Looking back at the 2021 data from the vantage point of 2023, you’d be forgiven for imagining yourself in a ravine looking back up towards those dizzy heights. The word ‘dizzy’ is opportune, given the bloated round sizes and dizzying valuations that founders sought, and investors approved. It feels like those days are now quite far behind us – gone is the sense that revenue can wait in pursuit of virality and extraordinary user growth. Too many investors were burnt in such deals. We find ourselves in a much more competitive and demanding landscape, in which resilience plays an increasingly significant role.
This said, the market is far from barren; indeed, it is quite the opposite. We continue to be excited by and in awe of the ingenuity in the Edtech sector. European Edtech investment saw its second consecutive rise in half year funding, reflecting the continuation of a muted but definite resurgence. European Edtech continued to show more resilience than most major Edtech markets, in deal number and funding amounts – 32% of global Edtech deals done in 2023 were done in Europe with an increasing portion in the earliest stages.
7 key takeaways
1. European Edtech funding slowed, but remained higher than 2020 levels with back-to-back growth in Half Year data
After a major slump in VC funding between H1 2022 and H2 2022, Edtech appears to be mounting a gradual, hopefully sustainable resurgence, with back-to-back Half Year increases in funding.
2. The number of Edtech deals in Europe increased on 2022 levels
Despite a slowdown in overall funding figures, the number of deals in Europe actually increased, with the highest density in the earliest stages in rounds <$1M, which bodes well for the health of the ecosystem in future years as talented founders continue to build and get their companies off the ground.
3. UK maintains top spot in Europe with strong resilience, with only a slight downturn on 2022 levels
The UK retained top spot in 2023 in terms of both funding and deal numbers- though the funding total of $547M in 2023 is down slightly on the $583M of 2022, it’s still more than 3.5X the levels observed in 2020 ($164M). UK startups secured almost 3X the number secured in the second-placed market, France. France returned to second in terms of both funding and deals, with French startups securing $162M across 14 deals, leapfrogging Germany.
4. 32% of global Edtech deals done in Europe, with particular resilience in early deals
The trend of an increasing portion of global Edtech deals being done in Europe continues to progress. The portion grew from 26% in 2022 to 32% in 2023… The precise reasons for this difficult to gauge, but two points are worth making: 1) most deals are relatively early stage and 2) there is enormous diversity in the European ecosystem, requiring a diverse range of solutions in response to diverse range of opportunities.
5. Exits in Edtech primarily in the US, as is the case for the largest deals
More consolidation took place in the US in 2023 than in any other major region. Most major deals focused on K12, such as Kahoot!’s privatization via Goldman Sachs and others, as well as Dreambox Learning’s exit to Discovery and Firefly Learning’s exit to Veracross.
6. Brighteye retains the (joint!) top spot for most active investor in European Edtech, with increasing involvement of government-aligned organisations in the investment landscape
We displayed VCs by the typical definitions, but the increasing involvement of government-aligned organisations was clear to see - organisations aligned with the Spanish, French, Welsh and Italian governments all took a keen interest in the sector in 2023. We expect to see even more of this type of activity in 2024.
7. One of the 3 market maps featured in the report focuses on workforce productivity tools- we highlight knowledge management, learning and talent management as the three areas that Brighteye defines as Edtech
We hope you enjoy reading the report and find it useful!