The education sector has had a ground-breaking new year when it comes to venture capital financing, reaching three times investment levels before the pandemic in 2021, according to a new report.
Globally, more than $20 billion was invested in education technology in 2021, according to the annual report from Holon IQ, an Australia-based global research and intelligence firm.
That’s an increase from $16 billion in 2020, which was also a record year.
“It was clear by mid-2021 that 2020 was just the beginning of a major wave of venture capital looking to invest in the future of education,” Patrick Brothers, co-founder and co-CEO of Holon IQ, said in an email. “The US and European market acceleration … has created a new level of funding that will drive major innovation in the next three to five years.”
In the United States, investment funding for education technology jumped from $2.5 billion in 2020 to $8.3 billion in 2021, according to the report. Across Europe, there has also been strong growth: investment has risen from less than $1 billion in 2020 to $3 billion in 2021.
India also remains a major player in the industry in 2021 after exceeding total technology investment in Europe in 2020. India invested $3.8 billion in 2021.
These increases in funding were enough to offset the collapse in investment in China – previously a world leader in educational technology financing – due to new education regulations launched by the government.
The flow of financing in China is collapsing
In 2021, China’s investment in educational technology fell to $2.7 billion, according to a Holon IQ report, compared to $10.2 billion in 2020.
Many education companies have sought to invest in China’s vast market over the past few years, although some of that enthusiasm has waned recently, as new regulations have generally banned the use of foreign education materials in Chinese public schools, and in many cases closed for profit. Private classes.
Before COVID, China also dominated the educational technology unicorn scene – Startups worth over $1 billion.
But 2022 has seen 17 new unicorns – most of them from the US – a metamorphosis that the brothers call a “game changer”.
Brothers said that while the education markets in Europe and the United States are expected to continue to strengthen, overall, it will be difficult for global investment for 2022 to continue at the same pace the market has seen over the past two years.
Brothers said China’s investment in education may continue to decline in 2022. Although a shift in focus toward professional technology and skills upgrading may stabilize the level of investment in education in the country.
There is also the possibility that India will follow China’s lead and regulate education technology more aggressively, Brothers said, which could affect global investment levels.
“India was led by a small number of major players,” he said. And while early-stage investment continues to accelerate, “we may see India moderate over the next few years as those big investments [players] It seeks to exit and consolidate the local market.”
However, the Brothers said it’s important to note that the industry will continue to see results from this two-year wave of funding for years to come, as hiring, acquisitions and new product integration takes time.
“It is exciting to see technical education receive the attention and funding it needs and deserves, to support schools, colleges, universities, and most importantly, learners around the world in such a critical digital transformation.”
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