How the Major EdTech AI Unicorns Took Off

It's pretty wild to think that we're on track to see the EdTech and smart classrooms market explode to a whopping $181.3 billion by 2025 – which is basically next year. And it's not hard to guess who's stealing the show: Artificial Intelligence (AI).

Among the avant-garde leading this transformation are EdTech AI startups, whose innovations promise to redefine educational engagement and outcomes. 67% of EdTech unicorns are currently developing or using AI in their products or services.

And it's not just the newer companies; with over 300 million users, Duolingo persistently innovates, leveraging AI to further engage and personalize the language learning experience. Coursera saw a new user every minute on average for its AI courses in 2023. While some new kids on the block, like Lithuanian Leya AI, have raised €1 million in a pre-seed funding round revolutionizing language learning through an affordable real-time speaking AI Tutor. 

These trailblazers reveal the potential of AI to elevate educational offerings.

So, what paths should your company navigate to drive a similar impact in the EdTech landscape? In the following sections, we'll discuss key strategies for embedding AI in your offerings and highlight innovative startups carving out new narratives in the EdTech AI space.

EdTech AI market: Why EdTech companies have to incorporate AI in their products?

From homes to workplaces, AI’s influence is extending its reach. Why should education be any different? AI's allure is not limited to schoolrooms alone, it's making waves everywhere where teaching and learning are involved. Think professional development programs, informal learning platforms, or even lifelong learning initiatives – AI could well be the next cornerstone of education.

Success stories of EdTech AI integration are abundant in modern EdTech startups. It’s enough to have a look at Europe EdTech 200 Map, featuring the annual list of two hundred of Europe’s youngest, fastest-growing, and most innovative digital education companies, many things become clear as 17% of the companies fall under the "new delivery models" category, which indicates their use of innovative learning approaches, such as incorporating new technologies, including AI, to improve learning outcomes.

Another list of the top 13 EdTech startups to watch in 2023, featured on Sifted, highlights how many EdTech companies utilize AI to augment their services. 

• For instance, Rocket Tutor uses AI to build a digital twin of a student's knowledge, focusing on the understated side of education – the filling of personal knowledge gaps. 
• Knowunity, akin to an "Instagram for school material," has woven AI into its fabric, offering authenticated user-generated content and a lively social learning experience.
• Fluento has marked its name in language learning by offering AI-powered personalized feedback and engaging conversation scenarios to learn English more realistically and effectively. 
• Not just limiting itself to the younger demographic, Silber Salon uses AI to guide older adults in their pathway to understand digital skills. The EdTech startup offers simplified guides and tutorials produced by AI, in response to the user's queries.
• Going beyond the conventional learning path, Mindstone has employed AI-backed learning habits, ensuring better retention and understanding of content for its users.

Each of these startups, set for growth in 2023, demonstrates a common theme: artificial intelligence's game-changing potential in refining the EdTech environment.

So, what does this mean for EdTech startups? In simple terms, they can't afford to sit out the AI revolution. AI isn't just an add-on feature; it's the core of future-ready education solutions. It's crucial for enhancing personalization, making learning engaging, and freeing up educators' time for value-added tasks.

Opinions on AI in the classroom

Tiny robots as teachers may still be a thing of science fiction, but artificial intelligence (AI) is fast becoming a vital tool in classrooms.

In the interview for EdTech Magazine, Jeremy Roschelle from Digital Promise encapsulates this sentiment effectively when he speaks of the positive reception of AI among educators. “We’re seeing a lot of engagement and enthusiasm,” he says. AI is not seen as a mere gadget but as a potent professional tool – a means to enhance the educator's role rather than diminish it. “This is a tool for me, as a teacher, to make my life better,” reflects the collective voice of educators. This marks a promising departure that portrays AI as something educators actively want to incorporate into their workflow.

However, this burgeoning relationship between educators and AI is predicated on a fundamental precondition: trust. While educators appreciate AI’s potential, they have valid concerns too. A primary issue is data privacy, with 42% expressing unease over data security in AI applications. Another worry is AI's possible disconnect with curricular goals. If AI isn't programmed accurately, it might misinterpret educational content. Teachers also fear a "black box" situation where they can't discern how AI reaches its conclusions. There's concern about the digital divide, and the challenge of equitably distributing AI technologies in education. The necessity for widely available and regular professional development to keep pace with technology is also stressed.

Balancing these concerns with the benefits of AI is key to its more extensive use in education. Education leader, Dr. Dale Allen wisely points out, “AI in education can only grow at the speed of trust.” As with any relationship, building trust is a process, one that is essential for the meaningful integration of AI into educational ecosystems.

How can AI be used in EdTech?

With the majority of educators pinpointing personalization as AI's most significant benefit, it's clear that AI's role transcends beyond mere automation. 

From customizing learning paths to providing real-time feedback and assessments, EdTech AI is set to transform traditional education paradigms, making learning more accessible and efficient.

Personalized learning

With over 60% of K-12 teachers in the U.S. weaving personalized learning elements into classrooms, education is becoming more adaptive and intuitive to individual student needs. By predicting and adapting to each student's learning pace and style, AI is transforming personalized learning from an aspiration to a reality. For instance, an AI tutor could dynamically adjust math problems' difficulty based on a student's proficiency, ensuring challenges are neither too easy to bore nor too hard to frustrate.

A good example of AI personalizing learning is Century Tech, an 'AI tutor' that uses AI to provide differentiated and personalized instruction, aligned to each student's learning pace and preferences. With thousands of short lessons or "nuggets" in subjects like math, sciences, and English, the tool expertly identifies and addresses learning gaps, potentially improving student performance by up to 30%. Or Sana Labs, the platform uses ML algorithms to analyze students’ behaviors and preferences, offer custom learning paths and content recommendations, and provide adaptive assessments that adjust to individual performance.

Honorable mentions: Teachmint, Alef, Carnegie Learning, Aleks.

Automated assessments

20 to 40% of a teacher's workload involves grading, lesson planning, and general administration – tasks AI is poised to streamline significantly. Not only do automated assessments promise a future where teachers are liberated from the tedious aspects of their jobs but they also herald the onset of more accurate, unbiased evaluation of student performance. AI does this through NLP and ML, technologies that analyze test responses, essays, and even open-ended homework assignments with remarkable precision.

NLP interprets the nuances of human language, allowing AI to understand and assess students' written work, while ML algorithms learn from a vast compendium of data, enabling the automated system to adapt and predict student performance accurately. This synergy of technologies not only promises a future where teachers are liberated from the tedious aspects of their jobs but also heralds the onset of more accurate, unbiased evaluation of student performance.

Examples of this technology in action include Brightspace that merges AI assessment into their LMS for streamlined creation, delivery, and evaluation processes; Turnitin that tackles plagiarism through AI analysis, ensuring students’ work is original and properly cited; and Gradescope that streamlines grading by using AI to interpret handwriting, recognize answer patterns, and speed up feedback.

For example: Proctorio. ExamSoft, Knewton, Questionmark, Metacog, Coursera, Thinkster Math. 

Student enrollment

The arena of student enrollment in higher education is witnessing radical transformation, thanks to AI. Embraced by 42% of higher education institutes in North America for recruitment and admissions, AI predicts enrollment trends through Machine Learning (ML), translating into robust and strategic admission campaigns. By analyzing past and present data trends in age, socioeconomic status, geographical area, and academic performance, ML algorithms can anticipate the probability of enrollment in upcoming semesters.

Higher education institutions can thus tailor individualized recruitment strategies, optimizing allocation of resources, and enhancing student diversity. Additionally, AI chatbots play an instrumental role in guiding prospective students through the enrollment process, delivering personalized, real-time interaction. An example is QS AIDA system – this innovative tool leverages AI-based modeling alongside human judgment, providing universities with a laser-focused insight into their applicant pipeline, profiles, and conversion likelihood. 

Task automation

AI-driven task automation is proving to be a game changer. As it stands, 27% of educational institutions recognize the benefit of automation within some facets of their operation, while a significant 73% acknowledge its critical role across multiple processes. With the promise of reclaiming up to 13 hours a week for teachers, AI is reshaping the educational landscape. It streamlines processes like attendance taking with facial recognition, refines scheduling with smart algorithms, and delivers swift grading feedback.

Moreover, AI-powered predictive analytics can flag potential at-risk students, enabling early interventions. All these automations signify a paradigm shift towards efficiency, allowing educators to reallocate precious time to enhance teaching and foster deeper student connections, all while securing the irreplaceable human element in education.

Intelligent tutoring

Intelligent Tutoring Systems (ITS) stand at the vanguard of education, providing personalized instruction through artificial intelligence that navigates beyond the one-size-fits-all approach. Harvesting insights from cognitive theories and educational data, ITSs adapt to individual learning paces and styles, tailoring feedback and content to maximize student potential. The efficacy of ITS is not just theoretical; empirical studies highlight significant gains. Students under the tutelage of ITSs boast an average of 15% improvement in academic performance, a 20% rise in engagement, and a remarkable 25% climb in knowledge retention compared to peers in traditional learning environments.

Many platforms already stand out offering AI tutor capabilities, among them are Thirdspace Learning that steer math proficiency with real-time teacher feedback; language enthusiasts find a digital conversant in Duolingo's Chatbot, refining foreign language skills through simulated conversations; Thinkster Math transforms homework into a data-mining exercise, individualizing learning through a watchful AI. 

For example: Differ, iTalk2Learn, Thirdspace Learning.

Generative content creation

Generative AI is revolutionizing education by personalizing learning materials, creating inclusive content, and offering adaptive exercises. Despite initial skepticism, approximately 13% of respondents demonstrated strong interest toward AI-generated content, focusing more on content quality than its source. 

Yet, its adoption faces hurdles. A UNESCO global survey in May, involving over 450 schools and universities, revealed fewer than 10% have institutional policies or formal guidance on using generative AI applications. Despite this slow policy adaptation, AI's potential is vast, from updating textbooks with the latest information, generating diverse historical perspectives, to personalizing quizzes for targeted learning support. The market has seen a proliferation of generative AI tools.

For instance, Wibbitz and Adobe offer automated video creation, transforming and enhancing learning materials. Synthesia and Murf AI use AI to generate realistic films and high-quality voice overs from text inputs. Others, like Eklavvya, Quizizz, and Canvas Question Bank Generator, assist in creating dynamic and customizable question banks for varied educational needs.

Intelligent chatbots

Intelligent chatbots are creating a paradigm shift in education, offering personalized learning experiences and real-time support. They can answer student queries, provide homework help, and even facilitate administrative tasks. For instance, Georgia State University's Pounce successfully reduced summer melt by over 20% using a chatbot to guide newly admitted students through administrative tasks.

Similarly, SchoolMessenger, a communication platform for K-12 schools, has introduced a chatbot feature to facilitate parent-teacher communication. The chatbot lets parents ask questions about their child’s progress, school events, and important deadlines, improving communication and engagement between parents and schools.

For example: Duolingo's AI chatbot, QuizBot for Learning and Revision, Carnegie Mellon University’s AI Tutor; SchoolMessenger.

Inclusive education

AI in special education heralds a transformative era for learners with diverse needs. With tools like text-to-speech apps, students with reading difficulties can experience written content audibly, helping break down barriers to learning. The ethical use of AI in collaboration with educators allows for the creation of personalized and inclusive educational experiences. Sealing examples, Proloquo2Go, a symbol-based app that aids those with speech impairments, enabling them to communicate through customizable buttons that represent words or phrases.

For example: Kinems, Seeing AI, Dragon NaturallySpeaking.

Benefits of AI for educational stakeholders

For Francie Alexander, chief research officer at HMH, the benefits of automated technologies such as AI are clear. He expressed his thoughts in an interview for Edtech Magazine. "There are four primary upsides to AI in the classroom,” she says. “The first is productivity, helping the teacher be more productive in all aspects of teaching. The second is the social aspect, being able to connect with families, students, and colleagues more easily. The third is data, being able to accumulate and review data to improve learning. The fourth upside is being able to use technology to assist in classroom instruction.

However, AI-driven benefits not only optimize educators' roles but also pave the way for deeper collaboration and innovation within the entire learning ecosystem.

Students

The 2023 Compilatio survey, ‘Teachers and students confront their views on AI’ sheds light on how AI is changing the game for students. Imagine having a personalized learning buddy; that's AI for 51% of students who use it to break down tough topics into bite-sized, understandable pieces. It's like having a smart friend who can help you 24/7, ensuring you're not left scratching your head over complex subjects. Students aren't ditching their textbooks for AI, though. It's more of a sidekick, with only 2% relying on it completely for studying. This shows that AI isn't taking over; it's making learning richer and more accessible. Plus, with tools being developed to ensure AI is used fairly in schoolwork, students get the best of both worlds – innovative help with their studies, without crossing any ethical lines. 

Teachers

Jamie Lewsadder, associate superintendent of technology services for La Cañada Unified School District in California, says, “As a society, we underestimate the effort it now takes to be a teacher.” A 2020 McKinsey report backs up that claim, noting that 20 to 40 percent of the tasks that teachers spend time on — grading, lesson planning, general administration — could be outsourced to technology. 

The use of AI in education can provide substantial support for teachers to manage workload and increase productivity. 82% of educators, feeling the burnout, advocate for a balanced workload, something AI promises to offer. AI tools can automate tasks such as grading and lesson planning. Furthermore, these can support fundamental learning skills like Reading Coach. AI not only lightens teachers' workloads but also enriches the educational experience.

Parents

A poll by the National Parents Union reveals parents' optimistic yet cautious view of AI in education. Predominantly, 56% of parents see the positive impact of AI-driven online tutoring, which can offer personalized attention after school hours. Another 53% appreciate its potential in providing initial homework feedback, meaning less time struggling over comma placements and more for family board game nights. Notably, AI's promise as a teaching aid that churns out tailored worksheets and lesson plans appeals to 52% of parents. This functionality means learning can be specifically tailored to a child's needs, strengths, and weaknesses, helping parents to effectively reinforce learning objectives at home, without spending hours searching for or creating resources themselves.

For parents, this translates to a support system that augments their efforts, enabling them to provide targeted educational support without having to become experts in every subject. It's about making learning at home more effective, less stressful, and perhaps even more enjoyable for all involved.

School administration 

AI is redefining efficiency and precision in school management, showcasing a promising shift towards more streamlined administrative processes. By automating the grunt work – think scheduling, grading, attendance tracking, and even the nuanced task of student enrollment – AI liberates educators and administrators from the shackles of menial tasks. This newfound freedom isn't just about saving time; it's about reallocating human intellect to where it truly belongs: strategizing, teaching, and personalizing the educational journey. As AI takes on the laborious backend operations, schools witness enhanced operational efficiency, paving the way for a more focused, data-informed decision-making process.

Dissecting the popular cases: how the major AI EdTech startups took off

By January 2023, the landscape boasts 13 such unicorns, collectively valued at an impressive $34 billion. In the grand scheme of EdTech's evolution, it's clear that Artificial Intelligence isn't just an optional upgrade – it's a cornerstone that sets industry pace-setters apart.

Names like GoStudent have become synonymous with innovation, thanks to their strategic use of AI. This unicorn status company employs AI to tailor the educational experience by matching students with the most suitable tutors, creating personalized learning journeys. However, it's not alone in such a strategic conquest. Other entities, like Riiid, with $248M in funding, evoking a global scale of operations and technological innovation in AI tutoring. DreamBox Learning, having raised $175.6M, champions personalized paths and predictive analytics. 

These startups signal a robust ecosystem – echoed by insights from a TechCrunch survey – where AI’s deployment serves not only to boost competitiveness but also to fundamentally shift the EdTech paradigm.

"Advancements in AI will provide tailwinds for a boom in EdTech in 2024," as stated by Masha Bucher, a founder at Day One Ventures. 

For AI to give EdTech startups a long-term advantage, though, they will need to do more than the competition.

“Simply labeling generative AI as an EdTech product isn’t enough. What I find more intriguing is when AI enhances an already robust product, as seen with Duolingo,” Marieke Gehres, an early-stage investor at Earlybird Venture Capital, said. 

According to the insights, the next phase for EdTech innovators is clear: transcending beyond the novelty of AI, towards creating in-depth, impactful educational experiences that leverage AI to meet unique learning needs.

Top AI adoption challenges for EdTech

Nearly 99% of education institutions recognize the importance of AI and have outlined why they want to adopt it. However, most are still in the early stages of getting the technology up and running. The main challenges they face include the high costs of AI solutions, pointed out by 57% of them, a lack of proper skills and ongoing learning for staff, noted by 47%, and 37% haven't fully embraced the need for a solid data strategy to support AI efforts.

Data challenges

Navigating the path to AI adoption in education, data management emerges as a fundamental checkpoint. Half the institutions have achieved a significant milestone by centralizing their data, which improves accessibility for analytics teams and aids in smarter decision-making. However, not everyone's on the same page. For 40% of these institutions, data quality and timeliness issues pose serious roadblocks. 

They often resort to quick fixes by their operational teams, indicating that a well-planned, systematic approach to data management might be missing. This uneven landscape of data readiness could potentially impact the successful implementation and efficiency of AI applications in the education sector.

Interoperability

A crucial challenge to successful AI implementation in education is interoperability or the ability of different software and systems to communicate with ease. Institutions often utilize an array of software platforms and databases, each characterized by different data formats, protocols, and technical aspects. Incompatibility in protocols, data formats, or APIs between various systems impedes the seamless exchange of data critical for AI effectiveness.

Coping with this fragmentation calls for strategic measures. 

1. Adopting open standards helps in creating a consistent data language. 
2. Robust APIs and middleware can serve as bridges between systems, smoothing over compatibility issues. 
3. Regular interoperability testing can preempt issues, paving the way for hassle-free AI integration. 

Collectively, these steps can help open the gateway for AI to thrive and make a telling impact in education.

Data privacy and security

Data privacy and security present significant impediments to AI adoption, with 39% of enterprise leaders citing these issues as major barriers. This concern is mainly due to uncertainties about having the appropriate data infrastructure to support scalable AI initiatives. A more analytical approach to addressing these concerns involves implementing advanced security measures and embracing privacy-enhancing technologies, such as differential privacy.

Moreover, conducting thorough audits of AI systems and infrastructures is critical for early detection of potential vulnerabilities. By systematically tackling these challenges, organizations can ensure compliance with regulatory standards and cultivate a foundation of trust necessary for the broader adoption of AI technologies.

Institutional policies on using AI applications

While the push for AI is undeniably strong, it's striking that less than half of the companies rolling out AI are taking concrete steps toward crafting it to be trustworthy. According to IBM, a mere 27% of companies are tackling bias, and only 37% are tracking where their data comes from. Even more, explaining AI decisions is a priority for just 41%, and a slightly better 44% are drafting ethical AI policies.

This gap between ideal and real-world AI ethics practices reveals a significant oversight in the rush to adopt AI. It suggests companies might be more focused on the 'can we' rather than the 'should we' aspects of AI deployment. However, for AI to reach its full potential and be universally embraced, embedding ethical considerations and transparency into its core is not negotiable.

Talent-related challenges

Adopting AI in Edtech brings two key talent challenges to light. Firstly, attracting the right talent to develop AI solutions poses a significant hurdle. Such individuals are uncommon; they must be adept in AI technologies like machine learning, yet equally competent in understanding and addressing the unique demands of the educational sector. More than half of school districts find tech integration challenging, often due to limited in-house IT expertise. Schools are debating whether to rely on external AI providers or to foster a mix of in-house and external AI talent.

Secondly, we need to better prepare people who'll use these AI solutions. These end-users, who typically consist of educators and administrative personnel, must be adequately ready to interact with and utilize AI solutions effectively. Training these individuals isn't just about familiarizing them with the tech. It's more about ensuring they have a thorough understanding of how to use the AI to its full potential. That includes leveraging AI insights to enhance their teaching methods, streamline administrative tasks, and ultimately, improve the learning outcomes delivered to students.

How to reinforce your EdTech strategy with AI?

Tackling the integration of AI into educational strategies encompasses a web of complexities that demands a closer look. These range from securing adequate funding to navigate the high costs associated with AI development to the shortage of skilled AI professionals capable of bringing these advanced technologies to the educational sphere. Data privacy, ethical concerns, and crafting AI that improves rather than disrupts the learning experience are significant hurdles. Besides, there's a certain reluctance from both educators and learners to rely heavily on AI-driven solutions, stemming from the sheer familiarity and comfort with conventional teaching methods.

Each of these aspects underscores a critical truth: integrating AI into education isn't a solo journey. It thrives on collaboration with partners who bring not just technological expertise but a nuanced understanding of the EdTech landscape.

Working with AI development at ElifTech, we prefer to “get right into the thick of things'' and take a personalized approach to each AI project. We deep dive into your specific needs, figuring out the perfect timing and areas for AI implementation that promise the most impact.

We're all about enhancing your team’s strengths with our AI team, ensuring you receive not just advice, but hands-on AI development. This approach helps educational institutions unlock the true potential of AI, with a keen eye on maintaining high educational standards and ethical integrity, all tailored precisely to your unique situation. If you're seeking expert guidance for adopting AI, we’re ready to be your partner for positive change.