Mark Grovic, a trailblazer in impact investment and a founding partner of New Markets Venture Partners, has spent decades bridging the gap between financial returns and social good in the EdTech sector. In his EdTech Mentor Investor conversation with Phill Miller, Grovic delves into the pressing challenges and transformative opportunities shaping education technology today. From dissecting the current investment drought to highlighting the areas where AI promises to disrupt education in meaningful ways, Grovic offers a masterclass in navigating the complexities of EdTech investment.
1. The EdTech Investment Drought
Mark Grovic doesn’t mince words when describing the current state of EdTech investment: it’s a drought. While the pandemic sparked an initial boom, the tide quickly turned, leaving many companies stranded. Grovic attributes this downturn to several factors: rising interest rates, overhyped valuations, and a wave of underwhelming results from earlier investments. These forces combined have created a challenging landscape where investors tread cautiously, and EdTech startups face a steeper uphill climb to secure funding.
The Causes Behind the Drought
According to Grovic, inflated expectations played a significant role. The pandemic pushed education technology into the spotlight, driving an influx of capital into startups promising revolutionary changes. When many of these companies failed to deliver consistent returns, skepticism took root. Adding to the challenge, the broader economic climate—with interest rates soaring—has made riskier investments like venture capital less appealing. Investors now demand tangible proof of scalability and profitability before committing funds.
The Implications for Startups
For EdTech companies, the implications are stark: funding is no longer as readily available. Startups must demonstrate not just potential but concrete progress, with solid metrics and sustainable models to attract investment. Grovic underscores the need for patience and adaptability in this climate, urging founders to recalibrate expectations and focus on fundamentals. While the drought is daunting, Grovic sees it as an opportunity for the industry to reset, shedding hype for a focus on sustainable growth and meaningful outcomes.
Ending the Drought
The first showers to end the drought depend on a combination of market stabilization and strategic recalibration by startups and investors. He emphasizes that investors need to regain confidence through evidence of sustainable value creation and market adaptability. Startups that demonstrate strong unit economics, clear paths to profitability and measurable results are more likely to attract capital. In addition, Grovic points out that innovations that address systemic challenges in education, such as affordability and accessibility, can reinvigorate the sector. By addressing these fundamental issues and aligning with investor priorities, the EdTech ecosystem can foster renewed interest and investment momentum.
✨ The EdTech Investment Winter
We've seen a major pullback in EdTech investments. The question is whether this is a temporary correction or a long-term adjustment to overfunding.
2. The DNA of a Promising Founder or CEO
Mark Grovic identifies a distinct set of qualities that differentiate successful EdTech founders and CEOs from the rest. Chief among these characteristics is resilience—the ability to persevere through challenges, setbacks, and market fluctuations. In the current investment climate, the capacity to adapt to adversity and maintain focus on long-term objectives is indispensable. Grovic underscores that this resilience must be paired with an openness to feedback and a willingness to evolve, as even the best-laid plans often require adjustment in the face of real-world complexities.
Another vital trait is the ability to effectively articulate a clear, compelling vision. Founders who can not only conceptualize innovative solutions but also communicate their value proposition in a way that resonates with investors and stakeholders are at a significant advantage. Grovic also emphasizes operational acumen, particularly in balancing visionary goals with pragmatic execution. Founders and CEOs must show they can achieve milestones, manage resources wisely, and build high-performing teams that share their commitment.
Ultimately, Grovic argues, the best leaders in EdTech are those who balance passion with practicality, fostering a culture of innovation while remaining grounded in the realities of running a sustainable business. These attributes not only inspire confidence among investors but also enable companies to navigate the complexities of the education sector and create meaningful, scalable impact.
✨ Why Overfunding Isn't Always a Good Thing
Too much capital can hurt innovation. It can make startups reckless and unfocused because they think there's always more money coming.
3. What New Markets Venture Partners Looks for in a Product or Company
New Markets Venture Partners (NMVP) approaches investments with a clear focus: identifying solutions that address real problems while demonstrating resilience and scalability. Mark Grovic emphasizes several key traits they prioritize.
Tangible Impact and Data-Driven Outcomes
NMVP values products that solve meaningful problems and back it up with data—whether through improved learner outcomes, institutional cost savings, or workforce readiness metrics. Proof of impact is essential to win trust and investment.
Product-Market Fit
Grovic stresses the importance of targeting a clear audience and demonstrating indispensability within that niche. A focused, validated solution trumps broad ambitions.
Sustainable Scalability
Rapid growth means little without the infrastructure to maintain quality. NMVP seeks companies that can expand without compromising their core offerings, ensuring long-term viability.
Mission-Driven Leadership
Founders with a strong mission and vision inspire confidence and build cultures of innovation. Leadership deeply committed to their purpose is key to success in the education sector.
Alignment with Market Trends
NMVP prioritizes companies addressing shifts like alternative learning pathways or equity-focused solutions. Products that fit into larger market trends stand out in a competitive landscape.
For NMVP, success lies in substance over flash—companies that solve real problems, prove their value, and possess the leadership and vision to thrive. It’s about finding the right solutions for lasting impact.
✨ Resilience and Resourcefulness Win the Day
This market will reward entrepreneurs who are thoughtful, scrappy, and know how to manage through lean times.
4. The Focus on Alternative Learning Pathways
New Markets Venture Partners has made a deliberate pivot towards investing in alternative learning pathways, and according to Grovic, this focus stems from their potential to address critical gaps in traditional education systems. Grovic explains that the rapidly changing demands of the workforce, combined with rising costs of higher education, have created an urgent need for flexible, skills-based learning models. Alternative pathways, including bootcamps, micro-credentials, and online certifications, align well with these evolving needs by offering accessible, efficient routes to acquiring in-demand skills.
Grovic highlights that these models not only empower learners to achieve tangible outcomes but also demonstrate scalability and a clear return on investment. They cater to a diverse audience, including working professionals, underserved populations, and those seeking to pivot careers. This inclusivity enhances their appeal in a market increasingly focused on equity and measurable impact.
The scalability of alternative learning pathways also resonates with NMVP’s mission to support transformative education technologies. By reducing dependency on traditional institutional frameworks, these solutions open doors to innovation in content delivery, learner engagement, and data-driven personalization. Grovic notes that such pathways provide investors with a compelling value proposition: they are nimble, market-responsive, and often bypass many of the structural inefficiencies that hinder traditional education systems.
For Grovic and NMVP, the focus on alternative learning pathways represents a strategic alignment with a future where education and work are increasingly intertwined, and learners demand accessible, tailored, and outcome-driven solutions. These investments reflect a broader belief in the potential of EdTech to redefine education for the better.
✨The Promise of Alternative Learning Pathways
We're focusing on companies providing alternative education pathways—non-traditional models that lead directly to meaningful employment.
5. Balancing Financial and Impact Metrics as Investors
For NMVP, investing in EdTech is not just about dollars and cents—it’s about striking the delicate balance between financial returns and meaningful societal impact. Grovic candidly shares their approach to walking this tightrope and what they look for in their portfolio companies.
Financially Sound Impact
NMVP isn’t in the business of choosing between impact and profitability—they want both. As mentioned earlier, a promising company must demonstrate the ability to generate revenue while achieving measurable improvements in education or workforce outcomes. Grovic highlights the importance of products that are "must-haves" for their users, not just nice-to-haves, ensuring long-term demand and financial viability.
Beware Overpromising on Impact
A major red flag is a company that leans too heavily on its mission without a clear path to financial sustainability. While passion for social good is commendable, Grovic is pragmatic: "You can’t scale impact without financial health." Companies that can’t monetize or scale effectively risk losing both their investors and their mission.
Choosing the Right Metrics
NMVP evaluates impact with rigor. Rather than accepting vague claims, they look for tangible metrics—whether it’s better student outcomes, improved workforce alignment, or cost reductions for institutions. At the same time, they steer clear of companies overly reliant on grants or unsustainable business models, which often mask underlying weaknesses.
The End Game of Sustainable Transformation
For Grovic, the real magic lies in finding companies that seamlessly integrate impact with revenue. These businesses don’t just survive—they thrive by making the world a better place. NMVP’s ideal investments create systemic change without sacrificing profitability, proving that doing good can, indeed, be good business.
Balancing financial and impact metrics may be tricky, but Grovic’s philosophy is clear: the best EdTech investments achieve both, not as trade-offs, but as interwoven elements of lasting success.
✨ AI's Biggest Disruption in EdTech
The area where AI can have the most immediate and meaningful impact? Personalized tutoring, hands down.
6. The EdTech Investment Paradox and its New Frontiers
Investing in education isn’t like throwing cash at a fast-scaling SaaS product or a shiny new fintech app. According to Mark Grovic, education is a sector with its own set of unique challenges and opportunities, which require a distinct investment approach. At its core, education combines a slower adoption cycle with a deeply entrenched system resistant to disruption—a reality that sets it apart from other industries.
Why Education Is a Different Beast
Grovic underscores that education buyers, whether schools, districts, or colleges, are inherently risk-averse. Unlike other sectors where agility reigns supreme, education systems prioritize stability and compliance. These dynamics create longer sales cycles and demand a high degree of trustworthiness from EdTech providers. Products must not only work but also align with institutional values and priorities.
Another distinctive challenge? Funding. Unlike industries fueled by private capital or direct consumer spending, education relies heavily on public funding and grants, creating uncertainty tied to policy shifts and budget constraints.
✨ Choosing the Right Founder
We look for founders with grit, humility, and an ability to listen. A great founder knows what they don’t know and builds a team to fill those gaps.
EdTech’s Innovative Business Models
While the sector might seem rigid, Grovic notes that new business models are redefining what’s possible in education. One standout trend is outcomes-based pricing, where EdTech companies tie their revenue to the success metrics of their clients. For instance, a workforce development platform might charge employers only when a learner secures a job. This approach aligns incentives, making it attractive for both buyers and investors.
Another innovation is subscription-as-a-service models for learners, a spin on the typical B2B SaaS structure. These models allow students and families to directly access platforms on a subscription basis, bypassing slower institutional adoption cycles while democratizing access to valuable resources.
Finally, Grovic highlights hybrid education models, which blend traditional and digital learning. These models aren’t just about convenience—they tap into emerging markets, where flexible education pathways are critical to bridging skill gaps. Hybrid models offer scalability while respecting the localized needs of diverse learners.
As Grovic sees it, education might be a slower climb, but the summit offers unparalleled rewards: transforming lives through learning while building sustainable businesses. It’s a balancing act, but one that promises to rewrite the rules of the game for those willing to take the leap.
✨ The Need for Sustainable Business Models
The days of 'grow at all costs' are over. Companies need to show a clear path to profitability to attract serious investors now.
7: AI’s First Big Test in EdTech: Tutoring
Mark Grovic pinpoints tutoring as the most immediate and impactful area for AI disruption in education. AI-powered tutors, he suggests, can address the long-standing challenge of providing personalized, one-on-one support at scale—an often-unaffordable luxury in traditional systems.
The Promise of AI Tutoring
Tutoring has always been a gold standard for addressing individual student needs. However, cost, availability, and geography have made access uneven. AI changes the game, offering personalized instruction through adaptive tools that identify weaknesses, provide tailored exercises, and deliver instant feedback—all without human constraints. For Grovic, AI tutoring isn’t about replacing teachers but augmenting their efforts to ensure every student has access to support when they need it.
Expanding AI’s Role in EdTech
AI’s potential doesn’t stop at tutoring. Grovic highlights administrative efficiency and adaptive learning platforms as additional areas for impact. Automating grading, analyzing data, and tailoring lesson plans can save educators time while improving outcomes.
✨ Data, Design, and Delivery
The best EdTech products combine great design, data that drives decisions, and seamless delivery. If you’re missing one, you’ll struggle.
The Ethical Balancing Act
Yet, Grovic cautions against unchecked enthusiasm. Privacy, algorithmic bias, and over-reliance on technology are real concerns. AI should enhance the human connection in education, not replace it.
Why AI in Tutoring Makes the Grade
AI tutoring is a near-term win—a scalable, cost-effective solution to democratize high-quality support. While education-wide disruption may take years, this is an immediate leap toward equity and efficiency. For Grovic, the future of AI in education is bright—as long as it keeps the human element at its core.
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