“A rising star” for EdTech in Southeast Asia
The education sector, especially the EdTech market vertical, has significantly attracted the attention of investors in search of more opportunities. EdTech, which combines Education and Technology, is still at its early stages in Vietnam with an estimated value of up to $3 billion. Along with the hype, the Vietnamese authorities have the E-learning initiatives strongly promoted, encouraging and enabling parents and students to adopt online learning and digital resources. The report aims to give an overview of the EdTech Market in Vietnam, trends towards its development and analysis of challenges and opportunities encountered by EdTech.
Overview of EdTech in the world and in Vietnam:
According to Research and Markets (2022), the value of global market size was at $254.80 billion in 2021, and is expected to reach $605.40 billion by 2027 whose Compound annual growth rate (CAGR) will grow by 15.52% during the forecast period. With the emergence of artificial challenges (AI) and digitalization, the global EdTech market has its digital revolution constantly accelerated. Application of advanced technology such as AI and Augmented Reality (AR) will help the digital Education market thrive via means of gamification, hybrid model, and mobile-based learning. Regarding the Asia-Pacific region, rapid urbanization accompanied by high smartphones/internet penetration would profoundly influence the EdTech market. Concerning the market size, Vietnam is in the top 10 countries worldwide with a significant growth in E-learning, reaching up to 44.3% (Ken Research 2019). Specifically, Vietnam’s online teaching market hits the threshold of 3 billion USD, presenting itself as a lucrative ‘piece of cake’ that many corporations/investors want to share (Vietnambiz 2021).
Reasons for momentum growth of EdTech in Vietnam:
In the near future from 2021 to 2022, Vietnamese Edtech startups can receive more foreign capital. It is expected that the capital will skyrocket up to 50% if the Edtech market 2021 continues to maintain this momentum of growth (TopDev 2021). Drivers for this gigantic growth are in accordance with the general growth tendency of Asia and Southeast Asia. Firstly, there exists a rise in demands for multimedia content, low-cost-and time-efficient learning options (Australia Government 2020). Concerning the demographic and economic factors, a large proportion of young population, high device ownership, high internet penetration (Datareportal 2022) and well-maintained economic growth greatly contribute to EdTech blooming in Vietnam.
Figure 1: Population by Age in Vietnam (DataReportal 2022)
Figure 2: Device ownership in Vietnam (DataReportal 2022)
Figure 3: Internet use in Vietnam (DataReportal 2022)
The EdTech market in Vietnam receives positive responses as well as changing perspectives from consumers, especially parents. The enhanced trust also results from improved infrastructure whose foundation of the technology system is slightly better than others in the region. Given the bold emphasis on education and, undeniably, COVID-19 pandemic, parents and students have a strong need for effective and independent education along with foreign language learning services. Also, due to the prolific and competitive human resources in Vietnam, enterprises need to train their employees more conveniently and effectively, strengthening EdTech’s demand.
Segments and existing products of EdTech:
Edtech has 4 major segments: content (pre-recorded lessons in the form of videos or exam banks); live-class (online class with a teacher, can be one-on-one or in groups); OMO (model online combined offline); B2B (process management solution for schools or educational institutions). In the first stage, Vietnam’s edtech market started from content and is starting to move into the live-class segment (Bao Dau Tu 2021). According to statistics of Tracxn 2019 organization, there are currently 109 startup organizations operating in the Edtech market with different segmented objects in Vietnam.
Figure 4: Participants in EdTech Market of Vietnam (TechinAsia 2021)
CoderSchool, an online teaching startup providing courses on web development, machine learning, and data in Ho Chi Minh City, has just been poured $2.6 million (Pre-Series A round) by Monk’s Hill Ventures. In 2018, this start-up also successfully raised a seed round from TRIVE Ventures.
The Marathon platform was also funded with $1.5 million (Pre-seed round) by Forge Ventures, with participation from Venturra Discovery and iSeed SEA.
Educa Group, which operates in the English language education sector, also received a $2 million investment in a Series A funding round from Singapore-based Redefine Capital Fund.
Clevai Vietnam received $2.1 million for a Pre-Series A funding round from Altara Ventures. This is an e-learning system for tutoring students, mentored by Mr. Bui Hai Hung, Director of VinAI Research Institute. Another name, Edmicro, also raised capital from Beenext Ventures.
With the above potential, not only domestic units, start-up Astrid (Sweden) also applies experience from the field of mobile games to enter the online learning market in Vietnam. Astrid has so far raised $5.3 million and hopes to expand to China, India and Indonesia (ICT Vietnam 2021).
There are two sectors in the EdTech market (Australia Government 2020) :
a) Higher Education (HE) Sector: Vietnamese public universities have been developing and delivering e-learning courses and programs since 2007. There are about 237 universities in Vietnam of which 22 are currently delivering distance learning programs, with e-learning as one of the delivery modes.
b) School sector: Current edtech companies in Vietnam focus on three key products and services: digital content provision targeting learners of various age groups; LMS; and integrating advanced technology such as Augmented Reality, Virtual Reality, and AI. In terms of digital content, the market is crowded with service providers offering low quality content.
Opportunities and Challenges of the EdTech Market in Vietnam:
1. Opportunities of the EdTech Market in Vietnam:
Although many names were born, investors believe that Vietnam’s EdTech ecosystem is still young. In particular, the segment of curriculum design and searching and comparing information about schools and courses is still left open. Moreover, Internet penetration in Vietnam is expected to increase to 75% by the end of 2023, facilitating the expansion of the EdTech market. Hence, start-ups in the EdTech field will reach more potential customers in many different segments, and in many different locations across the country. With the current average spending on education at 40% of total income, Vietnamese people will certainly continue to invest in more education programs in the future.
This is the opportunity that EdTech start-ups need to seize to come up with many smart and convenient learning solutions to meet the learning needs of Vietnamese users. Most importantly, with extensive government support in the Education sector, especially EdTech, the market poses promising potentials for future development and exploitation. Analysts say that currently the most potential customer segments for start-up models are students, office workers (B2C model) and schools (B2B model). In particular, the proliferation of private education investment models and international schools has resulted in the shortage of teachers, proposing an opportunity for edtech start-ups.
2. Challenges for the EdTech Market in Vietnam:
However, the EdTech market in Vietnam will undoubtedly face significant challenges which requires not only relevance but also persistence to succeed. Despite the strong growth in Vietnam, EdTech still has to compete fiercely with traditional learning which remains common and aligns with learning habits of Vietnamese learners. The vibrant edtech market also means that there is a strong competition of many start-ups in this field and the possibility of “follow-up” start-ups is also significant, leading to price competition for foreign companies in both B2B (business to business) and B2C (business to customer) models.
In addition, the process of selling products to schools (especially public schools with tight budgets) is very difficult, requiring start-ups to know how to choose the right time to introduce products and to convince the school based on breakthrough solutions. It is very difficult for EdTech start-ups to achieve a high level of revenue and profit at the early stage of investment, because education is a long-term investment process. Companies need at least five years to assess the market fit of their products. Meanwhile, venture capital funds are also extremely pressured when they have to wait for a long time to evaluate investment efficiency in this field. Besides, owning a large number of users does not mean that companies can make money from these users, so it is necessary to calculate the number of users willing to pay for the company’s product or service.
It should also be noted that there is a lack of synchronization in the transition from face-to-face teaching to online. In fact, schools are using many different platforms and applications, making classroom management, curriculum, and teaching and learning effectiveness assessment difficult and labor-intensive (Forbes 2021), not to mention the negative health impacts from online teaching. Besides, a common legal corridor in accordance with regulations, regarding copyright, intellectual property, information security, and electronic transactions, etc, needs to be developed for digital materials management and intellectual property.
In general, education is currently receiving much attention in Vietnam, especially in the edtech field. The potential and room for development is great, but it is still too early to confirm whether investing in this industry is really profitable, because edtech is still considered one of the “hard to chew” markets anyway. Best opportunities only come to those who know how to take advantage and understand difficulties.
Source: InnoLab Asia 2021
- Australia Government 2020, VIETNAM EDTECH SCOPING STUDY SUMMARY REPORT, viewed 8 March 2022, <https://www.austrade.gov.au/ArticleDocuments/10377/REPORT%20-%20Austrade%20report%20Vietnam%20edtech%20scoping%20study%20ATTACHMENT.PDF.aspx>.
- Bao Dau Tu 2021, Lĩnh vực công nghệ giáo dục (edtech): Chờ ngày ‘cất cánh’, baodautu, viewed 8 March 2022, <https://baodautu.vn/linh-vuc-cong-nghe-giao-duc-edtech-cho-ngay-cat-canh-d152289.html>.
- Datareportal 2022, Digital 2022: Vietnam, DataReportal – Global Digital Insights, viewed 4 March 2022, <https://datareportal.com/reports/digital-2022-vietnam>.
- Forbes 2021, ‘Công nghệ giáo dục thời đại dịch: Cuộc chạy đua trong hành tinh số’, Forbes Việt Nam, viewed 4 March 2022, <https://forbes.vn/cong-nghe-giao-duc-thoi-dai-dich-cuoc-chay-dua-trong-hanh-tinh-so>.
- Ken Research 2019, Vietnam E-Learning Industry, E-Learning Market, Market Research Report, Industry Research Report, Ken Research, 29 August, viewed 2 March 2022, <https://www.kenresearch.com/blog/2019/08/vietnam-e-learning-market-research-report-ken-research/>.
- Research and Markets 2022, ‘Global EdTech Market Outlook & Forecast Report 2022: Market Size was Valued at $254.80 Billion in 2021 and is Expected to Reach $605.40 Billion by 2027’, GlobeNewswire News Room, 1 February, viewed 3 March 2022, <https://www.globenewswire.com/en/news-release/2022/02/01/2376551/28124/en/Global-EdTech-Market-Outlook-Forecast-Report-2022-Market-Size-was-Valued-at-254-80-Billion-in-2021-and-is-Expected-to-Reach-605-40-Billion-by-2027.html#:~:text=The%20EdTech%20market%20size%20was>.
- TopDev 2020, Thị trường Edtech 2020 | Thị trường Giáo dục Điện tử 2020, TopDev, 25 August, viewed 1 March 2022, <https://topdev.vn/blog/dich-vu-thi-truong-edtech-landscape-2020/#tong-quan-thi-truong-edtech-2021>.
- VietnamBiz 2021, ‘Thị trường dạy học trực tuyến Việt Nam chạm ngưỡng 3 tỷ USD – “miếng bánh” béo bở nhiều tập đoàn muốn chia phần’, Vietnambiz, 20 December, viewed 4 March 2022, <https://vietnambiz.vn/thi-truong-day-hoc-truc-tuyen-viet-nam-cham-nguong-3-ty-usd-mieng-banh-beo-bo-nhieu-tap-doan-muon-chia-phan-20211218214038012.htm>.