Funding to education-technology companies is booming. Overall, the period from 2010 to 2014 saw more than a 503% growth in investment dollars.
The pace has held high even in recent quarters. Financing grew from $911M in 2013 to over $1.5B in 2014, a 71% increase year-over-year. In the last four quarters, including Q2’15, ed tech startups attracted $1.9B, a jump of 68% compared to the previous four quarters.
Meanwhile, deal count has carried along steadily. There were 193 deals in 2014, up from 176 in 2013. However, at the current run rate 2015 will see a deal count of 158, well below that of previous years which indicates that deals are becoming fewer yet larger. Note: This data only includes funding to VC-backed companies in the Ed Tech space.
Quarterly deals and dollars
The quarterly breakdown below reveals the recent surge in ed tech funding and deals. Q1’15 set a new high for ed tech financing, with a total of $641M in funding (equal to about 41% of the dollars going to ed tech in all of 2014).
The largest round in Q2’15 was a $100M investment in China-based education app developer Changingedu by Sequoia Capital China, among other investors. The biggest Q1’15 deal was $186M in growth equity to education and training site Lynda.com, in a round that included Accel Partners, Meritech Capital Partners, Spectrum Equity Investors, and TPG Growth. Lynda.com was later acquired by LinkedIn in Q2’15 for $1.5B.
Deals by investment stage
Looking at ed tech funding by investment stage we see a trend toward early-stage investments. The deal share of early-stage deals ramped up from 41% in 2011, to 69% in 2013. Since then, it’s held relatively high; in the first six months of 2015 early-stage deal share was 21%. Meanwhile, mid-stage investments have accounted for a growing share of deals, going from a 20% share in 2012, to 24% in 2014. Late-stage dollar share has also grown slowly, from 4% in 2011, to 7% in 2014, and up to 13% in the first half of 2015.
The dollar share breakdown by investment stage is far more variable. Early-stage deals represented a range of 23% to 40% of dollars invested from 2010 to 2014. In that time, middle stage dollars slid from from 58% to 51% of dollars invested. And late-stage deals saw a range of 10% to 35%, currently accounting for 28% of dollars in the first half of 2015.
Most active investors
The most active ed tech investor is NewSchools Venture Fund with investments in over 35 unique companies. NewSchools’ largest deal was their participation in a $23.5M Series D funding to electronic school-transcript company Parchment in 2012. NewSchools has also invested in Teachscape and Kidaptive. Second on the active ed tech investor list is 500 Startups, followed by Kapor Capital and Learn Capital.
|Most Active Ed Tech Investors
2010 – H1 2015
|1||NewSchools Venture Fund|
|9||The Social+Capital Partnership|
500 Startups is the most active early-stage VC, with a majority of its investments going to early-stage companies. 500 Startups’ largest early-stage investments include seed deals to online learning companies Tynker and Colingo. NewSchools Venture Fund and Kapor Capital are tied for second most active.
|Most Active Early-Stage Ed Tech Investors
2010 – H1 2015
|2||NewSchools Venture Fund|
|6||The Social+Capital Partnership|
Pluralsight, an online course company, is the most well-funded with a total of $203.5M invested by backers including Felicis Ventures and Insight Venture Partners. Learning platform Desire2Learn is second with $165M invested by Silicon Valley Bank, among others.
|Most Well-Funded Ed Tech Companies
2010 – H1 2015
Looking for the most comprehensive set of private company Ed Tech financing and exit data? Check out the CB Insights Venture Capital Database. Sign up free below.