I rarely get invited, let alone actually want to attend most education events, but I am glad I went to this one.
Most gatherings of the great, good and infamous of education and edtech are rather pedestrian events. I always get more out of listening and asking a few awkward questions. The conference had three strands: independent schools, childcare, and investment. My key takeaways from last Friday are:
- Most of the successful operators in the independent school sector expect Labour to stick them with both VAT and business rates. A sizeable minority either don’t think Labour will win or disbelieve their announced policies.The large, well-resourced and well-run charitable schools will survive, but become more elitist
- The for-profit independent sector (almost 25%) will grow substantially, both within and outside the UK
- My estimate of as many as 25% of independent schools closing was largely echoed, although this won’t be 25% of students, as most of the at-risk schools have small (sub-400) enrolments
- As a sector they appear oblivious to the fact that the substantial tutoring sector (approx. £3.7-£5bn p.a.) has largely been created by their putting up fees by approx double CPI for 25 years. While ceding this market to non-school operators, most private school students are also tutored!
- Myopia. At a session about international opportunities for independent schools, the panel seemed to think the whole international market exists in India, the Middle East and China. There was a brief reference to Africa (21% of enrolled students attend private schools), but also dismissal of markets like Australia (40% of students privately educated), US (11m+ students), 750,00/9% in Germany, Brazil 18% at primary level, etc.
- The childcare sector report by Arun Kanwar of Cairneagle was very impressive. But the big news of the day was that he didn’t mention was Ontario Teachers Pension Plan (OTPP) putting the sale of its minority stake in Busy Bees, the UK’s leading childcare provider, on hold until 2024 due to market conditions (hat tip to Josh O’Neill of Debtwire and former Editor at Education Investor)
- Fund myopia. At the AI panel on What AI does to investability, there were two funds on stage, NESTA and Brighteye Ventures, and a non-edtech AI expert. NESTA, represented by Jon Loader (a healthcare specialist) have only ever had one edtech success (Arbour) and haven’t done anything in AI, despite having one of the most knowledgeable and personable practitioners in the sector (Isabel Newman, who has now left). I recently pitched an AI startup (teachology.ai) to NESTA, a very dispiriting experience even after 25 years of investment and business in the education and edtech spaces. Brighteye are the best European edtech VC, with a great investment in sAInaptic. Even they failed to impress as all three panellists seemed oblivious to the issue of why raising edtech money is so difficult in the UK (and it’s not Oak National). Perhaps they need to do the investment equivalent of a secret shopper and blind pitch (i.e. not using their name/network) an AI edtech idea to their own fund to see it from the other side. They also seemed blind to the fact that there are educators, not just students, who might benefit from AI. They showed universal disdain for generative AI which one panellist said,it would “put a Professor in their pocket” allowing students to follow their passion, not a moribund curriculum. What AI has done to investment is driven it overseas. My experience is that Australian, Asia and US funds (especially the latter) have a more effective business intelligence networks and greater appetite for risk. The bottom line for EU/UK AI investors is that they, like local regulators, have a precautionary principle approach, which is why in 2008 the EU had an economy 10% larger than the US and by 2022 the US economy was almost 50% larger than the EU (without the UK, 30%). Too much regulation, too much self satisfaction (amongst funds) and a greater interest/appetite for risk outside the EU/UK means many promising AI startups (edtech and otherwise) will end up either moving overseas or being controlled by investors from outside the EU/UK.
The day ended with a debate between Alistair Campbell and Sir Anthony Seldon about Labour’s plans to impose VAT and business rates on private schools. To save time, attendees could have listened to Seldon having largely the same debate, albeit in 5 minutes, with Fiona Millar (Mrs Alisdair Campbell) on BBC Radio 4’s Today Programme on 27 Sep.
All up it was an interesting event, but the signs were not great for private schools, AI startups, or those hoping to buy a few billion worth of nurseries. Thanks again to the Nexus team for an interesting day out.