EdTech Startup Activity — Global Ecosystems Report
Released in April 2018 at the Global Entrepreneurship Congress (GEC) in Istanbul, the Global Startup Ecosystem Report (GSER) is in its eighth year of providing a global picture of startup ecosystems around the world, featuring strategic startup, investment and policy insights from over 10,000 founders in 45 cities. This years report analyses key sub-sectors including EdTech and Artificial Intelligence.
EdTech Highlights
While education underpins economic, social and financial prosperity for every country in the world, it is arguably one of the last sectors to innovate through technology. At the same time, experts predict 1 billion additional students worldwide by 2050, driven by population growth (in emerging economies in particular), increased participation in education, longer time at school and an increased need for re-skilling due to labor market shifts.
Global education expenditure is projected to grow at 8 percent annually to $8 trillion by 2020. Despite this sizable investment, current education models and incumbent systems are unlikely to be able to service the future global demand for education. In the 10 years to 2025 education technology expenditure is projected to grow at 17 percent per year to $250 billion.
EdTech startup activity and funding stats are all from StartUp Genome’s global database and provide a fascinating comparative insight against the growing, maturing and declining sub-sectors profiled. Download the full report.
While education underpins economic, social and financial prosperity for every country in the world, it is arguably one of the last sectors to innovate through technology. At the same time, experts predict 1 billion additional students worldwide by 2050.
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EdTech set to grow at 17% pa to $250bn
In the 10 years to 2025 education technology expenditure is projected to grow at 17 percent per year to $250 billion.
Several themes underpin the EdTech sector and its growth. Technology, bandwidth and immersive devices are enabling much greater access to learning resources. There is a massive fragmentation of content around the world, much of which is very similar and aimed at the same learning outcomes.
Internationalization of education and the workplace is concentrating curricula around globally trusted brands and certificates. There is a growing focus on “return on investment” and workforce training, exacerbated by labor skills shortages, the need for job preparation, re-skilling, and continued professional development. In emerging markets, credentials for employment and career progression have particular salience.
Global EdTech Stats
2.8% – Global Share of Startups 7.4% – Startup Growth (2008-2016 annual ave) $320k – Median Seed Deal Value (2012 – 2017) $4.1m – Median Series A Deal Value (2012 – 2017) 462% – Exit Value Growth (2012 – 2017) $30.2m – Median Exit Value (2012 – 2017)
Report Insights
The full report is over 150 pages of insights, charts and incredible insights. Below is a quick summary of the major global themes across all sectors.
Global Growth
Global venture capital investment in startups hit a decade high in 2017, with over $140 billion invested in startups. Total value creation of the global startup economy from 2015 to 2017 is at $2.3 trillion — a 25.6% increase from the period between 2014 and 2016.
However, growth is not evenly distributed across all sub-sectors. This year, Startup Genome and the Global Entrepreneurship Network identified 12 key startup sub-sectors and analysed their growth and lifecycle stage. The results of this work reveal the high growth sub-sectors of Advanced Manufacturing & Robotics, Agtech & New Food, Blockchain, and Artificial Intelligence, Big Data & Analytics. The following sub-sectors showed declining growth – AdTech, Gaming and Digital Media.
China rising and US dominance waning
Especially in Deep Tech — as seen in unicorn growth and early indicators like patent creation. China is a primary growth driver in the global startup revolution. In 2014, only 14% of current unicorns were from China. In 2017 and 2018 so far, that number has grown to 35% — while for the U.S. it has gone down from 61% to 41%. China is rapidly increasing its knowledge production, as measured by patents, especially in AI and Blockchain. While the U.S. still has more startup activity in these sub-sectors, as measured by VC dollars, China has surpassed the US in patent applications — with 4 times as many AI-related patents and 3 times as many Blockchain and Crypto-related patents as of 2017.
The New Era of Tech
We are entering a New Era of Tech, where more startups tackle specific verticals or focus on Deep Tech (i.e. based on tangible and defensible innovation), for example in AI, Blockchain or Robotics. We see this clearly in the data for Sub-Sector growth. The fastest growing Sub-sectors all fit these categories, while declining sub-sectors are mostly associated with the first and second wave of tech startups.
While the prominent technology companies from the early 1990s to the 2000s have built businesses that live almost entirely on the web and mobile—with things like internet search, email, social media, and video—the prominent technologies of the future will live in the “real world.” They will transform not only what we do on the web, but also what we do outside of it, and sectors affected will include transportation, healthcare, heavy manufacturing, agriculture, and many more real-world industries.
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