Artificial intelligence is increasingly used in day-to-day life and business. What is the situation in the EdTech industry? How will online education with AI be developed? Which startups and technologies are worth following? Evgenii Chebotov, co-founder of the international venture capital club Prosto VC, tells us.

According to the research company Fortune Business Insights, the market will reach $433.17 billion by 2030.

In the field of education, startups largely built on AI have already started to appear. So far, there are not very many of them, as the field is just beginning to develop.

Coursera

The learning platform was founded in 2012 by Stanford University computer science professors Andrew Eun and Daphne Koller.

It provides students with online courses that lead to certificates and degrees in various fields and cooperations with universities. As of 2022, the platform has 118 million users.

The company received B Corp certification in February 2021, which means that it is legally responsible not only to its shareholders but also to society as a whole.

Coursera’s revenue for 2022 was $524 million. The company’s last investment round was in July 2020 and $130 million was raised. At the time of the round, the company was valued at $2.5 billion.

The company uses AI to improve its learning tools, such as automatic assignment checking and personalized course recommendations for students.

edX

It is an online learning platform founded in 2012 by Harvard and MIT. It was created as an experiment to make better education available to everyone. 

Today, edX is part of 2U, Inc. The purchase deal is classified, so there is no public valuation of the company. The platform offers online courses from various institutions to the audience. It partners with various organizations from around the world, from academic institutions to multinational corporations.

EdX uses AI to analyze data and improve the quality of learning. For example, the company applies machine learning algorithms to analyze student behavior on the platform and provide personalized recommendations to improve their learning. In addition, edX uses AI to analyze large amounts of data to determine which courses and programs are most effective for students.

Duolingo

An online language learning platform. The company offers users courses that include a variety of assignments, from speaking to tests. Duolingo offers language skills certification, among other things. 

The company was founded in 2011 by the Captcha inventors Luis von Ahn and Severin Hacker and now has over 60.7 million users worldwide and is based in Pittsburgh, Pennsylvania.

Duolingo uses AI in its products to improve the learning experience. For example, it uses machine learning algorithms to analyze student behavior on the platform and provide personalized recommendations to improve their learning. In addition, Duolingo uses AI to analyze large amounts of data to determine which courses and programs are most effective for students.

Duolingo is also using artificial intelligence to create its English test. The company applies machine learning algorithms to tests that can be customized to a student’s proficiency level. This allows it to provide more accurate results.

In December 2019, Duolingo’s valuation crossed the $1 billion mark. Duolingo’s latest revenue was $293.5 million in 2020, according to Crunchbase.

DreamBox

American provider of online software that specializes in teaching math to elementary and middle school students. DreamBox Learning was founded in 2006 by serial entrepreneur Lou Gray and former Microsoft employee Ben Slivka. The company provides more than 2,000 lessons presented as animations and personalized student intervention programs. 

GetLatka’s website states that DreamBox Learning earned $21.4 million in 2021.

The total value of funds raised from investors by the company is $175 million, according to Crunchbase.

DreamBox Learning utilizes Intelligent Adaptive Learning technology that adapts in real-time to each student’s every action both within and between lessons. This technology allows the company to personalize the educational process for each student, taking into account their level of knowledge and ability.

MagicKids

A gamified educational platform for children. Officially launched in 2022, founded by Anatoly Scherbakov and Marianna Alpatova.

Magic Kids helps children ages 4-8 learn math, logic, and English through 3D video games, making the learning process more exciting and engaging.

Since its founding, the company has raised $320k from Exploration VC, Ocean Capital, and Sunstone VC.

Today, Magic Kids has over 5k active users in the US, UK, Canada, and Australia.

How to Build a Portfolio

Investors who are interested in EdTech should seek to include 20 or more companies. These should be both early-stage companies (pre-seed, seed), where the growth potential and risk factors are high, and late-stage companies (stages C, D, Pre-IPO), where the potential is lower, but the risk component is also low.

It’s essential to pay special attention to startups that are trying to radically change the existing order of things or processes – to create disruption. They may develop a unique technology – for example, using neural networks to improve the quality of education, or have a unique business model – for example, paying a student’s tuition fee not immediately, but These startups are appealing to investors because their level of ambition and technology may allow them to control the entire market or or modify it significantly.