Number of Ed-Tech ‘Exits’ Falls as Dealmaking Frenzy Cools

Senior Editor

The number of investors making exits from global ed-tech companies has slowed so far this year—with a big drop-off from lofty heights two years ago—in yet another indication of a cooling in the digital space, a new analysis shows.

Just five exits have occurred among venture capital-backed ed-tech companies during the first 136 days of 2016, according to CB Insights, a market research firm.

That’s a small number, compared to 24 VC-backed exits that had played out in both 2014 and 2015 for the full year, the analysis found. The five 2016 exits were acquisitions. See below:

 

Exits are moves by investors to sell their stakes in companies, either for a profit or a loss. They typically play out in the form of companies getting acquired by other firms, or going public through public offerings.

What’s occurring in the world of exits fits a broader trend in play in the worldwide ed-tech market, CB Insights concludes. The overall rush of dealmaking in education has fallen off significantly over the past year, and from a couple years ago, both in the number of deals, and their size.

In an earlier analysis, the research firm reported that funding to ed-tech companies fell dramatically in the first quarter of 2016, and is on track for the lowest amount of annual funding since 2013. Much of the activity in 2015 was fueled by huge, $100 million-plus deals, CB Insights says, and those have vanished this year.

The amount of global ed-tech startup activity reached a record high in 2015, with yearly funding jumping by 64 percent to $3.1 billion, and the number of deals climbing by 10 percent, to 491. Again, big deals were largely behind that growth. (See chart below.)

But so far in 2016, the amount of activity is far off last year’s pace, the analysis found. If current trends continue, there will be just 376 deals, worth $1.3 billion, a drop in funding dollars of 57 percent from 2015.


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