What’s Next for Global Ed-Tech Funding? Report Predicts a ‘Resurgent’ Year

Contributing Writer
What's Next for Global Ed-Tech Funding in 2024? EdWeek Market Brief

Global ed-tech funding remains resilient and could be poised for a comeback this year, despite a steady slowdown of venture capital and private equity funding that continued throughout 2023. 

That’s one of the main takeaways from a new report published by Brighteye Ventures, a major ed-tech venture capital firm in Europe, sizing up the funding landscape for ed-tech startups. 

The steady drying up of venture capital that has rocked the ed-tech industry persisted last year. But it unfolded at a slower pace, per the report. 

Venture capital and private equity firms’ cash reserves create new opportunities for ed tech over the coming year, the report says.

And moving forward, there’s a potential silver lining on the horizon: Record amounts of “dry powder” — cash reserves stockpiled by venture capital and private equity firms — are waiting to be deployed, according to S&P Global intel data reviewed by Brighteye Ventures. 

The report says that “an abundance of dry powder in venture and private equity will lead to a resurgent 2024 for global ed tech.” 

“Though many of the data points that we’ve now been tracking for five years are down from the dizzying heights of 2021 … there are certainly some reasons to be optimistic,” Rhys Spence, head of research for Brighteye Ventures, and author of the report, said in an email. 

But just because investors appear to be lining up their unspent reserves to use in 2024, Spence said, it doesn’t necessarily mean there will be an uptick in funding activity this year, “but it does demonstrate that funding is available.”

Investment in India Takes a Hit

According to the report, global ed-tech funding reached $5.6 billion in 2023, down from $9.6 billion the year prior. Both figures pale compared to the boom period in 2021, when venture capital and private equity firms invested $19.8 billion into global ed-tech startups.

VC investment in ed tech soared during and after the pandemic as remote learning led school districts to throw their support into digital technologies, and billions of dollars in federal aid flowed into schools.

While the year-over-year declines in ed-tech funding are stark, the report notes, they are consistent with wider market trends and in comparable sectors. Additionally, the number of ed-tech deals in 2023 — 915 total — was comparable to 2022 when 972 deals were recorded.  

Though many of the data points that we’ve now been tracking for five years are down from the dizzying heights of 2021 … there are certainly some reasons to be optimistic. Rhys Spence, Head of Research, Brighteye Ventures

Every global region experienced a funding decline in 2023, according to the report. However, the extent of that dropoff varies, with the most precipitous happening in India, where investments fell by 40 percent in 2023. 

The U.S. and Europe both experienced funding declines of 37 percent in 2023 compared to the year prior, according to the report. Eight of the largest 10 deals in 2023 took place in the U.S., including the biggest: A $280 million funding round for curriculum and assessment provider Amplify. (A recent analysis by the venture capital firm Reach Capital found that VC funding in the U.S. specifically, also has fallen from COVID-era heights, but is still above pre-pandemic levels.)

And the geographic region with the smallest drop in funding was the Middle East and North Africa, which was down 26 percent last year. 

The report also notes that European ed-tech funding was one of the more resilient regions in 2023. 

Despite a significant drop in year-over-year funding — from $1.9 billion to $1.2 billion — the 2023 total remained higher than 2020 levels, when $951 million was raised by European education startups.  

There was also an increase in the overall number of deals finalized in Europe, growing from 256 in 2022 to 288 last year. Total funding for European ed-tech startups also increased in the second half of 2023, the report notes. 

Spence said those data points reflect “the continuation of a muted but definite resurgence,” for European ed-tech funding that could become more apparent in the first half of 2024 and moving forward. 

At the same time, the portion of ed-tech deals happening in Europe has risen steadily in recent years, the report says, going from representing 21 percent of global ed-tech deals in 2019 to 32 percent of transactions last year. 

Decline in Mega-Rounds 

Meanwhile, the report also highlights another ongoing trend in ed-tech funding: the decline of mega rounds. 

According to the report, an increasing portion of ed-tech funding is being secured in the smallest rounds. In 2023, 55 percent of ed-tech funding deals were rounds of less than $40 million. That’s up 18 percent from 2022. 

And funding secured in rounds of more than $100 million accounted for just 9 percent of deals last year, down from a high of 67 percent in 2020. 

Spence said the trend is typical of a post-boom period, where round sizes and valuations tend to decrease. 

Image by Getty.

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