In 2020, EdTech witnessed its first $1B+ funding rounds and now Q2 2021 has delivered the sectors 107th $100M+ mega round.
One Hundred and Seven is now the number of EdTech mega venture-capital rounds > $100M.
In the last quarter, we’ve seen seven new EdTech Unicorns and another Unicorn alum head for the NYSE via IPO. GoStudent joined the list last week, raising a $244M Series C alongside Go1 and JoyTunes also joined in June with a $50M Series D. ApplyBoard, already a Unicorn, topped up with a $300 million Series D two weeks ago, Zhangmen graduated via IPO, raising nearly $42 million with a $2B market cap just after Masterclass raised a $225M Series F in May with Handshake raising a $80M Series E in May as well. Outschool joined the list in April, raising a $75M Series C together with Degreed, raising a $153M Series D.
As of 29 June 2021, there are now 27 EdTech Unicorns around the world who have collectively raised over $16B+ of total funding in the last decade and are now collectively valued at $80B+. While not all 74 companies that have raised a $100M Mega Round have disclosed their valuation, many have raised below the Unicorn valuation threshold, others are purposefully avoiding the Unicorn label and each quarter we see another Unicorn escape the herd and graduate to the Capital Markets.
Whether you are an education provider, policy-maker, investor, technology company or supporting this market, it is critical to keep up with these trends and indicators of medium and long-term disruption. HolonIQ provides global market analysis, built on proprietary data through our intelligence platform and deep knowledge of global education by experienced executive operators and investors. Request a Demo to gain access to the smartest source of global impact market intelligence.
The chart above shows the funding evolution of the 74 education technology companies that have raised 107 $100m+ VC rounds since 2010. Each dot represents a funding round, the lines represent individual companies and link their respective funding rounds. Asia Pacific headquartered companies in red, Americas in blue, Europe Middle East and Africa in green.
How did we get here?
Between 2012 and 2014, Lynda.com was the breakout after 17 years of revenue funding (without taking a penny from outside investors) and reaching $100m of revenue in 2012, Lynda raised its first round and the sector’s first mega-round for the decade in January 2013.
The only mega-round in the prior decade was Beijing-based Ambow Education Group, raising US$103 million in October 2008 in the belief that the education sector would cycle upward despite the global financial crisis.
2014-2015 was a peak funding period in general in the US with 10 mega-rounds in total. It was also the period when China surged, more than tripling its investment in 2015 over 2014. The sector broke through to a new ceiling with $200M rounds from the likes of iTutorGroup.
2016-2017 saw the US consolidate after peak-hype from general investors in 2015 while China, India, Southeast Asia and Africa started their own streams of growth. VIPKid achieved Unicorn status mid-2017 raising $250m nearly 12 months after its first $100m round in August 2016. By the end of 2017, all eyes were on China.
And then there was 2018. Mega Rounds were the new normal and China had surged ahead with VIPKid setting a new record $500M round in June 2018 only to be topped by ByJu’s from India when the 10-year-old company raised $540m in December 2018.
By this time and as 2019 broke, we were all warned of China’s forthcoming ‘capital winter’, only to wake up in Q1 to mega-rounds from Zhangmen ($350m), DaDa ($255), Andela ($100m) and opening Q2 was Coursera’s $103m Series E. 2H 2019 saw the surge continue with mega-rounds from Knowbox ($150m), ByJu’s ($150m), VIPKid ($150m), Zhihu ($434m), Ruangguru ($150m) and Guild ($157m).
As a new decade dawned, there was much discussion, debate and reflection that perhaps we would now see a period of consolidation and tempering of mega-investment. Little did we know what 2020 would bring.
COVID-19 and way too many video calls later, 1H 2020 marked a resurgence in mega-rounds, averaging a $100m round per month. In the space of six months, EdTech declared its very own ‘Decacorn’ (that didn’t come from China or the US), Yuanfudao set a new high water-mark with a $1B round and ‘mainstream’ investors started venturing their way into the sector to learn more about the future of education, the role of technology and the opportunities to participate in that growth.
Momentum built through 2020 and the first half of 2021 set a record half-year in EdTech funding with 568 rounds raising $10B of investment as, ready or not, the world turned to technology to support learning and education delivery.
The charts below shows the acceleration and shifting profile of EdTech mega-rounds over the past decade. Our momentum funding scenario suggests we may could see up to $150B of VC deployed this decade (2020-2029), with the assumption that the ‘COVID-fuelled’ investment surge moderates and the underlying momentum continues at sustainable investment rates.