The US economy is experiencing an upswing. In 2019 the Dow Jones Industrial Average passed 28,000 points, the S&P 500 Index topped 3,000 points and the Nasdaq broke 9,000 in what some have termed one of the longest bull markets in history. 

Since the beginning of 2020, Chinese education firms such as TAL, New Oriental, Genshuixue, 51Talk and Netease Youdao have all seen their stocks rise. Among them, New Oriental rose 11.96%, TAL rose 12.07% and 51Talk rose 47.76%.

This article observes global online education development trends from a macro perspective to give a much more comprehensive understanding. 

Vocational training track grabs attention in the US

According to data published by EdSurge, a research firm centered on educational technology in the United States, in 2019 investment in educational technology companies reached above USD 1.6 billion (about CNY 14.4 billion). The run involving 105 transactions, which is the highest in five years. The amount of financing increased by 16% as compared to the previous year, even with five fewer investment events.

A total of 332 financing events took place in China’s education industry with the total amount of financing reaching around CNY 20 billion. Out of the total 148 events that took place in the online education track, with a total financing amount of CNY 11.56 billion. It is not difficult to see that online education in China and the United States is very similar in terms of financing scale and quantity.

Funds have been pouring into the US education technology industry during the past year, which is largely mirrored across the wider venture capital landscape. A CB Insights report puts US venture capital investments at USD 108 billion across 5,906 deals in 2019, the third-biggest year ever by value.

Employers in the United States are seeking third-party agencies to help them recruit top talent or train talent among existing employees. Stimulation of uncontrollable economic factors has created a talent recruitment market where employers are looking for help. 

The unemployment rate is at a low level of 3.6%, which is a rare number in the period since 1969; this low level may be caused by people giving up job applications, resulting in a lower labor force participation rate, making it difficult for employers to recruit suitable talent, reported EdSurge. 

The eight most important edtech deals in 2019 involved companies that provide training services to employers and employees, often focusing on training them to ensure their qualified retention or an internal promotion. The eight companies are Guild Education, BetterUp, Coursera, Andela, Degreed, MindTickle, EdCast, and A Cloud Guru, which account for 39% of total education technology investment in 2019.

Jenny Abramson, founder and CEO of Rethink Impact venture capital firm, said the employee training programs “are becoming table stakes for anyone who wants to run a company with great talent.” 

Data from iResearch shows that the revenue of Chinas’ online education industry exceeded CNY 300 billion. It may be estimated that by 2022 the scale of the market will surpass CNY 540 billion, with industry insiders predicting that the track will produce a unicorn soon. 

Morgan Stanley’s survey report analyzes that China’s K12 online education market will grow 23 times in the next 10 years which makes investors around the world confident about investing in the sector.

The table below shows that Chinese companies that provide teaching services in K12 related fields and their combined investments exceed CNY 1 billion.

However, K12 online education companies in the US do not have a broad financing record. Except for ClassClassjo, an app used by schools for communication, which received USD 35 million from GSV ventures, and Newsela, an instructional content platform that supercharges reading engagement and learning, which raised a Series C round worth USD 50 million in March 2019.

We can see that, as compared to China, the K12 education market in the US is declining. Quite a few of the companies are being acquired. We should also note that K12 education has lost its position to STEAM education in terms of number of companies attracting capital.