GenAI and K-12: Hype, Headwinds, and Durable Investment Opportunities

Introduction  

Yes, it’s another email hitting your inbox with GenAI in big bold letters. We recognize the last few years have seen a lot of digital ink on this topic, and anyone who has attended an education conference (or any type of conference for that matter) knows the hype has been, and continues to be, seemingly inexhaustible. 

For those familiar with the Gartner Hype Cycle, GenAI in K-12 education appears to be positioned near the peak of inflated expectations, with a slide into the trough of disillusionment on the horizon (though admittedly, it seems this assessment could be at odds with tech giants who are shelling out quarter-billion dollar pay packages to recruit AI experts, albeit for use cases outside of education).  

But as students are back for another school year with newer, shinier, AI-ier tools, we want to step back and assess how GenAI is impacting students, districts, systems, and markets, and highlight what we believe is here to stay, what will soon be forgotten, and where gaps remain that represent pockets of opportunity. 

This is Part 1 of a 3-part series, dedicated to assessing how GenAI is reshaping learning and skills development across the entire education continuum. In this edition, we focus on K-12 education; in the weeks ahead, Parts 2 and 3 will turn to the higher education and workforce sectors.  

Broader Context: AI Inside and Outside the Classroom

EdTech tools play a large, but ultimately limited, role in students’ lives. A larger (and arguably scarier) trend is the interactions students have with AI tools outside of school. A recent study found that three-quarters of teens have used AI companions (e.g., Replika), and over half use them regularly. We will not go deep on the need for guardrails in this piece, but the need for AI safety education, and risks if we failed to provide it, are real. By comparison, engagement with school-based EdTech apps ranks second to companions, but extremely far behind. 

Still, keeping pace with the potential of GenAI has become a priority for districts and providers alike, and “AI-powered” has quickly become table stakes for anyone looking to sell into schools. The centralized nature of decision-making in K-12 has slowed widespread adoption (at least relative to higher ed, which we’ll dive into in the next newsletter), but the reality is clear: students, educators, and administrators are already interacting with GenAI in nearly every tool they touch, and providers and investors need to understand the dynamics at play to drive positive impact, outcomes, and sustainable business.   

GenAI has Infiltrated Nearly All K-12 “Jobs to Be Done”

Improved Efficiencies

Improved efficiencies are among the most promising and proven aspects of GenAI in K-12 schools. On the administrative and operational side, AI is helping to optimize bus routes through platforms such as Zum and Edulog and maximize safety and security from both physical and digital perspectives with companies like ZeroEyes and Lightspeed Systems. The need to do more with less amidst the volatility at the federal level and budget constraints hampering investments in the future has put a premium on technologies that can offer efficient, predictive, and cost-effective tools to power core district operations.  

For teachers, productivity gains are just as critical as those powering the back office. From streamlining administrative tasks with solutions like Magic School and SchoolAI, to creating interactive lessons and activities with tools like LessonUp and Knowt, to building and grading assessments through EdPuzzle, EssayGrader, and Snorkl, the time savings are real. Early studies suggest teachers save as much as six hours a week using these tools—not hard to believe for anyone who has spent their Sunday afternoons buried on the couch under a stack of papers to grade. While the durability of these administrative and workflow tools feels strong, the actual impacts on student learning remain less validated. For investors, however, an equally pressing question is whether these companies can sustain durable business models, rather than be relegated to “point solution” status within districts’ fragmented edtech stacks. In many cases, that consideration may outweigh questions of direct student impact. Still, the tools that can alleviate teacher burnout and allow them more time with students will be difficult for districts to turn away from, regardless of whether a direct correlation in student outcomes is clear. 

Student Supports

Student supports, both academic and behavioral, have real potential but are already sliding down the hype cycle curve. AI-powered tutors and test prep tools like PowerBuddy and Acely hold the promise of personalized learning for every student, but conversations with students and educators have revealed the human element remains critical and that these tools in isolation can only go so far. CourseMojo, positioned as a “curriculum-aligned teaching assistant,” reflects this dynamic by playing a complementary role in the classroom. Providers and investors must consider how these tools enhance the role of the adult in the room, rather than pushing a value proposition that claims to replace them.  

On the social and mental health side, providers such as Koko and Sonar offer real-time support and guidance, which is particularly valuable given student-to-counselor ratios approaching 400:1 in some districts. However, while some studies suggest these tools can increase belonging, others find that heavier use of GenAI leads to heightened loneliness and reduced socialization. The lesson for providers is clear: adults must remain in the loop to ensure safety, particularly as more teens begin turning to chatbots as de facto therapists—a trend that raises serious concerns about long-term well-being.  

The reality is that more data-driven and personalized student supports are going to be necessary, especially as K-12 districts face increasingly diverse student needs both within and outside the classroom and persistent challenges with teacher and counselor churn. Providers and investors must recognize, however, that lasting impact will depend on positioning these tools as strengthening—not sidelining—the adults who guide and safeguard students. 

Market Implications and Needs to Be Filled 

Providers selling into schools first felt the fear around AI: The immediate question from districts has been ‘How can we control what these technologies are doing with (and to) our students and families?’. Increasingly, the discussion has shifted to hype: districts now require solutions to have AI-powered capabilities just to entertain a sales conversation. The challenge for investors is that many districts have not slowed down to answer the first question before getting seduced by the second one. As a result, what remains a powerful new technology resource has matured to a sales and marketing soundbite benefiting those with a loud, fast go-to-market motion. GenAI already feels like a commodity, even as we just start to identify and pursue responsible, compelling use cases. The implications for investors are clear and long-standing – make sure the businesses touting their AI bonafides are solving real district administrative and instructional problems, not manufactured – or hallucinating – ones.    

The broader trend toward consolidation in K-12, which we’ve written about in past newsletters, needs also to be considered by providers and investors. Many new solutions are essentially wrappers around generalist models such as ChatGPT, Claude, and Gemini. Point solution providers will be increasingly forced to defend against the gravitational pull of these generalist platforms, as the ease of use in having a one-stop-shop for all GenAI needs can quickly outweigh the benefits of shifting between best-of-breed solutions for education purposes.  

This dynamic applies even more clearly to the market presence and distribution leverage of established K-12 incumbents adopting the self-same technologies, albeit with sizable installed customer bases.  Their initiatives to co-opt the innovations highlighted by GenAI upstarts could look very much like previous cycles, where K-12 product/ service innovators fall victim to the K-12 sector’s distribution imperative. This competitive threat could be compounded by providers needing to develop GenAI capabilities in a cost-conscious manner while also still investing in effective, durable go-to-market models in the post-ESSER K-12 budget environment.     

However, this is not to say that incumbents are unassailable. Across many K-12 administrative markets, emerging providers (e.g., Red Rover, FMX, Clarity Financial, Scout) are developing newer, more elegant models to solve long-standing district and school needs. Long-term winners will use the technology – including GenAI – in service of customer problem-solving, not the inverse.    

At the system level, districts are slowly coming to grips with the need to adjust to the inevitable use of generative AI by students. Chatbots have already undermined homework and low-stakes assessments, driving importance of solutions that support learning and higher-order thinking with, and without, GenAI. Examples include Khanmigo and its scaffolded approach to learning, and Duolingo with AI-powered interactive roleplay scenarios. 

Importantly, students’ increasing (over-)reliance on technology generally and GenAI more specifically risks eroding foundational human-centered skills. Communication, perseverance, and compassion – formerly staples (or at least well-covered side effects) of in-person instruction – are diminished as more interactions are mediated through bots. Providers such as PBIS Rewards (Navigate360), CharacterStrong (FullBloom), and Second Step – among others – that reinforce these skills will become increasingly critical to the future of schools. 

*** 

GenAI is neither a silver bullet nor a passing fad. In K-12, its most durable role will be streamlining district operations and easing teacher workloads, as student-facing tools face mixed results and require strong human guardrails. The real opportunities will flow to providers that use GenAI to enhance, not replace, the role of educators, while also safeguarding the human skills—perseverance, empathy, communication—that matter most.  

If you’re considering diligence support, partnership strategy, or just want to better understand how GenAI will impact your position in the education ecosystem, we’d welcome a conversation.