$3B Global EdTech Venture Capital for Q1 2020

Global EdTech Venture Capital will nearly triple over the next decade. Asia (Ex China), Latin America and Africa will see much higher investment over the next 5 years.

EdTech started the decade with $500M of Venture Capital investments in 2010 and finished 14x higher at $7B in 2019, down 18% off a 2018 high of $8.5B in VC funding. China made up 52% of the last decade’s EdTech VC funding, the US represents 33% followed by Europe, India and the Rest of the World, each investing about 5% of the global funding total.

Emerging Markets such as Africa, Latin America and Southeast Asia are growing rapidly and have large under-served populations looking to leapfrog traditional developed education systems to lower cost and improve access and outcomes, supporting learners, teachers and administrators with advanced technology. On current trends the early half of this decade will see a continuation of growth funding for Indian EdTech followed, in the latter half of the decade by investment traction in large emerging markets, particularly Southeast Asia and Latin America, where multi-billion dollar funds are being set up to deploy capital into education and other impact sectors.

COVID-19 is also highlighting inequality in access to digital and remote learning solutions, especially in an environment where synchronous video and laptop-based applications have been the emergency response, more so in developed economies. Developing economies and emerging markets are more broadly seeing surging levels of mobile and internet access and overwhelming demand for stronger education to employment links. In response to the tragic and sudden circumstances COVID-19 has brought about, confounded by global inequality, access and cost issues, we expect EdTech to be a bumpy ride through the rest of 2020 but bringing an exciting opportunity to help develop a more affordable, equitable, impactful and resilient education economy.

10 charts that explain the Global Education Technology Market

1. Education expenditure will grow to $10T by 2030.

Expenditure on education and training from governments, parents, individuals and corporates continues to grow to historic levels and is expected to reach USD$10T by 2030.

Source: HolonIQ

2. Driven by 500m more school students by 2025.

By 2025 there will be half a billion more school and university graduates in the world than today, driven primarily by population growth in developing countries. How will current models of education deliver to the scale, quality and speed required?

Source: Wittgenstein Centre

3. However, education is starved of capital compared with other sectors.

Innovation requires capital. Governments are struggling to fund education to previous levels and education is not drawing on enough private capital to fund the innovation that’s needed. Public-Private Partnerships will be critical to supporting future growth, innovation and access to education.

Source: HolonIQ

4. It is also grossly under digitised, with less than 3% of expenditure on technology.

As a sector, education is a digital laggard with less than 3% of overall expenditure allocated to digital, presenting a serious challenge given the scale of what’s to come.

Source: HolonIQ

5. However, digital spend is growing.

In 2018, education spent $142b on digital. While this is forecast to grow to $342b by 2025, it is still less than 5% of overall expenditure.

Source: HolonIQ

6. Advanced tech will embed into delivery and learning processes.

Applications of advanced technology in education and learning will begin to hit their strides by 2025 with AR/VR and Artificial Intelligence becoming increasingly integrated into core education delivery and learning processes. Most likely starting in the corporate and non-accredited sectors.

Source: HolonIQ

7. VC investment is set to triple in the next decade.

Venture Capital investors can see the favourable dynamics of the global education and training market, investing $7b in 2019, up from $500m in 2010, $2b in 2014 and moderating from the $8b high of 2018. 85% of that was in the last 5 years and nearly 50% of the last decade’s funding occurred in the last 2 years. This is set to grow but is not evenly spread across the globe.

Source: HolonIQ

8. China makes up half of all EdTech VC investment.

China, with the largest education market in the world, has led education VC investment growth over the past five years. China made up 50% of all Global VC investment in education through the decade, the USA 33% followed by Europe, India and the Rest of the World, each investing around 5% of the global funding total.

Source: HolonIQ

9. Expect 100+ education companies with $1B+ Market Caps by 2025.

Venture Capital investment ultimately drives more exits in the form of public listings. In 2015 there were 10 listed education companies with Market Cap’s over $1B, growing to 40 in 2019 and expected to be 100+ by 2025.

Source: HolonIQ

10. However, the devil is in the detail when it comes to education.

Education is a complex system. When it comes to understanding market dynamics and which technologies, business models and parts of the sector are likely to grow or shrink, it pays to understand the nuance. The Global Learning Landscape taxonomy, consisting of 50 clusters of innovation helps to unpack this complexity.

Explore the Landscape ‍

Source: globallearninglandscape.org