Venture Capital Investment in Education Technology
Global investment in education technology has grown rapidly over the past decade, benefitting from over $32 billion in venture capital funding. Education companies offering innovative digital content and services have proven to be attractive assets garnering ongoing competition by investors. In the last decade, these businesses traded on the promise that the traditional methods of learning would be at most, upended by new technologies, and at least, heavily complemented by them.
According to a report by Holon IQ, venture capital investments in education technology (“edtech”) totaled approximately $500 million in 2010. A decade later, edtech venture capital attracted nearly $4.6 billion in the first half of 2020, positioning the sector for a record-breaking investment year. No doubt, technology is accelerating across every industry, but especially in education as schools, colleges, students and families attempt to engage and maintain learning continuity in an isolating COVID-19 environment. Looking forward, Holon IQ projects the cumulative investment in the edtech sector to nearly triple to $87 billion by 2030.
Venture capital investment in the pre-K-12 to adult workforce education sector hit a peak in 2018, followed by over $7 billion in venture capital funding in 2019. China remains the top recipient of funding, with U.S.-headquartered companies attracting the majority of remaining capital.
Global spending in education is driven by a couple of factors:
- Emerging markets such as Latin America, Southeast Asia and Africa are rapidly growing and looking to improve educational outcomes for large, underserved populations. By 2025, the primary-, secondary- and university-level student base is expected to grow by half a billion, driven primarily by population growth in developing countries. The scale, quality and speed required to deliver this instruction will undoubtedly involve technology.
- In developed economies, technology is already used to support learners, teachers and school decision makers. Education technology has become especially important in the COVID-19 environment as schools implement newer asynchronous, remote and hybrid learning models.
The overwhelming demand for better communication tools and learning products should sustain a continued increase in investment over the back half of 2020. Beyond that, more advanced technology learning applications are expected to hit their strides by 2025 with augmented and virtual reality and artificial intelligence becoming more integrated into core education delivery and learning processes.