2017 was an amazing year for edtech, it raised a whopping $3.5 billion last year. 2018 is coming across even better than its predecessor. Let’s take a look at how the phenomenon is shaping up globally as we say goodbye to the first quarter of 2018.
Consolidation continues in the US K12 market driven by PE firms
In a bid to win the K12 market and offer a full suite of software products to schools and districts, Edtech software companies (mainly financed by private equity funds) are leading build up operations. From administrative and pedagogical tools to content, they are building all in one product for the K12 markets and it’s not unlike what the Talent Suites did a few years ago in the HR industry.
The merger of Vista Equity Partners with PowerSchool and PeopleAdmin is a recent example. According to Reuters, the two companies combined are valued close to $3bn. If you look closely, it is a continuing trend in the US:
- Vista Equity has acquired 8 edtech companies for $1bn total since 2015.
- Thomas Bravo with Frontline Education (9 acquisitions since 2014).
- BV Investment with Hero K12 which raised $150m in 2017 for external growth.
Massive Chinese investments in edtech
China is bound to be a major edtech hub with 260m students, 15m teachers, 300m people learning English and an estimated $40bn tutoring market in 2021. The top 3 edtech investments worldwide (17zouye (tutoring): $200 million, Zhangmen (tutoring): $120 million, and DadaABC (English language learning): $100 million) were all Chinese in Q1 2018. 7 Chinese edtech company went public (outside China) in 2017 raising more than $1.1bn and 7 Chinese edtech startups have raised more than $30m rounds.
France is picking up
The French edtech startups have raised $31m in Q1 2018 as compared to a mere €11m in Q1 2017. Though the edtech scene in Europe is relatively smaller than the US or China, European leaders will emerge in the coming years.