Tuesday, December 30, 2014

2015: The New Higher Education

Brookings commentators see rapid emergence of new Higher Education models in 2015. (see here)

This is a reasonable expectation, given that so much money has gone into the sector since 2011, and some of the models should now start maturing - and VCs looking for exit - and delivering the goods.

The change is already in the air. The College for America has somehow set the benchmark tuition fee rate at $10,000 for the entire undergraduate degree and there are a number of ventures seeking to replicate that. Udacity starts the year by launching an University by Industry, one by Silicon Valley for Silicon Valley, by breaking down the college credentials into 'nanodegrees' (see here). As predicted in the Brookings piece, new MOOCs are also emerging - more credit bearing programmes focused on fee-paying students - and a slew of innovative tech-enhanced models coming into the market.

The big frontier of all the change is still the emerging markets. There is not much happening still, with most of education venture capital and technology shying away from the twin problems of regulation and bandwidth so far. But, given the population growth in these markets, this is where the action will be. I see more ventures focused on these markets in 2015, and the local education offerings strengthening and receiving new investments.

On that front, I believe that the ventures coming out of the emerging markets have a greater chance of winning there. This is self-explanatory: The emerging market companies are better in dealing with constraints (like bandwidth) and psychologically able to deal with ability-to-pay issues (even $10,000 in India is like $55,000, based on Purchasing Power Parity, hardly a disruptive figure). As is the case in other sectors, one may see emerging market companies leapfrogging in technology and business models - and getting into the export mode, initially leveraging their own diaspora in different regions. 

Indeed, there will be more action outside the For-Profit space, particularly in the emerging markets. The governments in countries like India don't treat education as one of the areas government should get out of: There is a new wave of nation-building sentiment and one would expect to see more state action on this front, both in setting up new colleges and universities, and in investment in other support areas, such as teacher training. Governments are also becoming smarter with technology and I wouldn't necessarily rule them out in terms of new applications of technology in furthering their objectives.

 




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