Education has not been a popular area for enterprise investors recently.
So far in 2024, industry startups have raised a total of just over $1 billion in funding, 1 behind Crunchbase data. As a result, edtech investment is on track to succeed in its lowest level in years.
To see how steeply funding has fallen, we have compiled below the total annual variety of investments and deals since 2019. As you may see, the education space shows no signs of recovery.
In the case of investments in the USA, the pattern is very similar. Investments are still well below pre-market levels in 2021.
It’s not a good time to go out either. We have not seen a major venture-backed public offering from an edtech company in a very long time. There have been no large acquisitions recently.
This is not a problem of growth
What gives? Clearly this is not a demand problem. Around the world, more people than ever are receiving formal education.
Enrollment numbers also proceed to grow, particularly in higher education. The world Bank predicts that the variety of post-secondary students will increase in comparison with estimates 220 million in 2021 to 380 million in 2030.
The use of edtech technology is not decreasing either. The edtech industry is expected to grow at a rate of approx faster pace than the entire global education sector, per Morgan Stanley analysts, supported by increased Internet access and high scalability of edtech business models.
These are not small numbers either. Morgan Stanley forecasts that global edtech spending will grow from $250 billion in 2022 to $620 billion in 2030.
Perhaps an ROI issue
But despite all this growth, it has been a while since we have seen a really big investment success story in the edtech startup space.
The last time we saw a series of huge IPOs was in 2021 when enterprise capital-backed unicorns Duolingo, Kursra AND Udemy went public. Since then, shares of language learning platform Duolingo have remained stable. However, Coursera, a higher education course provider, and Udemy, a skills training marketplace, are well below debut prices.
Investors were also clearly hoping for stronger results in 2021, with education funding (and enterprise investing in general) reaching an all-time high. According to Crunchbase, greater than 60 educational grants value at least $100 million were awarded in 2021 and 2022.
Of these, by far the largest recipient of funds – and the most famous edtech unicorn to go to waste – is India BYJU. This provider of online tutoring and educational content to thousands and thousands of individuals was valued at $22 billion at its peak in 2022.
Unfortunately, BYJU has since served more as a cautionary tale than an inspiring example. Over the past few quarters, the company has faced charges including deceptive marketing practices, large-scale layoffs and declaring bankruptcy of its U.S. subsidiary. It was recently worthwhile for a reported amount of $1 billion.
Other edtech unicorns have not secured latest funding for some time. Online learning application provider based in Bangalore NieAcademyfor example, it raised over $800 million between 2017 and 2021. However, the company, which has repeatedly laid off staff since then, has not decided on one other round of layoffs in almost three years.
Based in Denver Guild, which works with employers to supply staff with skills and higher education offers, also carried out large layoffs. To date, the company has raised over $640 million, with its last fundraising round two years ago.
There is one piece of positive news from the Vienna online tutoring market this yr GoStudentthat is, in line with reports now profitable. The startup previously raised greater than $780 million in equity financing and has conducted multiple rounds of layoffs in recent quarters.
So who will receive funding?
But that is enough about who hasn’t been receiving funding recently. What’s more necessary for startups in this space is who managed to secure fresh funding in a difficult climate.
We used Crunchbase data to compile a list of seven intriguing startups that raised at least $20 million in funding this yr.
Hence?
Optimists might argue that funding for education and edtech startups should see growth in this area. After all, the problems that edtech startups set out to unravel have not gone away.
As AI capabilities develop, we also expect to see more investment in startups that use the technology for educational purposes (aside from cheating). And while the fortunes of a few edtech unicorns have faltered, there’s clearly nothing stopping a latest generation from rising up.
For now, nonetheless, the level of investment in edtech technologies stays far from the level of economic recovery.