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Tech-Enabled Coaching Is Fueling Investment in Professional Development in Higher Education

Coaching services providers in education and business are growing fast and attracting unusually rich valuations for tech-enabled services.

Tech-Enabled Coaching Is Fueling Investment in Professional Development in Higher Education

What do you remember from the last time you had a training day or had to complete an online learning module for work? If you’re like most people, the honest answer is varied, from “I remember some” to “I don’t remember much.”

Research shows that people on average forget 50% of the information they learn within an hour, rising to 70% within a day and 90% after just a week. Despite this sobering reality, educational institutions continue to spend handsomely on training hoping to improve the quality of teaching and to retain staff.

Now—with a big push from the pandemic—both schools in K-12 and higher education are realizing there’s a way to get a lot more bang for their professional development buck. The answer is tech-enabled coaching, and it has the potential to be a very big, disruptive business. In the U.S. alone, it could be a $50 billion-$60 billion market.

Engage2learn, a K-12-focused virtual coaching company, was snapped up by Leeds Equity this year. Whetstone, a teacher coaching platform, was purchased by K-12 ed-tech firm SchoolMint in January. In the broader business world, iPec, a provider of coach training and certification solutions, was bought by Eureka Equity Partners in late 2020. Lessonly, a training and coaching provider, was acquired by sales enablement player Seismic in mid-2021.

Companies that provide coaching services, both in the education arena and the broader business world, are growing fast and attracting EBITDA multiples of 12x or more, unusually rich valuations for tech-enabled services.

While the idea of coaching isn’t new, these and other businesses are finding ways to make it more effective and developing metrics that demonstrate its value, making it easier for customers to justify spending money on it.

The power of coaching is that it gives learners continual support by experts over a longer period, as opposed to the old “one-and-done” method of professional development. Research has shown that coaching bestows clear advantages over traditional training, including better retention of knowledge and skills and putting learning into practice.

Even before the pandemic, it was clear that professional development approaches were failing K-12 teachers, and by extension, students. A study by the New Teacher Project found that 1 in 3 teachers quit within their first 5 years, 68% of new teachers felt unprepared to teach, and 70% were unsatisfied with their professional development. That was despite a professional development budget of $8 billion in the 50 largest school districts.

At a time when finding and keeping good people is a huge challenge across the economy, business and education leaders are realizing that effective professional development is a powerful retention tool and well worth the investment.

The pandemic-driven shift to online classes marked a turning point, highlighting how ill-equipped teachers were to cope with a flood of new tech tools. One study found that the average school district use of different ed-tech products each month rose to 1,327 compared with 952 when school closures started in March 2020.

The result was a profound learning loss and a realization by school districts that they need a new approach to supporting teachers.

Under the mentorship of full-time coaches, teachers can receive regular sessions throughout the school year to help them ensure they are getting the content they need and are repeating it regularly to instill better retention.

On the higher education side, the shift toward coaching is being driven by economic realities as colleges face declining student-related fees and revenues. That’s raising the importance of revenues generated by faculty members through endowments and research work, which directly benefit from effective professional development.

Contrary to long-held assumptions by university leadership, tenured faculty don’t necessarily know how to do the vital work of landing grants and presenting their research effectively. Coaching solutions can help them manage their time better and support their research and writing skills with multiple touch points over the academic year. It’s a gap that’s being filled by groups like the Association of College and University Educators (ACUE), which provides on-demand coaching and training to thousands of faculty members across the country.

Contrary to long-held assumptions by university leadership, tenured faculty don’t necessarily know how to do the vital work of landing grants and presenting their research effectively.

The non-academic world has, in general, been an earlier adopter of coaching solutions, particularly in the sphere of sales development. But there are still major untapped opportunities for coaching firms across a range of sectors.

Any business with a mentorship or apprenticeship model stands to benefit. Financial professionals, for example, often must learn on the job when it comes to skills such as developing and interacting with clients, a contributing factor to high turnover rates. Medical doctors tend to be poor businesspeople and could benefit enormously from systematic coaching in that area, as could engineers and lawyers.

At a time when finding and keeping good people is a huge challenge across the economy, business and education leaders are realizing that effective professional development is a powerful retention tool and well worth the investment.

Hiring someone new ends up costing more than investing in a current employee to avoid them leaving due to frustration with the job and a lack of development opportunities. At the same time, the younger generation of workers is demanding more from their employers than just a job and a paycheck. They expect companies to invest in them and grow their skills.

Virtual coaching is well placed to meet this moment, which is why it will be one of the fastest-growing areas of ed-tech and will provide rich opportunities for strategic investors in the coming years.

Alex Hicks is director, investment banking, at Cowen and Company, LLC.