Education technology (ed tech) hit a record high in Q1 2014 as investors poured more than $559 million across 103 deals. Yes over half a billion dollars and over 100 deals in just the last three months. Of note, Ed Tech funding in Q1 2014 represented nearly 45% of total funding to the sector in all of 2013.
The record quarter comes after Ed Tech investments hit $1.25B across 378 deals in in 2013, the second-straight year of over $1B invested across the Ed Tech sector. With everything from MOOCs to tutoring marketplaces to standardized APIs for K-12 schools getting funding, investors are clearly bullish on the education industry.
On a year-over-year (2013 vs. 2012) basis, funding to private Ed Tech companies has increased 26% while deal activity has risen over 35% on the back of significant early-stage investment activity.
Ed Tech Financing Trends By Stage
While early-stage activity continues to dominate investments in the Ed Tech space, mid-stage activity has seen the strongest YoY growth. Over the last eight quarters, more than 3/4ths of all Ed Tech deals took place at the seed or Series A stages. Mid-stage deals (Series B/Series C) have taken close to 1/5 of all Ed Tech financings – with Series C activity jumping 70% on a YoY basis.
Ed Tech Financing Trends By Deal Size
Q1 2014’s record quarter in Ed Tech funding came as average deal sizes in the industry also jumped to an eight-quarter high at $6.21M. Median Ed Tech deal sizes have trended ~$1M since Q2 2012. Among the notable Q1 deals boosting average VC deal sizes in the Ed Tech space were Intel Capital-backed Kaltura’s $47M Series E round, a $100M deal to Chinese online training platform TutorGroup and language learning app maker Duolingo’s $20M Series C led by Kleiner Perkins Caufield & Byers.
Ed Tech Financing Trends By Geography
With the opportunity for digital education encompassing a global audience, over 50% of Ed Tech deal activity in the last two years has been investments in non-U.S. companies. These countries are based in a diverse array of geos ranging from the U.K. to China to India to Russia. Within the U.S., Silicon Valley has notched the highest number of Ed Tech deals over the last two years at nearly 16%. NY has quietly grown its own ecosystem of Ed Tech startups and is just a tad less than Silicon Valley taking 14% of Ed Tech deals.