Will the Brexit Spell Trouble for British Edtech?

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It's a confusing time to be in Bredtech. 

Britons have voted the Brexit into law. The prime minister has resigned. Financial markets are in turmoil. What does it all mean for the edtech business?

Lord Jim Knight, chief education adviser at TES Global, wrote in a blog post that the day-to-day operations of schools will not change much. TES Global is a teacher-to-teacher marketplace based in London. The EU does not have jurisdiction over its members’ education systems. Schools will face the biggest challenge, he writes, in recruiting teachers and maintaining their budgets. If the financial sector becomes weaker in the long-term, there will be less money in taxes and government revenue that would have gone to schools. Before the vote, Lord Knight wrote a post in support of remaining in the EU.

At ISTE 2016, Lord Knight gave more opinions on the Brexit. He saw a silver lining in Britain’s impending departure. “Brexit may be an opportunity—if the politics are that we need to depend less on migrant skills (meaning people coming in from other countries),” he said, “Then that puts a massive policy priority on fixing skills education in the UK.”

But, Knight said, higher education may suffer budget cuts more immediately than other sectors of education: “Universities receive roughly $5 billion pounds from the EU, so that’ll go away. The EU invests a lot in science research, so how will the UK make up for that?”

When asked how the Brexit will affect TES Global’s business, Lord Knight hinted that the company might be focusing on other countries more than the embroiled UK: “If school budgets get squeezed, it may affect all education companies, and so we need to really focus on the ‘Global’ part to our name. Over the last few days, we’ve uploaded new resources on how to teach kids about Brexit. I don’t think the traffic will change, but the fundamentals of the business are strong. The effect on the edtech market in UK will be a function of how bigger events play out.”

Again, he saw a silver lining. “The upside to British edtech will be exports—British edtech products will be cheaper.”

Edtech products may move easily, but venture capital will not: “If you were looking for funding from British investors, that would be difficult. If I was investing money, I would want to wait and see how things play out.”

Peter Warburton, founder of the game design academy Rizing Games, was on the floor of the Electronics Entertainment Expo a week before the Brexit vote. He had come with three of his Polish students, who, he believed, wouldn’t be able to study at Rizing Games if Britain was not part of the European Union. He thinks continental students will face a much more difficult process to obtain approval to study in the UK.

“It could affect us quite adversely. We have a lot of students relocating from Poland, which has a strong gaming industry. There are a lot of massive gaming companies there. If we do have the Brexit and people choose to leave, it may increase the costs of students coming into the country to study, or they may not be able to come into the country at all. That is detrimental. We’re also exporting students to pursue other courses across Europe for university. It’s a worrying situation. I’m not convinced about it. Not at all.”

Caroline Wright, the director general designate of the British Educational Suppliers Association, deferred judgment on the Brexit in a prepared statement emailed to EdSurge:

“It is too early to understand the full ramifications of how the nation’s decision will impact the economy and our trading relationship with Europe and the rest of the world in the long term….I will make it clear that UK education suppliers are open for business and we will continue to provide our world-leading educational goods and services.”

The full ramifications may be unclear, but startups are already worried about the availability of venture capital. Rich Pleeth, CEO of the London-based friend-finder app Sup (not an edtech company), spoke with more vitriol to the Wall Street Journal, “Now I can’t imagine any capital is going to flow into the U.K. for the next several months. It’s a complete disaster. For lots of British startups, this could be the end of the road.”

Blake Montgomery (@blakersdozen) is a reporter at EdSurge, where he covers how people use edtech. He previously managed content at Cozymeal and taught English at Swiss Semester. He studied English and graduated Phi Beta Kappa from Stanford, having published the nonfiction graphic novel A Place Among the Stars.

Mary Jo Madda (@MJMadda) is Senior Editor at EdSurge, as well as a former STEM teacher and administrator. In 2016, Mary Jo was named to the Forbes "30 Under 30" list in education.

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