5 Predictions for the New Year

Everything from a muted IPO market to an explosion of AGI-powered startups

We love making predictions, and what better time than the New Year, when we’re slightly hungover from NYE, reflective of the past, and optimistic for the future.

The next decade will be the most disruptive one for education in decades—possibly since the 1960s and 70s.

There are massive demographic shifts happening in education, from enrollment cliffs to teacher pipeline shortages. Meanwhile, advancements in AGI will continue to disrupt how students learn and how educators teach, meaning that our traditional ways of teaching—from memorizing math facts and focusing on outcomes over proficiency—will be more irrelevant than ever.

Here are our 5 Predictions for 2024:

1. Proliferation of EdTech startups

We’re seeing tons of early stage startups taking off in the past 6 months, largely fueled by leaps in AGI and its relative democratization. Startups are developing awesome MVPs at extremely low development costs and with high velocity–everything from generating feedback for educators to creating content for teachers at point-of-use. The startups we’ve talked to are opting to boot strap for longer because they can build so, so much faster. The much anticipated launch of the Chat GPT store this week is also going to allow these startups to tap into hundreds of millions of users. TBD how effective the user acquisition is, but even a tiny conversion provides proof of concept for founders.

We’ve seen startups leveraging LLMs to generate adaptive assessments, grade-leveled readers, standards-aligned lesson plans—you name it. The field is only going to explode further.

2. Little to No IPO Action / Lots of M&A:

We’re skeptical that many EdTech companies will IPO in H1 of 2024 or even H2 of 2024. Interest rates are still high, the market is still hungover from the IPO party of 2021, and public EdTech firms in particular have underperformed: Udemy is trading at half their IPO price, 2U is trading at a 1/13 of their IPO price and 1% of their pandemic high, and Coursera is currently at less than half their IPO price.

Some of the companies we expected to IPO on the sooner side, like Multiverse and Guild, will likely kick those back. Get ready to see some Series E, F, G funding rounds.

We do think M&A will take off in 2024 (after one of the most lackluster M&A years in recent history). Instructure’s acquisition of Parchment and Brightwheel’s acquisition of Early Learning Center are emblematic of what 2024 will look like: More vertical integration as companies move up and down the value chain. Some companies will try to acquire companies ahead of 2025 IPOs (although this strategy won’t be as popular as it was in a low-interest rate environment), and some will shutter their doors completely.

3. The End of Small Colleges

15 non-profit colleges closed their doors in 2023, and 47 since 2020. Even more, such as Bloomfield College in New Jersey, were acquired or merged. The end result will be fewer affordable options for many geographies, higher densities of classes (not always good!), fewer college graduates, more student loan debt, and fewer availability for non-tenured professors.

Source: The Hechinger Report

We’ve talked about this before, but this is a tragedy. It means we’ll have sucky mass market universities like University of Phoenix, Strayer, and Capella (whose parent company merged with Strayer’s). And we’ll have expensive, elitist, and low-volume universities at the top of the market.

Over half (52%) of the students attending a shuttered college or university don’t re-enroll (Source: State Higher Education Executive Officers Association). These students just end up with debt and stranded credits (it’s incredibly difficult to get a transcript or credits from a shuttered school).

In 2024, we expect at least a dozen other non-profit universities and colleges closing, and then when the demographic cliff hits in 2025, expect that number to get much, much higher.

4. The Public School Crisis Continues

The teacher shortage, enrollment drop offs, and budget cuts are going to hit public schools hard.

The teacher pipeline won’t get any better, either, which is the existential threat for the future of public education. The profession is at an absolute nadir in terms of respect: Everyone acknowledges that teachers are the backbone of our educational system, but nobody wants to be a teacher—and nobody wants their kids to be teachers, either (check out our past Substack on this topic).

Just like there’s a looming demographic cliff that’s going to hit higher education, there’s a massive demographic cliff that’s going to hit our teachers.

Take a look at the two charts below, courtesy of the Population Reference Bureau in DC. The top chart is the age distribution from 1980. The bottom is from 2000 (and pretty similar to the age distribution today, which has a median age of 42).

These teachers are going to age out soon and retire, but there won’t be a backfill of younger educators to step in (especially as organizations like Teach for America which historically acted as a partial backstop see their Corps numbers dwindle).

Meanwhile, school segregation will continue to get worse in 2024. White flight from public education and a shift to private will see an acceleration of segregation trends that have been happening since the 1990s.

5. Focusing on Student Inputs not Outputs

2023 was a mistrustful year between higher education and AI. Schools correctly assumed that students would use AI to write papers and do their homework. But the paradigm is shifting: Pre-November 2022, we assessed students on output, training them to be calculators or regurgitate formulas. In 2024, we predict that we’re going to shift to focusing on inputs. We should be training students to use the technologies of the future (or at least, present), and Artificial general intelligence (AGI) is going to complete change what type of work we do. It’s only natural that how we assess and measure students change, too.

Interestingly enough, there’s a broader trend, induced by COVID, away from summative assessments (Regents Exams, GMATs, SATs, etc.), and that trend goes hand-in-hand with AI elevating our expectations around what assessments should measure.

Where 2024 will bring us

Our public educational system is breaking at the seams. A substantial number of colleges and degrees will be irrelevant in the next few years. However, with disruption comes opportunities. AGI’s ability to unlock time and talent might just allow more creativity. Movements such as the Science of Reading are already positive developments that will hopefully close the (il)literacy gap. And states are waking up to the urgency of teacher pipeline issues, which will lead to new and better interventions: Cross-state collaboration, new partnerships, and increases in teacher salaries.