Welcome to the 2023 edition of Brighteye's Edtech Funding Report, in partnership with Dealroom.
In venture and startup circles, 2021 undoubtedly represented a boom year. Optimism that the pandemic was coming to an end and that the world was reopening extended to ambitious founders and early teams. Indeed, this carried through to 2022, certainly in the first few months, but when pandemic-related public spending cuts and rising costs of living combined with Russia’s invasion of Ukraine, optimism ebbed away. It was replaced by a cocktail of caution and stoicism that led to many Edtech providers, from startups to large incumbents, providing support to the Ukrainian children and adult learners.
Following a strong start to the year for the global Edtech ecosystem, particularly for Europe which secured 40% more funding in H1 22 than in H1 21, positive momentum slowed, reflecting the broader landscape in public and private markets. This said, Europe demonstrated more resilience in funding and deal activity than comparable regions. This is explored in this report. Green shoots are still very visible for the sector, but we expect a relatively slow H1 23.
At Brighteye, we remain excited about the prospects for Edtech in Europe and are determined to help Europe lead the way. With dramatically reduced barriers to customer adoption, increased appetite for impact investments, and the ever-growing interest of US investors in European markets, we see a prosperous trajectory for entrepreneurs and founding teams operating in the space.
This report takes a deep dive into venture funding in the last 12 months across global and European Edtech, including both historical and global data sets.
Methodology
During the past 18 months, we have been working closely with Dealroom to develop the leading open-sourced Edtech-focused data platform. In this report, we have used Dealroom’s data as a starting point and then where relevant, consolidated it with relevant insights from Crunchbase, Pitchbook, Tracxn and our previous work. We would like to thank Dealroom for their co-operation in the production of this report.
Our searches in Pitchbook and Crunchbase included companies based within Europe and categorised as Edtech (vertical) and/or education (keyword). Searches were conducted in the first and second weeks of January and so may be subject to change as new details emerge.
Headlines include:
1. European Edtech showing more resilience than other major Edtech regions
Though 2022 saw falls in deal number and funding in all regions, Europe demonstrated the most resilience, with funding falling by 28%, relative to 62% for the US, 89% for China and 45% for India. China’s fall represents the most significant realignment, a market that in 2020 represented 55% of total global Edtech VC.
2. UK maintains top spot in Europe- Germany and Austria make up the top 3
Edtech companies in the UK secured the most funding, at $583M and 81 deals, more than $200M ahead of the next market, Germany with $363M and 34 deals. Austria, maintained a top 3 position, but France slipped out of the top 3, seeing a sharp fall in funding and deal activity relative to previous years. Italy was the only European market to see increased funding and deal number.
3. A year for Edtech specialist investors
As could be expected in challenging market conditions, Edtech specialists dominated the top 10 most active investors, both in the global and European contexts. Indeed, 29/51 deals done by top 10 most active investors in Europe were secured by specialists. Brighteye was the second most active in global Edtech and most active in Europe.
4. Corporate learning the only vertical to grow by total investment secured
Considering funding secured by user demographics in Europe, we observe that the the only Edtech sub-sector to see increases in funding was corporate learning. All other sub-sectors (Pre-K, K-12, HE and lifelong and consumer learning) saw falls, with the sharpest being observed in Pre-K and lifelong and consumer learning.
5. Angels increasingly active in Europe and now involved in more deals than any other region
By available data, Europe has seen the sharpest rise in angel investment activity in Edtech relative to other major regions. The European markets with most angel activity are Germany and the UK.
