Deal activity to education technology startups around the world has slowed significantly from peak levels seen in 2015. But digging deeper into investment trends globally reveals a complex landscape, as ed tech deals continue to accelerate in India and the US, while lagging this year in China and the UK.
We used CB Insights data to break out ed tech deal and dollar share distribution by country, and by US state. Our analysis reveals the increasingly global scope of ed tech investment, driven mainly by activity in India and China, which helped international markets outside the US reach a five-year high of 40% of total ed tech deal share in 2015.
This post includes information on:
- Deal and dollar share by country
- Global ed tech deals in the US vs. the rest of the world
- Top US states for ed tech
- Drivers of international growth
Deals and dollars by country: US remains dominant, China captures more dollars than deals
Funding to ed tech startups remains concentrated in the US, which accounted for 67% of all deals from 2011 to 2016 year-to-date, or more than 1,300 deals.
Looking outside the US, India ranked second for deals with 6% or roughly 130 deals, and China ranked third with 5% or just over 100 deals. Distribution of global ed tech deals then dissolves into a long-tail of other markets, with the fourth-ranked UK attracting just 63 deals, and no other country taking more than 40.
Dollars by country
Ed tech funding dollars were more concentrated geographically, with the US and China combining for 88% of dollars, thanks in part to numerous Chinese ed tech mega-rounds since 2014. China took 20% of global ed tech funding dollars compared to only 5% of deals. India, on the other hand, earned only 3% of global ed tech dollars, despite attracting 6% of global deals.
China’s large dollar share is reflected in the large average deal size of $24M seen by ed tech companies there, compared to only $4.8M in the US, and $3.4M in India.
China racked up four $100M+ ed tech deals in 2015, and one in 2014. On the other hand, India’s deals topped out at $75M — which was a round to test prep platform Byju’s in Q1’16 — while all India’s other deals have been under $30M, with the majority under $10M in size.
The US has seen seven $100M+ ed tech deals over the past five years, all since 2013. These included HotChalk’s $230M corporate minority round in 2015, Lynda.com’s $186M growth equity round in 2015, Pluralsight’s $135M Series B in 2014, and Udacity’s $105M Series D in 2015.
Ed tech deal share: US vs. rest of world
Markets outside the US saw their share of ed tech deals grow from 18% of the total in 2011 to 40% in 2015, as the US share decreased steadily from 82% to 60%. The US has bounced slightly to 64% thus far in 2016, taking share in part from China — which fell four percentage points.
Top states for US ed tech deals
Within the US, ed tech enjoys wider geographic diversity than do many other startup sectors.
California has dominated US ed tech activity since 2011, but this year the state is well off its 2015 pace that had it break the 100-deal mark. This year, California may not reach 90 deals, at the current run-rate.
New York consistently ranks second and Massachusetts consistently ranks third for ed tech deals, while our data shows Pennsylvania and Illinois switching between fourth and fifth places.
California totaled 493 deals between 2011 and 2016 year-to-date. New York saw 208, Massachusetts 141, Pennsylvania 67, and Illinois saw 60 deals. Every other state saw fewer than 50 ed tech deals in the same period.
The most well-funded companies in these top five states are as follows:
- California: Learning platform Lynda.com topped out the list at $289M before its acquisition by LinkedIn in 2015; K-12 learning management system HotChalk has raised $250M, most recently raising $230M in November 2015.
- New York: Personalized learning platform Knewton is the most well-funded New York ed tech startup with over $157M in disclosed funding. Knewton most recently raised the second $10M tranche of a Series F in January 2016.
- Massachusetts: Fullbridge, a business-focused digital learning platform, is Massachusetts’s most well-funded ed tech startup, with $32M raised. Fullbridge most recently raised a $15M Series D in May 2015.
- Pennsylvania: Language-learning app Duolingo is Pennsylvania’s most well-funded startup with $83M. Duolingo most recently raised a $45M Series D in June 2015.
- Illinois: Everspring, a learning management platform for universities, is the state’s most well-funded startup with $53.5M raised. Everspring most recently raised over $27M in growth equity in January 2016.
India leads international growth, followed by China and UK
- India saw a new high of over 50 ed tech deals in 2015, with the volume of deals up 315% from 2011. The country is on track to break last year’s record this year, with 18 deals so far implying more than 60 total by year-end 2016. Byju’s $75M growth equity round in March 2016 is the company’s sole funding round to date, but was enough to make it the most well-funded Indian ed tech startup.
- China overtook the UK in 2012 as the second-ranked market outside the US for ed tech deals, and kept that rank for two years, in 2013 and 2014 (since then it has been overtaken by India, though as seen, India has much smaller rounds). Ed tech deals in China slowed since 2014, though, and China and the UK have only four deals each so far this year. English-learning platform Tutor Group is China’s most well-funded ed tech startup, with $315M in total disclosed funding from investors including the Alibaba Group and Goldman Sachs. Tutor Group also pulled in China’s largest ed tech round — a $200M Series C in November 2015.
- UK: The UK is the third-ranked market for ed tech deals outside the US and has come close to equaling the ed tech deal volumes seen in China. Macat is the UK’s most well-funded startup with $30M raised, all from one growth equity round in November 2015.
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Cover image credit: Flickr/Peter-Ashley Jackson
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