Where Are Edtech Venture Capitalists Looking to Invest In?
In 2018, U.S. education technology companies raised $1.45 billion, which was the same as in 2015 but eclipsed the $1.2 billion raised by U.S. edtech startups in 2017. Globally, $6 billion of venture capital investment went into edtech, almost twice as much as in 2017.
The number of deals tells a story of its own. In 2015 there were 165 deals, compared to just 112 in 2018. This means that investors were spending more money per deal in 2018. Data from market analyst firms CB Insights and Pricewaterhouse Coopers show that total funding across all sectors reached $99.5B in 2018 despite fewer deals.
It is expected that companies that show consistent revenue growth will continue to attract bigger funders.
According to Jason Palmer, general partner at New Markets Venture Partners, 2019 will be an important year of rebalancing in the edtech market, with only a few big winners, but a large number of losers.
The $1.45 billion invested in 2018, represents $511 million raised by companies that support K-12 students and educators, $590 million raised by companies that primarily serve postsecondary education and $350 million raised by companies whose products serve preschool and professional learning sectors. The least amount was raised by companies that aim to serve teachers’ needs.
Commonbond, which focuses on supporting students and higher-ed institutions with financial aid services and loans, raised $50 million. It’s expected that more companies might enter this space to try and find a solution to student debt.
Another area that is attracting interest is the problem of finding jobs for college graduates. A number of companies are trying to build a solution with this purpose and investors are showing keen interest. Trilogy Education has raised $80 million altogether and has partnered with 35 universities to fill skills gaps with their programs. They offer short-term coding boot camp programs. Another company, Handshake, has raised $40 million for its platform for students looking for their first job and employers that want to connect with them. Experts expect this trend to continue.
In the K-12 sector, the biggest deal went to DreamBox, which raised $130 million in growth equity funding from TPG’s The Rise Fund, a social impact fund backed by people like Bono and Richard Branson. DreamBox is an adaptive learning company that specializes in math. Edsurge reports that DreamBox saw a 40 % increase in district adoption last year.
With an abundance of cash for investment on hand, and more companies starting to show positive revenue, many investors expect massive deals in 2019.
Where will the money go next?
You might find the answer at HolonIQ. HolonIQ is building the world’s most comprehensive global education intelligence platform, making it a great resource for investors. The company provides data that help investors to discover companies that are a strategic fit, ready for funding or primed for acquisition.