EdTech funding drops again in early 2025. Fewer deals, but bigger bets

$410M in Global EdTech VC funding with fewer deals, larger checks, and new regional momentum hint at where investment is heading next.

Education Intelligence Unit

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April 29, 2025

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.

2025 Global Education Outlook

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Regional realignment favors emerging markets

North America’s deal value dropped by over 50% in Q1 compared to the same quarter in 2024, but still captured nearly half of the total deals. MENA had 169% growth in funding and 20% more deals than in Q1 2024, largely due to the larger raise by Saudi edtech, ULA. Europe held steady, and South Asia remained active, driven by standout raises like Leap Scholar in India and Vidyaa in the UAE, signaling a pivot toward scalable, globally oriented platforms in fast-growing markets.

Figure 2. Q1 2025 Education VC Funding by Region

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M&A signals strength in workforce and student services

M&A volume fell 32% year-over-year in Q1 2025. Workforce learning organizations made up a third of all transactions, including TLG Learning and Clover Learning. Post-secondary made up just over a quarter of activity, driven by student services and global moves like ETS acquiring Ribbon Education. K–12 deal volume dropped YoY for the quarter, but had notable STEM acquisitions such as BlocksCAD by zSpace and Newsela’s acquisition of Generation Genius.

Education investment is down, but not out. While Q1 marked another drop in overall activity, capital is concentrating in categories with clearer ROI and long-term resilience, from workforce up-skilling to AI infrastructure. To go deeper, explore HolonIQ’s full Q1 2025 Investment Outlook on the platform or sign up for a demo, complete with every tracked deal year to date categorized by transaction.

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