In 2024, edtech startups have secured just over $1 billion in total funding, according to Crunchbase data. This marks a significant decline, setting investment on a path to hit its lowest total in years.
Decline in Funding
To illustrate this decline, we have charted annual investment and deal counts since 2019. The data clearly show a downward trend in the education sector, with no signs of a rebound. The pattern is similar for U.S. investment, which remains well below pre-2021 levels.
Challenges in Exits
The market for exits is also sluggish. No major IPOs for venture-backed edtech companies have occurred recently, and large acquisitions are scarce.
Growth vs. ROI
Interestingly, the decline in investment isn’t due to a lack of demand. Global enrollment in formal education is rising, especially in higher education. The World Bank predicts post-secondary student numbers will increase from 220 million in 2021 to 380 million by 2030.
Edtech adoption remains robust, with Morgan Stanley analysts forecasting the sector to grow faster than the overall global education market, driven by increased internet access and scalable business models. They project global edtech spending to rise from $250 billion in 2022 to $620 billion by 2030.
Despite this growth, recent years have seen few major investment success stories in edtech. The last notable IPOs were in 2021, with Duolingo, Coursera, and Udemy going public. While Duolingo has maintained its share value, Coursera and Udemy are trading well below their debut prices.
Highs and Lows
In 2021 and 2022, education-related financings of $100 million or more were common, with over 60 such deals. The largest recipient was India’s BYJU’s, which reached a $22 billion valuation in 2022. However, BYJU’s has since faced significant challenges, including deceptive marketing accusations, layoffs, and bankruptcy filings for its U.S. division, with its valuation plummeting to around $1 billion.
Other edtech unicorns have also struggled. Bangalore-based Unacademy has not secured new funding in nearly three years despite raising over $800 million between 2017 and 2021. Denver-based Guild, which offers upskilling and higher education services, has also experienced layoffs and has not raised funds in two years.
On a positive note, Vienna-based GoStudent, an online tutoring marketplace, is reportedly now profitable after raising over $780 million and undergoing multiple layoffs.
Current Funding Landscape
Despite the challenges, some startups have managed to secure financing. Crunchbase data highlights seven intriguing startups that raised $20 million or more this year, suggesting that there are still opportunities in the edtech space.
Looking Forward
Optimists might argue that edtech funding could rebound. The issues that edtech startups aim to address are still relevant, and advancements in AI could drive new investments. While many edtech unicorns have struggled, new players may emerge to fill the gap.
For now, however, edtech investment levels remain far from recovery territory.
Related Crunchbase Pro List:
- Edtech And Education-Related Startup Funding
