Are You in It for the ROI or the VOI?
Have you thought about stashing away a few dollars to get your money working for you?
Investors have long advocated for real estate as the number one way to make money.
Buy, rent, flip – property management has always promised riches; after all, it’s a $15 trillion per year commercial market in the United States alone. However, no matter how good you are with shiplap, the fascination with it will eventually wane.
Education technology, on the other hand, shows no signs of slowing down. Edtech has drawn plenty of attention, but how it’s being used is changing.
The next wave of edtech is the result of meeting workplace need. Many investors agree. International edtech funding stood at nearly ten billion dollars in 2017; only a small proportion of this funding went to schools.
Measuring ROI in edtech
We’re drawn to technology for two reasons: its novelty and its promise to yield more of what we’re seeking. In this case, we’re looking to improve education and make a profit in developing and delivering edtech solutions.
Edtech costs can be challenging to measure. Bringing digital solutions into the classroom can come with hidden costs, and these costs vary depending on the country of incubation and the size of the school. Europe has the lowest hidden costs at $157 per pupil, and the US has the highest at $220 per pupil. For a small school, that could translate in $30,000 difference in hidden costs.
Numbers like these can make edtech seem like a poor investment in schools. There’s little guarantee that edtech will generate the profit investors hope for. That’s why many edtech develops focus instead on workplace solutions.
Solving workplace problems
Continued training is necessary for employee success. Employee training remains one of the largest costs of any business, but edtech lowers that cost by replicating lessons and providing anywhere-anytime training. Edtech training can be efficient, cost-effective and engaging, making software like AR and VR highly desirable.
Businesses may require that their employees learn a foreign language, take online courses, or learning to operate new equipment. That’s where immersive technology, knowing how to code, and even uploading training certifications in a learning management system come in.
The demand draws edtech designers, and the likelihood of increased ROI attracts investors.
The ROI can be huge, especially when you consider that the training has hidden expenses and may not even be consistent from session to session. To measure effectiveness, businesses evaluate not only employee performance and retention, but also company morale.
More than an investment in things
The greatest ROI in edtech, however, is immeasurable. In fact, it isn’t about an ROI at all – it’s the VOI, the value on investment, that matters most to some investors.
While it’s true that some edtech has a lower ROI than other types of technology, we should also consider what we can’t put a price on: student achievement. It’s hard to predict the value of educating tomorrow’s leaders and problem-solvers, but most people agree that the investment has a long-reaching impact.
If you still want to be an edtech angel investor, you’ll have to decide the real purpose for your investments. Are you investing for yourself or in the future?