Investment Opportunities in Education

Abstract

A revolution is underway in the $740 billion U.S. education and training industry, spurred on by advances in technology and a dramatic influx of private capital. Second only to healthcare as a percentage of U.S. gross domestic product, the industry encompasses four major segments: Schools, Services, Products, and Internet-based Education. New technologies, rising student enrollments, and the global transformation from an industrial economy to a "knowledge economy" have all contributed to the industry's explosive growth. Amid this growth, private sector involvement has made deeper inroads into territory formerly reserved for government and not-for-profit entities. For most of the 1990s the for-profit education sector has grown rapidly, both in absolute terms and as a percentage of total education expenditure. Many investors already have discovered a variety of investment opportunities that not only generate significant financial returns, but also make a difference in the lives of millions of learners. In this article, the authors define the education industry, describe the trends and challenges facing various segments and sub-segments, and suggest that the industry offers a full range of business models and risk-reward profiles to suit virtually any investor.