By mid-April of this year, the coronavirus had caused nationwide school closures in 190 countries, impacting 90% of total enrolled learners, or almost 1.6 billion students globally. Now, as schools make plans to welcome students back, and educate them safely, one technology is in the spotlight: education technology (EdTech). The environment presents a unique opportunity for EdTech companies to gain share of a massive market opportunity to educate students from a distance, innovating and scaling their businesses more rapidly than most would have contemplated just one year ago. In order to take full advantage, though, these technology companies must have the accounting and financial management technology capable of supporting and enabling profitable and sustainable growth. Let’s first highlight the state of EdTech, and then look at some accounting functionality companies in the industry can use to better position themselves to embrace the opportunities at hand.
The State of EdTech
Even before the outbreak, the global education technology industry was growing rapidly. From a $76.4 billion market in 2019, the industry is expected to triple by 2025 to be worth $350 billion, as educators and students look for learning resources online. Investors have taken notice of the opportunity. According to EdSurge, there was $1.7 billion invested by US venture capital funds into the EdTech market in 2019 across 105 deals.
It’s hard to point to many topics that are more critical to the nation than the education of its children. There is a massive “addressable market” offering the EdTech industry opportunities and financial incentives to deliver ways learners can keep on learning – and learning more effectively. Ensuring education continues is vital, and EdTech companies are leading the way it’s being delivered. In order to both meet this critical need and capitalize on the opportunities at hand, EdTech companies need the right accounting and financial infrastructure.
Establish a Platform for Growth
In order for EdTech companies to capture additional market share and grow their operations, it becomes necessary to have the financial systems to back up that expansion. While there are many choices, not every accounting application has the chops to serve as the robust platform for growth EdTech companies need. Some functionality to look for is:
- Multi-entity support, to support multiple divisions, locations, lines-of-business
- Subscription billing to automate subscription payment processing and billing
- Revenue recognition – smart, automated, compliant revenue recognition—with complete support for ASC 606 and IFRS 15
- Real-time financial and operational insight, particularly into critical SaaS metrics like CAC, CLTV, CMRR, Gross Churn, and Customer Churn
Grasp the Opportunity
The global pandemic has opened up tremendous opportunities for EdTech companies. While the industry was already growing and finding new inroads, the increased emphasis on remote learning is likely to propel the industry, and the companies within that industry that are prepared to capitalize, to new heights.
Sage Intacct is the leader in subscription billing software solutions, offering the only ASC 606 cloud accounting and billing solution that automates the entire subscription contract lifecycle from quote-to-financial forecast. Hundreds of fast-growing software companies rely on Sage Intacct to help them overcome the obstacles to scale and capture new opportunities for growth.
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