Suddenly ed-tech is hot, gets over $1 bn from PE/VC funds
Companies in the online education space have attracted over 200 per cent more private equity and venture capital funding in the first eight months of this year compared to last year.
Between January and August this year, ed-tech companies have received a total funding of $1,191 million across 36 deals. In the same period last year, they could garner only $373 million across 31 deals-a growth of 219 per cent. During the entire calendar year 2019, the space had witnessed just 43 deals aggregating to $409 million, as per data from Venture Intelligence.
The growth in investments also saw ed-tech companies increasing their share in the total venture capital funding in the first eight months of this year to 23.1 per cent against 5.2 per cent in 2019. Though the ed-tech space has seen a gradual rise of investments and share in the past five years, 2020 saw a quantum jump. In 2015, ed-tech companies had received just $84 million and had a minimal share of 1.1 per cent in the venture capital funding.
Emergence of newer companies to tap the opportunity in online education combined with maturing of some of the larger companies has led to the increase in the funding. However, the pandemic was a game-changer. The new education policy of the government too enhances the role of online in continuous learning.
"In this pandemic situation where every other sector is struggling to survive, ed-tech is one and only sector that has seen maximum traction from VC/PEs, and the ed-tech industry has seen the highest investments in the last 3 months. Due to Covid-19, the complete education sector has been forced to move online whether its schools or colleges or traditional classroom training centres, and if we see the education sector has moved 10 years ahead. With a lot of job losses around the globe, there is a heavy demand for high-quality skills programmes that can help freshers and professionals to secure their careers and job in this pandemic situation," said Diwakar Chittora, founder and CEO of IntelliPaat.
According to Bengalurubased RedSeer, online higher education is expected to grow 10-fold to $5 billion by
FY25. This will see several new companies coming up in the space, consolidation and some of the larger ones growing stronger. All these will attract more venture capital.
Among the larger deals, Byju's received $300 million from Tiger Global in January, $200 mn from General Atlantic in February and $122 mn from DST Global in Aug-ust. Unacademy got $150 mn from SoftBank and others, and
$110 mn from Steadview Capital and others.