Edtech - Innovative Higher Education Services
Edtech - Innovative Higher Education Services
Business Model Description
Expanding high-quality and innovative higher education institutions to all regions of the country, enabling access to quality information and knowledge remotely in fields that make them competitive in the job market.
Expected Impact
Strengthen remote learning in higher education institutions to foster professionals with skills that make them competitive in the job market.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Macroregion Selva
- Macroregion Centro
- Macroregion Norte
- Region Lima y Callao
- Macroregion Sur
Sector Classification
Education
Development need
Peru ranks 64th out of 77 countries in the Pisa Test (1). In 2021, the illiteracy rate for the population aged 15 and older was 5.2% (2). The highlands show a higher illiteracy rate at 8.8% (2). Peru has a school dropout rate of 6.3%, according to figures from the Ministry of Education (Minedu) (8). Peru has regressed by 10.9 points in educational infrastructure (22).
Policy priority
Strategic National Development Plan for 2050, with the goal of ensuring quality and inclusive educational formation. National Policy on Education and Well-being of Adolescents, to guarantee the rights of children and adolescents. National Policy on Higher and Technical-Productive Education, to expand access and improve the quality of higher education.
Gender inequalities and marginalization issues
0.7% of women aged 15 to 19 are illiterate, 1.4% of women aged 20 to 29 are illiterate, higher compared to men of the same age at 1.2%. 3.7% of women aged 30 to 39 are illiterate, a higher figure than that of men with a percentage of 2%. The completion rate for primary education is lower for women compared to men (2).
Investment opportunities introduction
The National Plan's Priority Objective #2 states: 'Increase access and quality of higher education for the young population.' Peru has invested moren than $ 500 million in Bicentennial Schools, $60 million in the assessment of teachers and students, and $534 million in expanding, improving, and maintaining infrastructure and equipment, among other initiatives (3)
Key bottlenecks introduction
The enrollment rate in the private sector has decreased by 4.94%, while in early education, it decreased by 4.7% between 2021 and 2022 (2). 57.4% of Peruvian households have an internet connection. Primary education students have the lowest percentage of internet access, with only 43.3% (5).
Education Technology
Development need
Over 65,000 higher education students have dropped out during and after the pandemic, approximately 9% of the total enrollment. According to the Association of Institutes and Schools of Higher Education, this number could increase to 170,000 (9). Additionally, 22% of Peruvian companies report that a workforce with inadequate education is one of the main obstacles they face (24).
Policy priority
- The Bicentennial Digital Agenda, established in 2021, outlines specific strategies, goals, and actions related to digital technologies to promote competitiveness, economic and social development, and enhance the quality of life for citizens. Additionally, there is a Distance Education Program that provides guidelines for all stakeholders to implement distance education.
Gender inequalities and marginalization issues
Higher income levels are recorded by individuals with a higher level of education(S/ 2,082.2), followed by those with a secondary level of education(S/ 1,250.7), and the population with primary education (S/ 949.6). In 2021, 10.8% of the Peruvian population had completed university studies, highlighting that only 1% of women come from rural areas(29)
Investment opportunities introduction
The National Fund for Peruvian Education Development (Public) promotes investments in this sector. General Atlantic led a $70 million Series C funding round in Crehana, along with existing investors Acumen Capital, Mountain Nazca, and others (17).
Key bottlenecks introduction
In 2020, 40.1% of Peruvian households had internet access(12). 18.5% of the rural area has internet access (13). Only 5.1% of those in extreme poverty, 14.1% classified as poor, and 23.9% identified as vulnerable had computer access. 87.9% of the population in extreme poverty, and over 90% of the poor, vulnerable, and non-vulnerable populations have a mobile phone(13)
Educational Technology
Pipeline Opportunity
Edtech - Innovative Higher Education Services
Expanding high-quality and innovative higher education institutions to all regions of the country, enabling access to quality information and knowledge remotely in fields that make them competitive in the job market.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
20% - 25%
Approximately 300 million professional workers in Latin America and the Caribbean are seeking employment opportunities and exploring the possibility of reskilling and upskilling in a highly competitive regional economy (18). Additionally, over 80% of Peruvian professionals are willing to enhance their skills with new training (28). The individual membership for Crehana costs $99 annually.
-In Peru, there are approximately 44 Edtech startups that have received up to $145 million in funding, accounting for 13% of the total investment in Latin America and the Caribbean. Furthermore, 46% of Peruvian investment in Edtech is focused on Higher Education and Workforce (18).
Indicative Return
10% - 15%
From interviews conducted with investors and startups, it is evident that the expected return ranges from 10% to 15%. This return is lower in the case of startups that, in addition to technology, include social impact issues, such as Laboratoria.
Investment Timeframe
Medium Term (5–10 years)
According to the latest PECAP report, which includes interviews with startups and investors, they tend to invest in companies in the EDTECH sector when they are already in the process of scaling, typically with a medium to long-term perspective.
From the interviews conducted, it's clear that investors are looking to invest in startups that are in the process of scaling and have a medium to long-term perspective.
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - High Level of Competition
Capital - Requires Subsidy
Impact Case
Sustainable Development Need
According to the INEI (National Institute of Statistics and Informatics) of Peru, in 2020, approximately 70.5% of the population aged 15 and over in the country did not have completed higher education, meaning that more than two-thirds of Peru's population has not completed a university or higher technical education (21).
As of 2020, 67% of the employed Economically Active Population had only completed secondary or primary education or had no education. Only 15.3% of the employed PEA had completed non-university higher education, and 16.2% had completed university-level education (13).
According to the educational level reached by the Economically Active Population (PEA), the highest incomes are reported by those with a higher education level (S/ 2,082.2), followed by those with a secondary education level at S/ 1,250.7, and those with primary education at S/ 949.6 (16).
Gender & Marginalisation
According to socioeconomic status, school enrollment in higher education for the wealthiest quintile was 46.3%, nearly four times higher than the poorest quintile, which was 12.7%. This represents a gap of 33.6 percentage points in favor of the wealthiest quintile. (22)
According to INEI (National Institute of Statistics and Informatics) in 2020, approximately 72.7% of women aged 15 and older in the country did not have completed higher education.
In 2020, the average monthly income of women aged 14 and older in the informal sector without higher education was S/ 1,003, whereas the income of men in the same situation was S/ 1,251.
Expected Development Outcome
Democratizing higher education in Peru, so that the entire population can access quality education, regardless of their socio-economic status, is a valuable goal.
Increasing the number of professionals with higher education to meet the labor market demand is an essential objective.
Improve the income levels of the population without access to higher education so that individuals with low economic resources can be trained and become more competitive in the job market.
Gender & Marginalisation
Reduce the educational gender gap in higher education between men and women.
Increase women's participation in various business sectors by providing access to higher education that was previously unavailable to them.
Reduce the gender wage gap by enhancing skills and capabilities.
Primary SDGs addressed
4.5.1 Parity indices (female/male, rural/urban, bottom/top wealth quintile and others such as disability status, indigenous peoples and conflict-affected, as data become available) for all education indicators on this list that can be disaggregated
4.4.1 Proportion of youth and adults with information and communications technology (ICT) skills, by type of skill
4.6.1 Proportion of population in a given age group achieving at least a fixed level of proficiency in functional (a) literacy and (b) numeracy skills, by sex
The higher education coverage in Peru has significantly improved in recent decades. According to the Ministry of Education of Peru, the gross enrollment rate in higher education in the country was 49.5% in the year 2020 (22).
In the year 2021, the enrollment rate in higher education was higher for women (31.1%) than for men (25.4%) (22).
According to INEI, in 2021, 25.8% of the population aged 17 to 24 attended higher education (17.8% university and 7.9% non-university). Compared to the previous year, there was an increase of 3.8 and 2.2 percentage points, respectively (22).
One of Peru's objectives by 2030 is that at least 5 out of every 10 Peruvians will have access to comprehensive training that allows them to acquire the skills needed for their profession and for the development of research and innovation. (24)
Educational institutions that provide Technical Productive Higher Education services offer comprehensive training that enables timely job placement for their graduates.
By 2020, Peru expects that the difference in access to Technical Productive Higher Education between students from lower-income families and those from higher-income families will decrease by half.
8.2.1 Annual growth rate of real GDP per employed person
8.3.1 Proportion of informal employment in total employment, by sector and sex
The employed labor force shows varied performance concerning key indicators of decent work. Regarding regulated working hours and the right to a fair income, 64% of the employed labor force has an average daily working day of eight hours or less, and 47% earns an income equal to or higher than the minimum vital remuneration (MVR) (23).
Labor formality in Peru has experienced gradual improvement in recent years, although there is still much work to be done. In 2020, according to the Ministry of Labor and Employment Promotion (MTPE), the informality rate in Peru was 71.3%, which means that more than two-thirds of Peruvian workers do not have formal employment.
Peru hopes that by the year 2030, one out of every five Peruvians who are part of the occupied working-age population will have decent employment. (23)
Peru expects that the informality rate in the labor market will be 60% of the occupied working-age population, and the unemployment rate will remain at 5%. (23)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Public sector
Corporates
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Outcome Risks
Excessive exposure to computers can harm one's vision.
Excessive screen use without the necessary occupational health guidelines can lead to issues in the hands, wrists, and the upper body in general.
Gender inequality and/or marginalization risk: If educational technology is not designed to foster relevant skills and competencies, it can create skill gaps between those who use technology and those who do not.
Impact Risks
If equitable access to technology is not ensured, it can further widen the gap between students who have access to technology and those who do not.
Privacy and security are another set of risks that the education sector faces. Adequate regulation is needed to protect the privacy and security of students.
Gender inequality and/or marginalization risk: If educational technology comes at a high cost, it can lead to greater economic inequality in education, benefiting only those who have the financial resources to invest in educational technology.
Impact Classification
What
A significant and positive outcome is an improvement in salaries and economic well-being due to having a better-educated workforce.
Risk
Lack of internet coverage and access to necessary tools, due to economic or geographical reasons.
Impact Thesis
Strengthen remote learning in higher education institutions to foster professionals with skills that make them competitive in the job market.
Enabling Environment
Policy Environment
National Education Plan 2021-2026 aims to improve the quality of education and to expand access to higher and technical vocational education, ensuring access to quality education, especially for those in vulnerable situations or in rural and remote areas.
National Policy for Higher and Technical Vocational Education seeks to enhance the quality and relevance of education, promote research and innovation, expand access to education, ensure equity and inclusion, and strengthen the management and financing of education in the country.
Digital Agenda 2.0 is the plan for the development of the information society in Peru, aiming to reduce the digital divide, promote access to ICT, strengthen infrastructure and security, encourage their use in small and medium-sized enterprises (MIPYMEs), capacity development, and in public management.
Financial Environment
Financial incentives: In 2021, 59% of investments in Peruvian startups were allocated to EdTech companies. Private investment in Peruvian startups exceeded US$45 million in the first half of 2022. Public spending on education has increased by approximately 141%, according to INEI (National Institute of Statistics and Informatics).
Fiscal incentives: Companies that invest in scientific research, technological development, and technological innovation (R&D&I) to improve conditions for businesses of all scales can deduct up to 240% of their income tax.
Other incentives: Peru has a large number of students and educators seeking innovative and high-quality educational solutions. There is a need to enhance the quality of education in the country, which presents a significant opportunity for EdTech companies that can provide innovative and effective solutions.
Regulatory Environment
Decree of Urgency No. 006-2020 aims to promote and drive digital transformation in Peru and strengthen the effective use of digital technologies, networks, and digital services by citizens and individuals in general.
Vice Ministerial Resolution No. 125-2020-MINEDU establishes provisions for the implementation of the strategy in the semi-presential distance education mode for public educational institutions in Regular Basic Education.
Law No. 28303 declares of public interest the development, promotion, consolidation, transfer, and dissemination of Science, Technology, and Technological Innovation (STI) as fundamental factors for productivity and national development at different levels of government.
Law No. 30309 aims to promote scientific research, technological development, and technological innovation through tax benefits applicable to expenses in scientific research, technological development, and technological innovation projects.
Law 28044 establishes the general guidelines for education and the Peruvian Education System, as well as the powers and duties of the State, and the rights and responsibilities of individuals and society in their educational role.
Marketplace Participants
Private Sector
Start-ups like Creahana, Netzun, Udox, and Crack The Code are educational platforms based on EdTech, and they have received funding from investors such as Acumen, Kasze, General Atlantic, among others.
Government
Startup Peru, under Proinovate, invested a total of S/ 978 million over 12 years for the co-financing of approximately 3,500 innovation, entrepreneurship, and productive development projects throughout the country until 2019.
Multilaterals
The Ministry of Education of Peru (Minedu) has joined forces with UNESCO, UNICEF, and other major international organizations, as well as private sector and civil society actors, to establish the Peruvian chapter of the Education Coalition. (26)
Non-Profit
Laboratoria is an organization that promotes women in technology by helping them find employment in the field.
Target Locations
Macroregion Selva
Macroregion Centro
Macroregion Norte
Region Lima y Callao
Macroregion Sur
References
- (1) MINEDU (2022), Peru in PISA 2018: National Results Report, 2022.
- (2) Instituto Nacional de Estadística e Informática (2022) - National Household Survey.
- (3)Peru's Investment Plan 2021-2023.
- (4) UNICEF (2022), UNICEF warns that Peru is experiencing an unprecedented educational crisis and calls for prioritizing our girls, boys, and adolescents - press release.
- (5) Instituto Nacional de Estadística e Informática (2022), Households with internet connection increase in the second quarter of 2022.
- (6) MINEDU (2022), Diagnosis of infrastructure or access gaps in the education sector for the PMI 2023-2025.
- (7) UNICEF (2020)School dropout and gender gap: girls are the most affected by educational inequality.
- (8) UNICEF (2023), An additional percentage point in educational budgets can lift 35 million primary school students out of learning poverty.
- (9) UNESCO y UNSMP (2020), Educación y pandemia. Una visión desde la universidad
- (10) UNICEF (2020),School dropout and gender gap: girls are the most affected by educational inequality.
- (11) Apoyo Consultoria (2021), Estudio de contribución económica de la educación privada en el Perú.
- (12) MINEDU (2021), Edu COAR, Edición Trimestral 2021. "13) INEI (2021)Statistics on Information and Communication Technologies in Homes."
- (14) LABORATORIA, (2023), consulta página web.
- (15) Crehana (2023); Consulta página web.
- (16) INEI: Analysis period: April-May-June 2022.
- (17) Crehana: 2021, Crehana becomes the EdTech with the highest Series B funding in Latin America!
- (18) BID (2021), Tecnología educativa en América Latina y el Caribe.
- (19) Instituto Nacional de Estadística e Informática (2022), Behavior of National Labor Market Indicators.
- (20) HolonIQ (2021), 2021 LATAM EdTech 100: Mapping the Region's Leading EdTech Startups.
- (21) Instituto Nacional de Estadística e Informática (2020), Encuesta Nacional de Hogares.
- (22) Instituto Nacional de Estadística e Informática (2022), Indicadores de Educación Según Departamento.
- (23) Ministerio de Trabajo (2021), Política Nacional de Empleo Decente.
- (24) Ministerio de Educación (2020), Política Nacional de Educación Superior y Técnico Productiva.
- (25) PECAP (2022), Reporte de Inversiones de Capital Emprendedor en Perú 2021
- (26) UNICEF (2020), Minedu se une con UNESCO y UNICEF para lanzar el capítulo peruano de la Coalición para la Educación
- (27) Semana Económica (2023), Asociaciones Público Privadas: un mecanismo en cuidados intensivos
- (28) Gestión (2019), Más de 80% de profesionales peruanos dispuestos a capacitarse en nuevas habilidades "29) SUNEDU (2022), GÉNERO Y EDUCACIÓN SUPERIOR UNA MIRADA AL SISTEMA UNIVERSITARIO PERUANO DESDE LAS TRAYECTORIAS ESTUDIANTILES"