January 31, 2024
Headlines:
- European Edtech funding slowed from $1.9B to $1.2B, 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 (H2 2022 = $0.4B; H1 2023= $500M; H2 2023= $700M).
- The number of Edtech deals in Europe increased on 2022 levels, from 256 to 288
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.
- The 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.
- 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.
- 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.
The report also features 3 market maps on teacher support tools, workplace productivity and sustainability skills, as well as predictions for the year ahead in Edtech.
Rhys Spence, Head of Research, commented:
“We expected this report to be tough to write, given the broad perceptions in the markets that 2023 had been a tough year for startups. Though many of the data points that we’ve now been tracking for 5 years are down on the dizzying heights of 2021 following the extreme accelerations from H2 2020, there are certainly some reasons to be optimistic, particularly in European Edtech. The headline venture funding figure for European Edtech fell from $1.9B to $1.2B, but we were pleased to see a rise in the number of deals done. This and other data points represented 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 (relative to 26% in 2022) with an increasing portion in the earliest stages. We also observed greenshoots emerging in the headline funding data, with European Edtech investment seeing its second consecutive rise in half year funding, reflecting the continuation of a muted but definite resurgence.”
The report can be downloaded by clicking here
