Edtech Funding Has Not Hit Bottom

Education is not a hot area for venture investors lately.

So far in 2024, startups in the space have pulled in just over $1 billion in total funding, 1听辫别谤 . Consequently, investment in edtech is on track to hit its lowest total in years.

For a sense of how steeply funding has fallen, we charted out total annual investment and deal counts since 2019 below. As you can see, the education space is not showing signs of a rebound.

For U.S. investment, the pattern looks much the same. Investment is still far below where it was even before the 2021 market peak.

It鈥檚 not a great time for exits either. We haven鈥檛 seen a big IPO for a venture-backed edtech company in quite a while. Large acquisitions also haven鈥檛 been happening lately.

Not a growth problem

What gives? Clearly it鈥檚 not a demand problem. Across the world, more people than ever are receiving formal schooling.

Enrollment numbers continue to grow too, especially for higher education. The predicts the number of post-secondary students will rise from an estimated .

Nor is adoption of edtech waning. In coming years, edtech is expected to grow at a than the overall global education sector, per analysts, supported by increased internet access and the high scalability of edtech business models.

These aren鈥檛 small numbers either. Morgan Stanley projects global edtech spending to increase from $250 billion in 2022 to $620 billion in 2030.

Maybe an ROI problem

Despite all that growth, however, it鈥檚 been a while since we鈥檝e seen a really big investment success story out of the edtech startup space.

The last time we saw a string of sizable IPOs was 2021, when venture-backed unicorns , and went public. Since then, shares of language learning platform Duolingo have held up well. But Coursera, a higher-education course provider, and Udemy, a skills training marketplace, are well below their debut prices.

Investors also were clearly counting on more big outcomes in 2021, when funding to education (and venture investment overall) hit an all-time high. In 2021 and 2022, there were more than 60 education-related financings of $100 million or more, per SA国际传媒 data.

Of those, by far the largest funding recipient 鈥� and most famous edtech unicorn gone awry 鈥� is India鈥檚 . The online tutoring and educational content provider to millions had a reported $22 billion valuation at its 2022 peak.

Unfortunately, since then 叠驰闯鲍鈥檚 has served as more of a cautionary tale than an inspiring example. In the past few quarters, the company has faced charges of deceptive marketing practices, carried out large-scale layoffs, and filed for bankruptcy for its U.S. division, among other woes. It was recently at a reported $1 billion.

Other edtech unicorns haven鈥檛 secured new funding in a while. Bangalore-based online learning app provider , for example, raised over $800 million between 2017 and 2021. But the company, which has had multiple rounds of job cuts since then, has not closed on a new round in nearly three years.

Denver-based , which works with employers to provide upskilling and higher-education offerings to workers, has also carried out large layoffs. The company has raised over $640 million to date, securing its last round two years ago.

One bit of positive news came this year from Vienna-based online tutoring marketplace , which reportedly is . The startup previously raised over $780 million in equity funding, and carried out multiple rounds of layoffs in recent quarters.

So, who is getting funded?

But, that鈥檚 enough about who鈥檚 not getting funded lately. More pertinent for startups in the space is who has been managing to secure fresh financing in a challenging climate.

We used SA国际传媒 data to put together a list of seven intriguing startups that raised financings of $20 million or more this year.

Up from here?

Optimists could make a case that education and edtech startup funding should see upward movement from here. After all, the problems edtech startups set out to solve haven鈥檛 gone away.

As AI capabilities advance, we鈥檇 also expect to see more investment in startups that leverage the technology for education (in use cases other than cheating.) And even as several edtech unicorns have seen their fortunes falter, there鈥檚 nothing clearly stopping a new generation from emerging.

For now, though, edtech investment levels remain far from recovery territory.

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Illustration:

India鈥檚 troubled fallen unicorn 叠驰闯鲍鈥檚 raised $300 million in a rights offering in February. We did not include this in the global edtech funding total as a rights offering is not a traditional funding round. Rather, it has qualities of an option, as shareholders are extended the right to purchase new shares at a discount to the market price on a stated future date.↩

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