The textbook growth journey for online tutoring
The pandemic created the biggest forced experiment in education in generations. As schools and universities shuttered the world over, edtech was hailed at the plug and play answer to isolation learning. The reality, however, is that the adoption of full-remote or hybrid learning environments has not been seamless.
For 18 months students have suffered from unfinished school learning and the loss of personalized interactivity and mentorship. In the US, by the end of the 2020-21 school year, K-12 students were on average five months behind in math and four months behind in reading. This difference is even more significant in students from historically disadvantaged backgrounds.
Disengagement and schooling loss could hurt the economic well-being of this generation of students, who now risk losing $17 trillion in lifetime earnings in present value, or about 14% of today’s global GDP.
Broad consensus would say that digital tools can never replace personal schooling, but as parents, educators and governments look for the most effective and scalable ways to boost student engagement and catch up students on missed learning, tutoring solutions are uniquely suited to tackle the educational challenges in a post-Covid era, and take advantage of a $8T opportunity.
We mapped 50+ Online tutoring startups.
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Tutoring funding finding a new home
VC funding for in tutoring startups per key edtech markets
VC funding in tutoring startups has gone from $835M in 2016 to a combined $11B in 2020 and 2021. The increase has been led by megarounds such as those for Byju, GoStudent, and Yuanfudao. Prior to 2021, the vast majority of the investment was directed towards Chinese startups. Due to the recent Chinese crackdown, the landscape has shifted putting China’s lead at risk. In the last couple of years, European startups gained more traction.
🇨🇳 Yuanfudao – the largest online live course platform servicing primary and secondary school students in China – $4B of total funding.
🇮🇳 Byju’s – online learning platform intended to deliver engaging and accessible education – $3.5B of total funding.
🇨🇳 Zuoyebang – enables students to upload their homework questions and search for answers for their study-related problems – $2.9B of total funding.
Most funded European tutoring startups:
🇦🇹 GoStudent – digital platform that connects students to teachers in a virtual learning environment – $653M of total funding
🇺🇦 Preply – language learning marketplace, connecting tutors with learners – $55.4M of total funding
🇬🇧 MyTutorWeb – connects students with tutors online – $36.5M of total funding
Hunger for online learning is growing
Tutoring is a vast market, and it comprises test prep or exam factories (known as cram schools), private tutoring (or shadow market), one-to-one or one-to-many online tutoring classes and gamified apps/platforms.
Tutoring was already taking off before the pandemic, however, demand has since skyrocketed. Digital tutoring is now projected to grow $153B from 2020 to 2025, at a 15.8% CAGR. While the private tutoring market is forecast to reach $201.8 Billion by 2026.
East Asia is the biggest market by far as tutoring has become an integral part of the educational system of many Asian countries. About 80% of South Korea’s primary school students have access to after-school support, while 90% of Japanese students get private help at some point in their education.
While Asia is the hotspot, other markets are starting to heat up. For instance, in Egypt, about one-third of children get tutoring lesions in the first five years of schooling. In the UK, the share of students aged 11-18 year-olds who say they have received private tutoring increased from 18% to 27% in 2019.
The socio-economic education gap
The private topping up of public education is nothing new, but the cost incurred have previously been prohibitive for many.
The discrepancy in accessing tutoring solutions can widen inequalities between high and lower-income families. In the UK, the non-profit Sutton Trust found that 34% of the high-income parents had paid for extra classes, compared with 20% of the low-income ones.
But while for private or in-person tutoring the average hourly rate in 2019 was between £30 – £60, depending on experience, location and success rate, market leader GoStudent charges a range of £19.20 to £29.60 per lesson, depending on the type and duration of the learning plan.
As parents and schools further rely on tutoring, online tutoring alternatives are in a unique position to offer inclusive options for kids from low-income families, kids with disabilities and those in regional or rural areas lacking resources.
Government x Edtech
To understand just how much impact government regulation can have on startups and entrepreneurship, look no further than Edtech in China. Notoriously, China’s crackdown on tutoring banned the services during weekends and holidays and forbade providers from making a profit.
Market cap of the top Chinese after-school tutoring companies
Policymakers in other nations have also sought to ensure fair and accessible tutoring, without banning it altogether. Japan and South Korea have included public alternatives to private cram schools and experimented with financing schemes.
In Europe, the UK has set aside￡1B (about $1.3B) for tutoring programs in primary and secondary schools through the National Tutoring Programme (NTP) initiative. The Netherlands also approved new funding for tutoring, though schools are free to decide whether to use the funding for tutoring or other pupil services.
As parents and educators shift their perspective on academic support, the demand for after-school support most likely won’t wane once classroom learning resumes full-time.
There are a few reasons why affordable online tutoring is likely to remain in high demand:
- Globally more children are enrolled in primary and secondary education than ever before. Especially in the global South, parents worry that the quality of education will deteriorate as a direct consequence of increased enrolment rates. Thus, paying for top-up teaching is one way to compensate for this learning loss.
- With the increase in enrolment and completion of the 12 years of school, competition to enter top universities has grown more intense. After school tutoring can hold much appeal as a way to achieve academic goals.
- The pandemic has put at risk personalized interactivity and mentorship. Tutoring is about connection and dedicated time for each student to explore their interests.
While after-school support in the form of online tutoring is in a pioneering phase, there are several more areas of edtech innovation we’re also keeping an eye on, from teacher support to study notes. If you are keen on sharing insights or collaborating with us to further expand our research on this topic, please reach out, and keep up to date with our regular Edtech updates by subscribing to our newsletter: