The edtech ecosystem may have compared to a shallow well as late as 2019. There were just a few growing enterprises generating interest, and funding and activity were concentrated in a few markets. However, this is no longer the case. Gone are the days VC pitches to overcome concerns about market size and consumer preparedness to accept tech-enabled learning solutions? In the world of education, the year 2020 will be recognized for the upheaval it produced in schools, universities, and businesses. However, it will be remembered as the year that the education sector became aware of the solutions being produced by edtech businesses to help people learn more quickly, more affordably, efficiently, and effectively.
Unsurprisingly, 2021 witnessed a surge in edtech investment from a variety of sources. Indeed, edtech investment in 2020 and 2021 will equal the amount raised from 2014 to 2019. To continue the metaphor, the edtech ecosystem has evolved into a deep, vibrant lake. Exciting firms are forming across geographies and verticals, and even generalist investors are gaining confidence in the sector’s ability to create the same kinds of outsized returns as fintech, health tech, and other areas.
Generalist investors are becoming interested in the sector because of both financial and positive impact returns, putting specialist funds under more pressure. Our 2021 financing report, which issued today, focuses on Europe and analyzes key worldwide growth and activity metrics in edtech. We largely used data from Dealroom, with whom we have built an edtech-specific data platform.
A record-breaking year, To begin with, European edtech VC investments tripled from $790 million in 2020 to $2.5 billion in 2021, compared to a 34 percent increase in global funding from $15 billion in 2020 to $20.1 billion in 2021. The ecosystem on the continent is also becoming more robust — edtech deals in Europe accounted for 31% of all deals in the sector in 2019, up from 21% in 2019. This expansion was not limited to traditional geographies: in 2021, six European markets raised more than $100 million, compared to only one in 2020. Because the majority of these markets are in Northern Europe, we expect to see some major players emerge in Southern Europe in 2022.
