from fintech.

The financial viability of such a partnership industry can be secured through various co-funding initiatives. For example, academia-industry collaborations with schools can be funded through public-private partnership models that reduce costs, as both districts and ed-tech companies contribute to the cost of testing the technologies in schools. Collaborative partnership models between researchers and companies can be boosted with micro-financing (for example, in the form of allocated research budgets to the companies) and subsidies to local ed-tech initiatives, tailored to their stage and size. Foundations and governments can achieve greater impact through joint funding initiatives (for example, the Tools Competition is co-financed by Schmidt Futures, The Walton Family Foundation, the Bill & Melinda Gates Foundation, and AlleyCorp). The key to ed-tech’s sustained positive impact on children in the long run will be a successful financing model that hinges on all stakeholders embracing a mindset of “unite and align” rather than “divide and conquer.”

Read more stories by Natalia Kucirkova.