Education
We’ve analyzed 60 markets to look for great startup opportunities. We gathered size and amount invested to build opportunity scores, then considered falling input costs to pick a few top opportunities to highlight. One of the top opportunities we found was education.
Americans spend roughly $1.2 trillion on education, $400B via private markets and $800B via K-12 public schools. Despite this, only $11B has been invested in U.S. ed-tech startups in the last 10 years!
The recent technological change in education has been LLM-powered chatbots. A student with a 1:1 tutor can outperform 98% of comparable students receiving classroom-style teaching, so LLMs with 3D characters that can mimic human tutors will eventually approach this performance boost. Other technologies that will help AI tutors include emotional comprehension and engagement, visual generation or search to clarify ideas, questions that effectively evaluate understanding, and frameworks to model the ideal next step for students who are learning.
Dropping Input Costs
Costs to train and run AI models have dropped at least 1000x in the last 5 years.
Costs to run high-accuracy live emotion analysis have dropped 100x in the last 2 years.
Large Market
The U.S. private education market is far larger than the U.S. SaaS market, and has far higher positive externalities. Parents investing in their children’s future or adults investing in new skills have far-reaching effects on their families, colleagues, and communities. Despite this vast impact and far larger market, there are more than 2x the number of Series A SaaS companies, and far more total funding has gone to SaaS.
Few Startup Competitors
We found 385 Series A startups in the education space in the last 10 years. In total, they’ve raised $11.4B. Compare that to the U.S. SaaS market, where startups have raised $57B, roughly 5x more. This is despite the SaaS market being 70% smaller than the education market.