Fifty-Eight. Believe it or not, that is the number of education mega venture-capital rounds > $100M.
Earlier this week, Zouyebang (作业帮) closed a $750M Mega Round. Last week Byju’s became EdTech’s first ‘Decacorn’ (valued > $10B). Last quarter Yuanfudao (猿辅导) completed a USD $1B Series G, the single largest raise by an education company anywhere in the world. As of 2 July 2020, there are 19 EdTech Unicorns around the world who have collectively raised over $9 billion of total funding in the last decade. Not all 42 companies that have disclosed a $100M Mega Round have disclosed their valuation, many have raised below the Unicorn valuation threshold and others are purposefully avoiding the Unicorn label. Together, the 42 companies that have raised the 58 Mega Rounds have secured nearly $16B of funding from investors.
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The chart above shows the funding evolution of the 42 education companies that have raised 58 $100m+ VC rounds this decade. Each dot represents a funding round, the lines represent individual companies and link their respective funding rounds. Chinese companies in red, US in blue, Indian in green and Southeast Asia + Africa (Andela – Africa focused, based in the US) in yellow.
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.
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 has marked a resurgence in mega-rounds, averaging a $100m round per month. In the space of six months, EdTech has it’s very own ‘Decacorn’ (that didn’t come from China or the US), Yuanfudao has set a new high water-mark with a $1B round and ‘mainstream’ investors are venturing to learn more about the future of education, the role of technology and the opportunities to participate in that growth.
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The first half of 2020 was the second largest half-year for Global EdTech Venture Capital. We are reconfirming our expectation that over $87bn will be invested in EdTech over the next 10 years, almost triple the prior decade.
The fundraising evolution of every single education player globally that has raised a USD$100m+ VC round
The Complete List of Global EdTech Unicorns
The education innovation opportunity in Southeast Asia is rapidly gaining momentum. Often overshadowed by that of its neighbours, China and India, Southeast Asia is building a vibrant, much needed and regionally focused ecosystem.