Global ed tech investment is on pace to set a new funding high in 2014.
Following the smart money offers innovation trackers an inside look at the key areas and companies that will likely play a central role in the future of the ed tech movement.
And so we analyzed the ed tech investment activity of 12 of the top venture firms as identified by our tech unicorn VC analysis and 8 other top tier firms based on our Investor Mosaic models. Specifically, the VC firms whose ed tech investments are analyzed include:
- Accel Partners
- Andreessen Horowitz
- Battery Ventures
- Benchmark Capital
- Bessemer Venture Partners
- Greylock Partners
- Kleiner Perkins Caufield & Byers
- New Enterprise Associates
- Redpoint Ventures
- Sequoia Capital
- Union Square Ventures
- Spark Capital
- Index Ventures
- Khosla Ventures
- Founders Fund
- Google Ventures
- Felicis Ventures
- Floodgate Fund
- First Round Capital
The data on their ed tech investment trends below.
Top VCs slow down ed tech bets in 2014
While overall ed tech funding is booming, deal activity by the smart money VC firms is slowing down in 2014. Of note, deal activity is on pace to fall below 2013 and 2012 levels at the current run rate. In total, there have been 19 deals by the 20 firms through the end of August. Total deals by the 20 firms grew 167% in 2013 compared to 2010 but only 6% compared to 2012. While the smart money continues to invest in ed tech, it has often been to support existing investments versus new deals.
What’s hot with smart VCs within ed tech?
To better visualize the connections and specific areas the 20 VCs are investing within the broad ed tech market, we used the CB Insights’ Business Social Graph. Of the selected investors, Accel Partners, First Round Capital, Bessemer Venture Partners, Felicis Ventures & NEA were the most active Ed Tech firms by deals in the ecosystem over the period. Battery Ventures, Index Ventures and Khosla Ventures were least active among the 20 VCs in ed tech over the period.
Although they appear to be a bit less sanguine about ed tech, it is still worth noting where brand-name venture firms are seeing opportunity within ed tech. Analyzing the Business Social Graph, we identified a few markets that smart money VCs seem keen on based on historical deal activity since 2009. These include:
- Mobile language learning – Companies providing online and mobile software to learn foreign languages or English as a second language. Firms include Mindsnacks (Sequoia Capital), Duolingo (Kleiner Perkins, Union Square Ventures, NEA), OpenEnglish (Redpoint Ventures) and 8D World (Spark Capital). We’d previously highlighted Duolingo’s strong rank performance among mobile language learning apps.
- Teacher-student collaboration & communication – Companies connecting students and teachers through online and mobile software to share content, manage assignments & communicate both in and out of the classroom. Firms include Edmodo (NEA, Union Square Ventures, Benchmark, Greylock, Index Ventures), Remind (Kleiner Perkins, First Round Capital), FreshGrade (Accel Partners) and Piazza Technologies (Sequoia Capital, Felicis, Bessemer Venture Partners, Khosla Ventures). We’d highlighted Remind’s mobile outperformance last month prior to their recent $40 million raise from Kleiner Perkins, First Round Capital and others.
- Education data and analytics – Companies providing data analytics software and solutions in and around the education industry and student performance. This includes Civitas Learning (First Round Capital, Felicis, Floodgate), Panorama Education (Google Ventures), Learnsprout (Andreessen Horowitz) and Declara (Founders Fund).
- Coding & programming education – Companies offering digital offerings aimed at coding, programming or engineering skills and techniques. Companies include Codecademy (USV, Kleiner Perkins, Index Ventures), One Month (Andreessen Horowitz), Bloc (First Round Capital) and Treehouse (Greylock Partners).
- MOOCs & online classrooms – Companies offering free or accredited online courses or tutorials in assorted subject areas. These companies include Udacity (Andreessen Horowitz, CRV), Coursera (NEA, Kleiner Perkins), CreativeLIVE (Felicis, Greylock Google Ventures) & Lynda.com (Accel Partners).
A list of the ed tech companies in this analysis is available on the ‘Research’ tab, after logging in to CB Insights. Note: This research is only available to paid subscribers with access to CB Insider.
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