What is behind the $3.5 billion invested in ed tech in 2015? Victor Hu, Global Head of Education Technology and Services Investment Banking at Goldman Sachs, took the audience at LearnLaunch’s 4^th Across Boundaries conference on a tour of that bubble. Here are some takeaways to keep in mind as you prepare for SxSWedu next month in Austin.

According to Hu, the investor base is broadening. While we’re still in the early stages of making ed tech a mainstream vertical, the proliferation of accelerators is giving investors more options and investment rounds have gotten bigger (think Clever). Here’s why:

·         Low interest rates + massive capital + lower startup costs + the existing tech infrastructure = changes in behavior and mindsets. For example, social, mobile and cloud technologies had to be consumerized before they could be seen as viable for education.

Given investors' increased comfort with ed tech, what opportunities are likely to pique their interest?

·         The growth of professional training programs (think General Assembly and Lynda.com) and alternative credentialling. Investors are aware that “the half-life of knowledge shortens every day” and that a significant number of recent graduates and working adults will be looking for ways to learn new skills.

·         The growth of the Chinese education market. There are 415 million Chinese millennials. Hu estimates the value of the private education market at $154 billion and the global SAS market at $133 billion.

·         MOOCs were expected to upend higher ed, but now higher ed is being unbundled (think competency-based learning and boot camps). This point was attached to a cautionary note: a Master’s degree has more economic value than ever before. New alternatives must become just as valuable as the degree. It’s possible that traditional institutions may adapt before that happens.

·         K12 ed tech is back. The vendor-school-teacher-student-parent loop that investors have traditionally avoided is looking more attractive with the emergence of new tools that interweave data, homework, messaging, teaching tools and collaboration tools. The race to own the next major education software platform is on. (NOTE: the 2016 Education Industry Symposium is all about the platform & other components of the Next Gen Ed Tech Ecosystem. Learn more.)

·         Investors are rethinking how the market could work (think microschools like AltSchool and global/immersive programs like Minerva Schools).

Donelle Blubaugh is the Education Programs Manager at the Education Technology Industry Network (ETIN) of SIIA. Contact Donelle for information about ETIN’s Vision K-20 survey, U.S. K-12 Market survey, Innovation Showcase program or Diversity Initiative.