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What is EdTech?
EdTech encompasses a sector of companies that use technology to enhance teaching and learning. The industry saw a rise in investments after the Covid-19 pandemic pushed students and teachers into the reality of online learning. In 2020, global investment in EdTech reached $11.6 billion, a 40% increase from the previous year. We also saw 10,000 new EdTech startups launch in 2020 compared to 8,000 in 2019.
BYJU's co-founder put it best in this interview saying,
The biggest challenge to EdTech prior to the pandemic was awareness of how can online education be a part of mainstream education. / The future of education is not entirely online and it's not entirely offline - it’s best in the blended or hybrid format of learning.
Beyond K-12 and higher education, the rise in corporate learning and upskilling has also contributed to the industry's growth. In the corporate world, EdTech is being used to improve employee retention, refining skills they need to perform at their best. For example, many companies are using online courses and virtual classrooms to train employees on new software and technologies. Upskilling has also become a favorite as more individuals make career pivots or navigate fully away from traditional schooling.
EdTech Sub Sectors
The industry has carved out a number of sub-sectors, here are just a few to check out:
- Online learning. Includes platforms that offer courses and programs that can be accessed online. (Coursera, Udemy, Udacity)
- Gamification. Platforms that use game mechanics to make learning more engaging and fun. (Kahoot!, Quizlet, Duolingo)
- Learning management. Systems that offer a centralized place for teachers to create and deliver content, track student progress, and communicate with students. (Blackboard, Canvas, Moodle)
- Adaptive learning. Platforms that use data and analytics to personalize learning experiences for students. (DreamBox Learning, Knewton, ALEKS)
- Tutoring platforms. Platforms that connect students with tutors to guide them in their courses. (Chegg, Preply, Wyzant)
Why Invest in EdTech?
- Positive Social Impact. Investing in education means investing in the future of millions of individuals. Edtech has the power to increase access to learning on a global scale and improve the effectiveness of traditional methods.
- Disruptive. EdTech has the power to uproot everything we’ve known about traditional schooling. Impacting systems that have gone relatively untouched, especially with current trends in AI, machine learning, and gamification create more engaging environments.
- Growing Market. The education technology industry is ripe with growth potential. From 2022 to 2030, the education technology market is expected to grow annually by 16.5% and is expected to expand 2.5 times from 2019 to 2025, up to $404 billion in 2025.
- Profitable. A number of companies have proven major profitability in the EdTech space. In total, 2022 closed with 30 EdTech Unicorns around the world, collectively valued at $89B. Some of these include Course Hero, Masterclass, and Handshake.
Investment Landscape
In 2022, global EdTech funding reached $10.6B. Out of the total 1,400+ deals in EdTech venture funding, half of them were focused on learner/teacher support and management systems. Learner/teacher support ranges from study notes, tutoring, test prep, and after school. While management systems would include finance, learning environment, education management, class technology, and admissions.
Regional EdTech Funding (2010-2022)
China: $29.6B
USA: $25.5B
India: $10.5B
Europe: $7.7B
RoW: $6.4B
No. of EdTech Funding Rounds (2022)
$250M+: 5
$100-$250M: 15
$50-$100M: 25
$20-$50M: 70
While funding went down by 49% as compared to 2021’s total of $20.8B. The growth in EdTech funding from 2010 to 2021 has gradually seen a record rise. Additionally, investments with check sizes from $20 to $50M have steadily increased year over year and continued to do so in 2022.
While the global venture downturn continues in 2023, we’re seeing smaller and more frequent rounds. According to HolonIQ, EdTech is projected to raise a mere $3.35B in total funding for the year after hitting its $1.1B mark for Q1. That would mean a 67% drop in funding as compared to 2022 and an 87% drop compared to 2021.
EdTech VC Funds
Brighteye is an Edtech-focused venture capital fund in Europe. We invest in Seed and Series A stage companies.
Owl Ventures is the largest venture capital firm in the world focused on the education technology market with over $2 billion in assets under management.
At Kapor Capital, we invest in seed-stage startups that close gaps of access, expand economic opportunities, and make a positive impact on our society and the economy.
Learn is the first-ever and leading venture capital firm focused on tech-enabled education broadly defined.
Runa Capital is a global venture capital firm built by serial entrepreneurs that invests in early-stage software startups around the world.
Edovate Capital is a seed and early-stage venture capital company whose leadership invests in companies that lead innovation in the education market.
Reach Capital invests early-stage at the intersection of tech and adjacent sectors, including the future of work, creator economy, web3, fintech, and health.
GSV Ventures is a venture firm investing in exceptional technology entrepreneurs creating scaled solutions in the “Pre-K to Gray” digital education and skills market.
Additional Readings
Interested in learning more about the future of Edtech investing? Check out these additional readings!
- The VCs Fueling the Future of Education: A Guide for EdTech Founders
- EdTech Startups: to Invest or Not to Invest?
- Why Investors Are Bullish on EdTech in 2023
- The European Edtech Funding Report 2022 (free to download!)
- Global EdTech Landscape: What Niches Are the Most Promising?
- PeakSpan’s EdTech K-12 Market Map
