COVID-19 is a powerful catalyst for EdTech

Last year, we highlighted the Education sector as having one of the lowest adoption rates of digital technologies. At only 2-3% of total spending in the education sector, it is a lower level than practically every other sector of the modern economy.

July 6, 2020

Dr. Kirill Pyshkin

Fund Manager, Credit Suisse Asset Management

We believe that the adoption of digital learning solutions will rise over time and that spending on EdTech will grow annually in double-digits. What we did not anticipate was the COVID catastrophe and the catalytic effect it has had on the education sector. Adoption and usage has swelled and the demand for EdTech solutions has grown as we will see later in this Thematic Insight at extraordinary pace, fast-tracking the digitalisation of Education by 5-10 years.

Table 1. Edtech Adoption Life Cycle

Sources: Credit Suisse, “COVID-19, The (Great) Disruptor of Education & Work”, used with kind permission of EdTechX.

Coronavirus compelled the world’s students and educators to switch to remote learning overnight. According to UNESCO monitoring, 191 countries implemented nationwide closures, affecting around 98% of the world's student population.2 What has followed in recent months is an unprecedented experiment in the rapid adoption of online learning. At the peak of the Coronavirus crisis, more than 90% of the world’s schools and a majority of universities closed their doors and migrated their teaching online. By late April 2020, approximately 1.7 billion students were studying remotely using a mix of workplace and education technologies including Zoom, Google Classrooms and Microsoft Teams.

Unprecedented spike in users

According to language learning app Duolingo, traffic typically spiked 3 to 5 days after the introduction of lockdowns. Traffic doubled first in China, then Korea, and then by 135% in Spain, 100% in Italy and 90% in US. There were two main types of users: students assigned online learning material by teachers, and adult learners stuck at home taking courses. Coursera saw a fivefold increase in new learner enrolments, with personal development courses seeing the highest interest and a 10-fold increase in overall enrollments.3

When the first cases of Coronavirus emerged in China and schools were shut down, online learning companies opened their online courses for free and new user numbers often increased by a factor of ten. Koolearn, GSX and YouDao – the three pure online after-school tutoring services, each had over 10 million enrolments in free courses during this period, which compares to the paid user base prior to virus of hundreds of thousands. Education app downloads in China have soared to 127 million - almost double the pre-crisis figure.4 There has also been a surge in sales of iPads in China as schools moved online, resulting in shortages.5

As the virus spread around the world, EdTech companies around the globe saw similar increase in users. Seesaw, which allows students to build a digital portfolio of work to share with parents or teachers, increased its reach tenfold within a month when schools began to shut down in March 2020.6 Google Classrooms, which allows teachers to send lessons and materials to students, doubled its users to 100 million in March 2020.7 Byju’s, the Indian online learning app, added six million new users the same month.8 In Brazil, Estacio registered 55% growth in pure online distance-learning student enrolments during Q1 2020. In the US, Chegg, a digital textbook company, saw a 35% increase in subscriptions to its online learning services over the same quarter. Newsela, an app providing engaging digital content and learning resources, signed up thousands of US schools within just a few weeks.

Industry offered unprecedented support to students and teachers amid the crisis

Stewardship in a crisis will pay dividends in the future

Supporting students, teachers and families with free access to courses, training and product is a moral imperative in a crisis. That being said, the pandemic was in many ways a boon to the EdTech industry, by exposing customers to a service that, prior to January 24, 2020, they did not know they needed.

It is too early to tell how many of free trial or forced online users will stay on as paying subscribers. However, even if the conversion rate of free trial customers into paying customers is much lower than what it was in the past, that would still mean a significant increase of paying user base, boosting future revenue. A look at the top three players in China also suggests that the free classes offered to students during the coronavirus period may have resulted in a customer acquisition cost reduction of 95%.11 In other words, these companies get a huge boost in revenue with a simultaneous uplift in margins, which may justify outstanding share performance from the pure-play EdTech companies during the COVID-19 outbreak.

The future of learning is EdTech

Just as EdTech companies may have benefitted from the crisis with ’unexpected universal brand awareness’, as it were, the entire industry received a lift in attention and acceptance as a result of the pandemic. Though difficult to quantify in these early days, the pandemic crisis will likely accelerate industry development, with many EdTech companies bringing forward investments into new functionalities. With the extra resources, and a vast population of educators and students who are now much more open to digital learning, EdTech could transform education as we knew it.

Coronavirus had an unintended consequence – it highlighted for educators and administrators, not to mention students and families, that many of these online applications are as effective – and in some cases more effective - than traditional learning models. Coronavirus has accelerated the blended learning model, which empowers, not replaces, the educator. Across both developed and emerging markets, millions of students and teachers have signed up to free versions of EdTech learning apps, and are experimenting with different formats and technologies. Once the world’s students return to the classroom, it is likely that they will continue to use the most engaging subset of these apps. Further, as students embrace the flexibility and adaptive learning advantages that online learning affords, it is likely that many of these technologies will be increasingly integrated into the brick and mortar classroom or university seminar room.

Profound changes in the workforce

Society is emerging cautiously from lockdown and grappling with a plethora of “new normals.” Among them might also be fundamental changes in the workforce. The world will never be the same. The share of flexible working is going to increase and with that the need for technology and automation. Unfortunately, the COVID-19 crisis is likely to have also plunged the world into a deep recession resulting in significant job losses. That means that the need for reskilling of those being laid-off is more urgent than ever for them to be able to quickly re-integrate themselves back into the work force. With that, online professional training and certification sector will see a significant boost in demand.

Table 2. Workforce: The next normal

Sources: Credit Suisse, Chart from “COVID-19, The (Great) Disruptor of Education & Work” used with kind permission of EdTechX



  • Political developments concerning the education industry could have a significant adverse impact on the edutainment sector.
  • Exposure to smaller companies can result in elevated short-term volatility and may carry liquidity risk.
  • A higher concentration in specific sectors may fall out of investor favor at certain points in time.
  • There are risks arising from a factor bias toward a growth investment style with a particular overweight in small- and mid-cap stocks.
  • Since the fund focuses on highly innovative companies, volatility can be significantly elevated. Exposure to emerging markets may result in even higher volatility.


1 2U Inc (2020): Q1 2020 Earning Call. Bloomberg Transcript from April 30, 2020. Page 4
2, last accessed on May 12, 2020
3 GSV Virtual Summit Series (Program 1 – Wednesday, April 1st)
4, last accessed on May 11, 2020
5, last accessed on May 11, 2020
6, last accessed on May 12, 2020
7, last accessed on May 14, 2020
8, last accessed on May 12, 2020
9, last accessed on May 11, 2020
10 Youdao Inc (2020): Q4 2019 Earning Call. Bloomberg Transcript from February 27, 2020. Pages 5 and 7f
11, last accessed on May 15, 2020



Fee Disclosure
Where permitted by law, we may receive fees, commissions or other monetary benefits in connection with this product from third parties. For details please refer to your Fee Schedule or contact your Relationship Manager.

If you are not a client of Credit Suisse UK Ltd
If you are not a client of Credit Suisse, please note that this document has been provided to you for information purposes only as an example of the type of products we are able to offer to you should you become a client of Credit Suisse. The provision to you of this document does not constitute an invitation or inducement to buy or sell any security or other financial investment, nor does it constitute an advice or personal recommendation. Should you wish to invest in any products, you will have to go through our account opening process which involves providing us with details of your personal and financial circumstances, risk appetite and investment objectives as well as selecting the most appropriate portfolio mandate for you. We can thereafter work with you to determine which investments are suitable or appropriate for you.

Marketing Disclaimer
This document is provided to you for your information and discussion only. It is not a solicitation or an offer to buy or sell any security or other financial instrument. Any information including facts, opinions or quotations, may be condensed or summarised and is expressed as of the date of writing. The information may change without notice and Credit Suisse (UK) Limited (“Credit Suisse”) is under no obligation to ensure that such updates are brought to your attention. The price and value of investments mentioned and any income that might accrue could fall or rise or fluctuate. Past performance is not a guide to future performance. If an investment is denominated in a currency other than your base currency consult with such advisor(s) as you consider necessary to assist you in making these determinations. Nothing in this document constitutes legal, accounting or tax advice. Credit Suisse does not advise on the tax consequences of investments and you are advised to contact a tax advisor should you have any questions in this regard. The levels and basis of taxation are dependent on individual circumstances and are subject to change. This document has been prepared from sources Credit Suisse believes to be reliable but we do not guarantee its accuracy or completeness and do not accept liability for any loss arising from its use. Credit Suisse reserves the right to remedy any errors that may be present in this document. Credit Suisse its affiliates and/or their employees may have a position or holding, or other material interest or effect transactions in any securities mentioned or options thereon, or other investments related thereto and from time to time may add to or dispose of such investments. Credit Suisse may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment to any company or issuer mentioned. Some investments referred to in this document will be offered by a single entity or an associate of Credit Suisse or Credit Suisse may be the only market maker in such investments. This document is intended only for the person to whom it is issued by Credit Suisse. It may not be reproduced either in whole, or in part, without our written permission. The distribution of this document and the offer and sale of the investment in certain jurisdictions may be forbidden or restricted by law or regulation. Investments may have no public market or only a restricted secondary market. Where a secondary market exists, it is not possible to predict the price at which investments will trade in the market or whether such market will be liquid or illiquid. Where such investments will not be listed or traded on any exchange, pricing information may be more difficult to obtain and the liquidity of the investments may be adversely affected. A holder may be able to realise value prior to an investment’s maturity date only at a price in an available secondary market. The Issuer of the investment may have entered into contracts with third parties to create the indicated returns and/or any applicable capital protection (in part or in full). The investment instrument's retention of value is dependent not only on the development of the value of the underlying asset, but also on the creditworthiness of the Issuer and/or Guarantor (as applicable), which may change over the term of the investment instrument. In the event of default by the Issuer and/or Guarantor of the investment and/or any third party, the investment or any income derived from such contracts is not guaranteed and you may get back none of, or less than, what was originally invested. Parties other than the Issuer or Guarantor (as appropriate) mentioned in this document (for instance the Lead Manager, Co-structurer, Calculation Agent or Paying Agent) do neither guarantee repayment of the invested capital nor financial return on the investment product, if nothing is indicated to the contrary. You may have to accept smaller returns on an investment relative to a direct investment in the underlying index, basket, etc. because of the costs involved in providing the capital protection. Such capital protection normally only applies if the investment is held until maturity. The amount of initial capital to be repaid may be geared, which means that a fall in the underlying index or securities may result in a larger reduction in the amount repaid to investors. Where this document relates to packaged products (such as regulated collective investment schemes), any advice offered to retail clients is based on a selection of products from the whole of the market. Where this document relates to emerging markets you should refer to the Risk Disclosures section of the Credit Suisse Terms of Business. Additional information is, subject to duties of confidentiality, available from Credit Suisse upon request. Hedge Fund strategies may include the use of leverage (borrowing) and derivative instruments resulting in certain risks, some of which are as follows: leveraged investments, by their nature, increase the potential loss to investors resulting from any depreciation in the value of such investments. Consequently, a relatively small price movement in a leveraged instrument may result in a substantially greater loss to the Hedge Fund. The market in some of the investments made as part of a Fund’s strategy may be relatively illiquid, giving rise to potential difficulties in valuing and disposing of such investments. Information for determining the value of investments held by a Fund may not be readily available which has corresponding implications for the overall valuation of a Fund. Accurate risk profiling of the Fund holdings may also not be readily available. Always refer to the Fund’s Prospectus and/or the Key Investor Information Document before making an investment. Your personal data will be processed in accordance with the Credit Suisse Privacy Policy published at Credit Suisse (UK) Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority for the conduct of investment business in the United Kingdom. The registered address of Credit Suisse (UK) Limited is Five Cabot Square, London, E14 4QR. If you have any questions regarding the document, please contact your Relationship Manager.

© Credit Suisse (UK) Limited 2020.