Investment in traditional edtech companies has fallen sharply, from $17.3 billion in 2021 to $3 billion in 2024—the lowest in over a decade. Meanwhile, generative AI tools like ChatGPT, with their free and highly accessible offerings, have surged in popularity, drawing $51.4 billion in investment this year. Platforms like Chegg and Coursera have struggled to retain subscribers, and their stock values have plummeted.

Yet, this isn’t just a story about technology replacing older models—it’s about the deeper dynamics of organisational change, investor behaviour, and the complexities of education itself.

The Cultural Inertia of Edtech Companies

The struggles of traditional edtech aren’t purely technological—they’re cultural. Like Kodak in the era of digital photography or Shell in the shift toward renewable energy, edtech companies often find it hard to pivot. Their workforce, leadership, and even customer base are often rooted in the very practices and models that generative AI threatens to disrupt.

Many edtech professionals joined the sector to create content-rich, structured learning experiences. These values and skills don’t always align with the demands of AI-driven innovation, which requires a different mindset—one focused on data, algorithms, and adaptive systems rather than static course creation.

This cultural inertia isn’t insurmountable, but it’s a significant barrier. To thrive, edtech companies need leaders who can align teams around a new vision, reskill their workforce, and bring on talent with expertise in AI. Without this cultural shift, technological transformation will remain out of reach.

Generative AI: The Bright, Shiny Distraction?

The surge in generative AI investment reflects the allure of the “new.” Investors are drawn to technologies that promise immediate disruption and quick returns. Generative AI is versatile, accessible, and cheap—qualities that appeal to a market hungry for innovation.

However, the value generative AI provides is often surface-level. It excels at generating content and providing instant answers, but it cannot replicate the deeper learning experiences that require human guidance, collaboration, and critical thinking. While AI tools have their place in education, they cannot address systemic challenges like equity, engagement, and long-term skill development.

Edtech’s role, by contrast, is inherently long-term. The sector isn’t just about delivering content; it’s about creating systems and tools that foster meaningful learning outcomes over time. This is where edtech can persevere: by focusing on the broader, lasting impact of education rather than the quick wins that generative AI offers.

Balancing Long-Term Value with Short-Term Pressures

The challenge for edtech leaders lies in navigating conflicting pressures. Shareholders may demand that companies chase the fast returns associated with generative AI, but this strategy risks undermining the deeper value that edtech can provide.

Education is not a marketplace where “quick and shiny” solutions succeed in the long term. Learners and institutions need tools that are rigorous, inclusive, and aligned with broader educational goals. Generative AI cannot address these needs on its own, and platforms that over-rely on it risk eroding trust and failing to deliver on their core mission.

By focusing on their unique strengths—building institutional trust, supporting educators, and creating adaptive, equitable systems—edtech companies can carve out a space that complements generative AI without being overshadowed by it.

The Danger of Stalling

Edtech’s decline in investment also reflects its failure to adapt quickly enough. Companies that have relied on established models, even as the world around them changes, face the risk of obsolescence.

Generative AI has exposed this vulnerability, but it doesn’t have to spell the end for edtech. There is still room for companies to reposition themselves as essential players in the education ecosystem. To do so, they must:

• Demonstrate measurable impact on learning outcomes.
• Address the systemic challenges of education, including inequity and access.
• Use AI as a tool to enhance their offerings, rather than a crutch that replaces them.

Leadership will be key. Those who can align organisational culture, market demands, and technological possibilities will not just survive this disruption—they will redefine what edtech can achieve.

A Moment of Reckoning

The drop in investment is a wake-up call for edtech, but it’s also an opportunity to reassess its role in education. The rise of generative AI has forced the sector to confront its weaknesses and its strengths.

For leaders in edtech, the path forward requires a clear understanding of what makes their platforms valuable in the first place. It means resisting the temptation to chase short-term trends and instead doubling down on the mission of education: fostering understanding, critical thinking, and human connection.

The disruption caused by generative AI is real, but it doesn’t have to be the end of edtech. By focusing on what AI cannot do—addressing the deeper complexities of education—edtech can not only survive but thrive in this new landscape.