Q1 2025 confirmed what many in the global education market already sensed: venture capital has been more cautious, but not absent.

Investment in EdTech dropped sharply year-over-year, early-stage activity is down, and M&A volumes continue to decline. But the quarter also surfaced where investor interest is holding firm: AI-powered solutions and infrastructure, international student mobility, and scalable models in emerging markets.

Venture funding for education fell 35% in Q1 year-over-year. Still, the average check size rose to $7.8M as investors doubled down on fewer, stronger plays. Three companies—Leap Scholar, MagicSchool AI, and Campus—accounted for nearly half of all capital raised, pointing to a tighter market focused on access, automation, and alternative models.

Figure 1. Global EdTech VC Funding. 2010 - Q1 2025

Venture capital investment in EdTech plummeted to its lowest level since 2014, reaching $2.4 billion, representing a dramatic 89% decline from the 2021 peak, with the proportion of early-stage deals increased as larger round transactions plummeted. Notable exceptions included PhysicsWallah's $210 million round and significant investments in Eruditus, Zum, and SpringHealth. Expect the EdTech funding to continue focusing on scalable, tech-driven solutions, particularly in workforce training, and greater interest in the potential of AI to help solve core challenges in education. Growth capital may return in 2025, but venture investors are holding back large sums, waiting to see outcomes of their pandemic-era bets.