🛝 Half of EdTech Companies Lost Revenue Last Year

Welcome to Playground Post, a bi-weekly newsletter that keeps education innovators ahead of what's next.

This week's reality check: Nearly half of EdTech companies report revenue declines for the third year running, and "pilot purgatory" has replaced growth as the sector's defining problem. Meanwhile, only 27% of 8th graders can do math at grade level, and the teachers expected to fix it were never trained for their biggest classroom challenge: student behavior.

Data Gem

82% of K-12 schools reported experiencing cybersecurity incidents between July 2023 and December 2024, according to the Center for Internet Security.

Districts Want Proof Before They Buy

The K-12 education market is valued at more than $800 billion. It has reached what industry leaders are calling a critical inflection point.

An EdWeek Research Center survey of 287 K-12 business officials found 48% of education companies reported revenue declines over the past year.

That's up from 36% in 2025.

And 28% in 2024.

Three years of worsening financials across nearly half the industry.

The cause isn't just budget cuts, it's a shift in how districts buy. With ESSER's $189.5 billion gone and no replacement coming, every dollar now requires justification through efficacy and proof of impact.

The sector's biggest problem has a name: pilot purgatory. 

Products deployed in thousands of classrooms that can't convert to district-wide contracts because they can't demonstrate measurable student outcomes. Privacy and cybersecurity have become strategic differentiators, not features.

There's a counterpoint: optimism for future growth is ticking up for the first time in three years. 

Companies see opportunities in specific state markets, the growing private school and ESA market, and AI-backed technologies. But optimism without proof won't convert to revenue.

For education innovators, this is a direct market signal. The era of "buy and hope" is over. 

Products must prove impact, not just demonstrate features. That means outcomes measurement built into the product from day one, not added as an afterthought. 

If you can't show a district superintendent exactly how many students improved and by how much, your competitor will.

A "Science of Math" Movement Is Coming

The numbers are hard to argue with.

39% of 4th graders scored proficient in math on the 2024 NAEP.

27% of 8th graders.

21% of high school seniors.

The U.S. ranks 26th out of 38 countries on international assessments.

Bellwether's "Solving for X" report calls for a balanced approach grounded in cognitive science. The problem isn't just what's being taught. It's that instructional methodology remains inconsistent across districts and states.

"Research is telling us there should be a balanced approach," said Anson Jackson, co-author and senior partner at Bellwether, describing the false choice between rote memorization and conceptual understanding.

Ashley Jochim, a senior fellow at the Center on Reinventing Public Education, draws a direct parallel to literacy.

"The thing that best builds kids' confidence in mathematics is skill-building," Jochim said. "When we throw kids into the deep end and tell them to swim, that doesn't help them. It reinforces the idea that, 'I can't do this.'"

Jackson identified a cultural problem too: "Too many teachers are afraid of mathematics. Elementary teachers say, 'I'm not a math person,' but they're teaching mathematics. No one says, 'I'm not a good reader.'"

The parallels to the Science of Reading movement are striking. A decade ago, literacy instruction was similarly fragmented between phonics-first and balanced literacy approaches. Research settled the debate. Policy followed. Purchasing followed policy. An entire market was reshaped.

Math appears to be at the start of that same cycle.

For education innovators, this is a signal for transformation. The "Science of Math" opportunity mirrors what happened in literacy: evidence-based adaptive math curriculum, math-specific teacher professional development platforms, formative assessment tools that diagnose conceptual vs. procedural gaps, and implementation analytics that track fidelity across classrooms. 

The $3 billion+ math curriculum market is about to be disrupted by the same research-to-policy-to-procurement pipeline that reshaped reading instruction. Companies that position around evidence-based math instruction now will have the advantage when state adoption cycles catch up.

Teachers Say Behavior Is Impossible. Their Training Programs Never Taught Them How

Kasandra Medina Torres is a first-year teacher in Reno, Nevada. She has 25 to 30 first graders in her class.

"We learn so many strategies and the importance of meeting every single student's needs, but once you're in the classroom, you're just on your own," she said. "It's just a lot to manage when not having the actual skills quite yet."

A new framework from the National Council on Teacher Quality documents why teachers like Medina Torres feel unprepared.

NCTQ's review of teacher preparation programs found most cover rules, routines, and physical classroom setup. 

But only about half address how to respond to serious misbehavior. And only a quarter cover positive reinforcement.

Meanwhile, more than 1 in 3 of 5,800 surveyed teachers said student behavior was "a lot worse" in the 2025-26 school year than the prior year.

The consequences are measurable. 

Studies show first-year teachers are far more likely than experienced teachers to send students to the principal's office for behavior problems. And providing better discipline preparation could halve racial gaps in student discipline referrals.

Demetrius Dove, a first-year English teacher in Atlanta, said his prep program covered mainly "surface-level" strategies like standing near a misbehaving student.

"I may be reading this behavior as, 'oh, they're just disinterested in my curriculum,' but no, they're actually responding out of their trauma," Dove said. "I didn't necessarily get taught to notice the nuances."

NCTQ's framework recommends prep programs teach educators to treat misbehavior as "a skill gap rather than a character flaw" and give future teachers structured practice responding to challenging behaviors before they enter the classroom.

For education innovators, the gap between what prep programs teach and what classrooms demand is a specific, named product opportunity. Simulation-based practice platforms where aspiring teachers rehearse behavior scenarios before facing them live. Video coaching tools that let mentors give feedback on real classroom interactions. 

The research says better preparation could cut discipline gaps in half - but the tools to deliver that preparation at scale barely exist.

⚡️More Quick Hits

This week in education:

• 442 of 1,700 private colleges are at risk of closing within a decade — Huron Consulting projects more than a quarter of private nonprofit colleges, serving 670,000 students, are financially at risk, with 120+ in the highest-risk tier as the high-school-to-college transition rate fell from 70% in 2016 to 61% in 2023

• K-12 telehealth provider Hazel Health lays off 135 staff as ESSER funding expires — Hazel still serves 6,000 schools in 21 states, but contracts are ending as relief dollars expire, despite a California program that spent $28 million and referred 9,337 students from 804 schools

• New nutrition standards could force menu changes at 130,000 schools serving 30 million lunches daily — Over 900 districts urged USDA to maintain current requirements, while nutrition specialists note most kids already get adequate protein but fiber is "the nutrient that tends to get neglected"

• Texas voucher data: 75% of 274,000 applicants were already in private school or homeschool — The nation's $1 billion program drew 45% white applicants versus 53% Hispanic public school demographics, and 63% came from middle-to-high-income families

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