In 2020, U.S. education technology startups raised over $2.2 billion in venture and private equity capital across 130 deals. That’s a nearly 30 percent increase from the $1.7 billion invested in 2019, which was spread across 105 deals. From Zoom schooling to workforce reskilling, existing and new education funders jumped on opportunities to support products that not only serve as stopgaps, but also reimagine education for the long haul. The pandemic has changed how generalist tech funds, which historically deployed capital elsewhere, viewed the education market, adds Ebony Brown, a principal at Rethink Education. A report from CB Insights showed that investments for all venture-backed U.S. companies reached a record $130 billion in 2020.
Seven of the 10 largest investments went to U.S. edtech companies selling their services directly to consumers. The biggest deal, at $150 million, went to Roblox, primarily a consumer online gaming platform for kids. Nontraditional alternative education providers Udacity and Lambda School also made the list. Some companies are working with colleges to offer job-specific tech training programs that they normally don’t offer, including TRANSFR, which offers VR-based training and has worked with Alabama’s community colleges to prepare students for jobs at Lockheed Martin. “Our traditional education system is strained, and we do think that corporations will take on more of that role,” says Ashley Bittner, a co-founder of Firework Ventures.
School closures led to a rise in spending for supplemental educational services. Outschool, which offers an online marketplace of live classes for kids, raised $45 million. Juni Learning, a similar service, secured $10.5 million. With most districts offering a subpar remote learning experience, such services have seen growing demand. But they could widen existing inequities as private educational services continue to attract students and teachers, says James Kim, a principal at Reach Capital. “We are concerned about “gap-widening” behavior,” says Kim, who wrote in a recent EdSurge op-ed.
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A Record Year Amid a Pandemic: US Edtech Raises $2.2 Billion in 2020