The EdTech sector has had a brilliant run for the last two years. Online and virtual learning spurred the adoption of technology in education, which has seen a surge in funding over the last one year.
Last year alone, venture capital-backed education companies raised more than USD 20 billion last year, compared to USD 14.6 billion in the year 2020. This sector also witnessed a considerable number of companies like Coursera, Duolingo and Udemy exiting to public markets and making an Initial Public Offering (IPO).
According to Amit Patel of Owl Ventures, which is focused on education, the sector is ripe for investment across the board. Patel said that the sector appears to be in the early stages of a significant opportunity across the entire sector. While the foundation for investment in the Edtech sector was laid years ago, these companies can now scale up, thanks to the large investments of tech infrastructure from schools globally.
The investments in infrastructure includes investments by government in devices and connectivity for schools, such as broadband internet, mobile connectivity and the use of tablets. More connected students with devices translates into more customers for the companies.
Patel stated that entrepreneurs are now entering the sector with the confidence to innovate and scale up. He also said that investors are recognizing this as well, and that success and proof points are visible too.
Investor funding in the Edtech sector exploded in 2020, a year which saw VC investment of USD 14.6 Billion dollars in the segment globally. This represented an increase from just USD 7 Billion in the year 2019. The trend continued into 2021 too, with Articulate raising USD 1.5 billion, and Indian company Byju’s raising USD 460 million for personalized learning programs.
Adult education offerings grow
The adult education sector continued to surge ahead with an increase of investments in upskilling startups, and also learning programs for children. Coursera and Udemy are among the top companies offering online adult education.
Skills development is an emerging trend, said CEO of Coursera Jeff Maggioncalda. He said that while governments continue to look for ways to upskill public sector employees, campuses realize that quality needs to remain high in the face of stiff competition in the sector.
According to Patel, investments are expected to continue to grow across the sector, since as the economy changes, so too is the workforce, and to remain competitive, many will need to upskill and reskill.
Other emerging trends are the D2C education model, especially for adults looking to upskill, mental health resources for children and adults, and the fact that Edtech companies can be anywhere in the world serving a totally different audience geographically.
More than half of the largest funding rounds to Edtech companies were to companies based outside the US, according to reports.
Patel said that the interest in this category is at the highest now, and pointed out that last year alone, nearly USD 21 Billion was invested, indicating the growth opportunity of the segment.
The high investment in the sector is indicative of the opportunities presented by new technology being utilized in the education sector. Notwithstanding the adverse effects of the pandemic, the discontinuation of classes requiring students to be physically present acted as a catalyst for many education technology companies. Investors have been quick to identify this emerging sector as very promising. Education technology companies around the world have shown strong signs of growth and scalability – qualities that all investors look for.
In the year 2022, as the pandemic started to change into an endemic, more and more investments started to pour in to the sector.