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‘Great Resignation’ Drives Billions In VC Dollars To Upskilling Startups

The imbalances in today’s job market have become a familiar story.

Employers can’t fill an enormous number of jobs because they can’t find and attract employees with the requisite skills.

Scores of workers, meanwhile, feel stuck in mediocre jobs they don’t see as paths to more lucrative and satisfying careers.

It’s the kind of situation that attracts startup founders and venture investors looking for scalable approaches to big, entrenched problems. And as a result, we’ve seen a boom recently in global investment to startups developing tools and platforms focused on upskilling and reskilling workers.

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Since last year, investors have poured more than $2.1 billion into an assortment of companies in the skilling space, per Crunchbase data. Primarily, they’re focused on two areas: upskilling, which provides skills to grow in one’s current career, and reskilling, which involves training for an entirely new job.

 

The funding spurt comes as employers are pumping more money into keeping workers around. Beyond pay raises, many are investing more heavily in education and career development for entry-level level jobs and beyond.

“What we’re seeing is that companies have to serve their frontline workforce as well as their knowledge workforce,” said Rachel Romer Carlson, co-founder and CEO of Guild Education, an upskilling unicorn that counts large hourly wage employers like Chipotle, Lowe’s and Target among its corporate customers.

Over the past year, the number of learners Guild works with has grown over 60 percent, according to the company. The Denver-based startup has raised more than $340 million in the past three years to keep up that pace of expansion.

Guild is one of a handful of companies in the upskilling and reskilling space that have raised big rounds in the past year. The most heavily funded workplace training provider, Articulate, pulled in $1.5 billion in Series A funding in June, nearly two decades after its founder began bootstrapping the New York-based company. Next up is Degreed, a workforce upskilling platform that raised over $150 million in Series D funding last spring.

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The difference between upskilling and traditional schooling

Broadly, upskilling tends to be more about demonstrating what you can do rather than accumulating a specific number of course hours or credits.

At Guild, for instance, Carlson said programs are increasingly competency-based rather than time-based. If a learner can demonstrate competence in a subject area, they can move through the program quickly.

There’s a similar philosophy at Workera, an enterprise upskilling platform for artificial intelligence, machine-learning and data science that closed a $16 million Series A last summer. The idea is that users already have skills when they begin, so programming should focus on figuring out how to teach the things they don’t know.

“In today’s world, content is not the bottleneck to learn. There is so much content,” said Kian Katanforoosh, co-founder and CEO of Workera.

The real bottleneck, he said, is around mentorship. Learners need help determining what skills they need, finding content and tools to learn those skills, tracking improvement and assessing what they can do.

Workera’s offering aims to address this issue, by essentially doing everything but the content part. While the platform doesn’t produce educational programming, it curates the most appropriate materials from free and employer-paid sources, helps students work through it, and provides assessments of the skills they’ve gained.

Who pays?

The nice thing about upskilling for employees is that usually their employer covers the tab.

That’s the case for virtually all learners at the most heavily funded upskilling providers. The cost for employers, meanwhile, varies depending on factors such as level of program customization, type of assessments and the number of learners. At Guild, Carlson said, the cost typically works out to between $3,000 and $6,000 a year for a full slate of courses offered through partner universities and learning providers.

On the reskilling side, the question of who pays has a more varied set of answers. Employer-covered reskilling isn’t uncommon, but students often fund their own way as well. There are also some hybrid approaches. Coding academies, for instance, have been known to offer income-sharing agreements, which allow students to defer tuition payments until after they land a job.

Balancing perishable and durable skills

The potential for broad economic gains from upskilling drew plaudits recently from The World Economic Forum, which posited last year that wide-scale investment in upskilling has the potential to boost global GDP by $6.5 trillion by 2030.

While the biggest gains would likely be seen in China and the U.S., WEF contends that sub-Saharan Africa and Latin America regions could also see an additional 7 percent or more GDP gain by 2030 if they start investing in upskilling now.

Sounds promising, but, as upskilling providers note, it’s a perennial challenge for employers and workers alike to determine in which areas they’ll reap the most reward for their efforts.

“Employers are new in their work doing skills mapping. And candidly, any executive who tells you what skills they need 10 years from now doesn’t know what they’re talking about,” Carlson quipped.

A common framework is to break skill sets broadly into two categories: durable and perishable skills.

Durable skills include abilities in such areas as leadership, written and verbal communications, and critical thinking, that can serve a person well in any position.

Perishable skills are more job-specific: say, mastery of a particular analytics tool, programming language or sales platform.

Another durable skill that strikes me as coming out of all this is the demonstrated ability to upskill. An employee who doesn’t know a programming language or collaboration platform but has demonstrated ability to pick up these skills could also be in high demand.

And given the fast-changing nature of today’s workplaces, there’s a virtually unlimited set of useful skills most of us have yet to master—which bodes well for upskilling providers.

Illustration: Li-Anne Dias

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