Q3 2019 Global EdTech VC Update
Q3 marks more than $5B of Education VC invested through 2019. We expect to see $6.5B for the full year from a lower number of larger transactions.
8 October 2019
EdTech Venture Capital is moderating with fewer mega-deals and a $1.6B Q3, signalling a lower 2019 year-end forecast
HolonIQ tracks every single education transaction globally. From Seed to Venture, Growth Stage to LBO, IPO and Take Private. This is our quarterly VC flow update.
$6.5B Full Year EdTech VC Forecast for 2019
EdTech VC investment in 2018 was absolutely unprecedented, almost double 2017 investment levels. At 2Q19 we saw $3.5B of EdTech VC through the first half and at that time we estimated 2019 could reach as much as $7.5B of EdTech VC.
At 3Q, we are downgrading our outlook for 2019 by almost $1B and estimating the year closes out at $6.5B. While there are a number of mega-deals in the market still searching for the right investors and terms, we have seen a significant slow down of mega-deals out of China and weaker than normal underlying activity through 3Q globally.
40 Deals per Quarter > $5m
The total value of education venture capital transactions each quarter is moderating at around 40 that are over $5M in size.
Q1 2015 was the first time the world reached that volume of transactions > $5m and since 2016, Q3 and Q4 have generally surged ahead than the first half.
However, we don’t see 2019 following the trend. Whilst we expect at least two Mega Rounds, overall our expectation is for Q4 to moderate slightly and close what will still be an extraordinary year in EdTech VC.
2018 appears to be a Mega Round outlier
The biggest change since the start of 2018 was the acceleration of the Chinese mega-investment round. Most months since January 2018 included a $100M+ VC round.
While 3Q 2019 has seen a number of Chinese and Indian Mega Rounds, namely Zhihu and Byju’s, Coursera was the highest-profile US transaction in 1H 2019.
As time goes by and we zoom out and track the evolution of Mega Round companies, the lower rate of activity in 3Q and anticipated moderation in Q4 is suggesting 2018 really was China Mega Round driven outlier.
Related Research
The Complete List of Global EdTech Unicorns
3 September 2020.The Complete List of Global EdTech Unicorns
$4.5B Global EdTech Venture Capital for 1H 2020
10 July 2020.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.
58 EdTech Mega $100m+ VC Rounds
2 July 2020.The fundraising evolution of every single education player globally that has raised a USD$100m+ VC round
Southeast Asia EdTech – $480M of VC in 5 Years
7 May 2020.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.