The Anatomy of an EdTech Unicorn

15 Oct 2018. Mapping the evolution of EdTech Unicorns and four growth archetypes they are following

Education Intelligence Unit

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October 17, 2018

10 EdTech Unicorns, $4B+ of Capital Invested and 4 Growth Archetypes

A unicorn startup is a private company with a valuation over $1 billion. As of October 2018, there are more than 260 unicorns around the world and just 10 of those are EdTech Unicorn StartUps.

Our Complete List of Global EdTech Unicorns tracks those 10 Startups but also the Unicorn Elders. Elders are more mature private companies, valued at over $1B but have achieved “Escape Velocity” and no longer raise venture capital to fuel their growth. Some Unicorns have graduated and IPO’d to join their 120+ listed education peers but our focus for this deep dive is the funding evolution of the 10 EdTech Unicorn StartUps.

The chart above shows 63 rounds of funding in 10 Unicorns over the last 8 years, including the rumoured $500m round SoftBank Vision Fund is seeking to invest in China’s Zuoyebang which isn’t surprising once you see the archetypes below. The funds invested in these 10 EdTech Startups total $4.3b excluding this rumoured mega-round from SoftBank.

A selection of today’s Unicorns will obviously bias towards more recent mega-rounds, however education has never seen the size and frequency of mega funding as we are seeing today – for the most part driven by China.

Almost every month of 2018 has witnessed an EdTech mega-round. In February and March it was 17Zhouye’s $200m and $250m rounds. In July it was Zuoyebang’s $350m Series D. August saw Zhihu close a $270m round and ByJu’s closed a $100m round in September. In this last quarter of 2018 we also expect to see Zuoyebang close a $500m round from Softbank if the rumours are to be believed. Asia seems the place to be if you are looking to become an EdTech Unicorn.

Unicorn Funding Evolution

It’s challenging to look at these startups side by side. Each have their own unique approach to serving learners, a different strategy, economic model and they operate in different markets.

However, it is still worth lining these organisations up on their first major funding round to look for patterns that might help us understand the different paths EdTech Unicorns take when reaching for escape velocity.

The chart below lines each Unicorn up on their first disclosed funding round. Each dot represents a funding round of a certain size and the number of months that round occurred after the Unicorn’s first round.

Four EdTech Unicorn Archetypes

At first glance several patterns appear which are clearer when broken up into four archetypes below. Noting the sample is quite small, the archetypes are a bit of fun but do help to break down the complexity of EdTech Unicorn pathways.

Big Bang captures VIPKid and Zuoyebang, both having completed $350m+ rounds within 5 years of their first major round – and if the rumours are true, Zuoyebang will join VIPKid in the $500m club in exponential fashion and record time.

Clear Launch captures iTutorGroup, Age of Learning and Udacity. Each completing rapid second time funding rounds before topping up at the 72 month mark and (finger crossed) achieveing a stable orbit and sustainability.

Two Stage Booster’s include Yuanfudao, Zhihu and 17Zouye. This cohort demonstrate two clear phases, the first a 72-96 month cadence of solid funding before the second round of boosters kick in.

Finally, Controlled Burn captures Udemy and ByJu’s, both sealing a long and steady, almost rhythmic pattern of funding with a $100m mega-round in year 10.

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