Global EdTech Venture Capital Update - Q1 2020

With 1.5 billion children out of school at the peak of the pandemic in 2020, the enormous potential for education technology and the devastating digital divide was right in front of us. With 2 steps forward and 1 step back, the world is stumbling out of a period most would rather forget and 2021 is set to test the stickiness of abrupt adjustments we made to life, including how technology is being used in education.

Hence we are all tracking developments more carefully, testing our ‘innovation hypotheses’ with each and every announcement and looking for signs of sustained behavioral change, or regression to ‘Education-as-Usual’.

Venture Capital flows are often a useful lead indicator for innovation that is winning the confidence of learners and customers and hence finding the backing of private investors. If Q1 2021 is anything to go by, education technology leapfrogged the pandemic and is setting new records month to month.

Global EdTech started the last decade with $500M of Venture Capital invested in 2010 and finished 32x higher at $16.1B in 2020, nearly 2x the previous investment record of 2018. The last 12 weeks have seen nearly $4B of venture funding raised by EdTech companies around the world, over $300M each week on average.

China has been a key driver of growth in EdTech VC investment, making up 60%+ of all Global EdTech VC in 2020 but dropping to below 40% of Q1 2021 investment levels, despite a number of mega-rounds > $100M that we have become accustomed to for the Chinese market.

The US has made a roaring start to 2021 delivering the better part of half of 2020’s record $2.5B of EdTech VC. 115 US-headquartered EdTech companies completed 197 VC rounds > $20M since 2011 and we expect to see a wave of exits over the next 24 months, accelerated by the SPAC phenomena, acquisitive strategic players and private equity. The sector is now overdue for a ‘mass-exit’ wave which would,  in turn, make the sector more attractive to investors who are looking to back the future of education and/or deliver on their impact investment goals.

India’s strong early-stage momentum continues, and Q1 also included what is now a customary quarterly mega-round by BYJU’s fueling an international acquisition-spree. Byju’s acquired the two-year old company WhiteHat Jr. for $300 million in 2020, recently announced another $1B of deals in due diligence in Indian brick-and-mortar institute Aakash and Edtech Toppr, made an unsuccessful attempt to acquire 3PLearning in Australia and is now rumored to be in talks with US-based reading platform EPIC!

Europe had a very strong quarter with teams such as GoStudent, Labster, Keystone and Sana Labs closing large rounds for European benchmarks and potentially marking a new wave of technology supported education models.