TL;DR
The education sector is undergoing a seismic shift as generative AI reshapes how students learn and how institutions operate. Founders looking to scale in this space will need more than flashy features, they'll need a strong AI strategy, measurable outcomes, and a deep understanding of the human elements that make learning meaningful.
A Shift in Infrastructure, Not Just Interface
"The biggest changes we're seeing aren't just in how students interact with tools," says Nick Solly, CTO of Mohara. "The real shift is happening in how those tools are built." Solly's team has been embedding generative AI into the backend of EdTech platforms: automating testing, enhancing data oversight, and speeding up product iteration.
Matthew Henshall, founder of Lessonspace, which operates in 90+ countries, agrees. "AI has made us code faster, test better, and offer teachers more visibility into what's happening post-lesson." But he cautions against overpromising. "The magic is still in the social contract between people, the expectation that a student shows up at 4pm and the tutor is there."
The Human Element (Still) Matters
A 2025 MIT Sloan study found that overreliance on AI tools, especially without guidance, can lead to diminished critical thinking skills over time, particularly in younger learners. Students who used AI to complete assignments without teacher oversight showed a measurable decline in metacognitive engagement over six months.
For founders, this is a product strategy issue. Tools that undermine learning outcomes, even subtly, will lose traction. As one investor noted: "We want to back founders who think critically about the pedagogical implications of their tools."
Building Trust, Not Just Features
Irmak Atabek, co-founder of KidsAI, builds explainable AI tools for children aged 5–12. "We made a conscious choice: Olii, our AI assistant, doesn't pretend to be your friend. It doesn't simulate empathy, or say things it can't back up." For kids, that boundary is essential. "You can't blur the line between tool and companion. That's where harm can creep in."
What Investors Are Looking For Now
A HolonIQ report released in July 2024 showed that while EdTech funding declined 17% overall year-on-year, investment in AI-enabled EdTech products rose 36%. Startups with vague AI roadmaps or inflated claims saw markedly lower conversion rates. AI must be woven into product architecture, not slapped on as a feature.
Ethics, Privacy and the Role of Institutions
If your AI tool is gathering insights from a 10-year-old's learning responses, you need a whole different level of scrutiny. Several panelists noted growing regulatory momentum in Europe and the Middle East. "This shift is already underway, and many institutions are scrambling to catch up," says Henshall.
4 Emerging Signals to Watch
- Micro-interventions with AI, Short, AI-powered interventions that integrate into existing platforms.
- AI Literacy as a Core Skill, Teaching students when to use it, how to challenge it, and how to reflect on its outputs.
- Decentralized Tutoring Networks, Platforms matching students to instructors based on goals, personality, and learning style.
- Ethical Certification for AI Tools, An "AI-Ready" certification expected to become a differentiator for startups.
