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Earlier this summer, the tech blog Techcrunch pronounced that “Investors Rethink EdTech As Dealflow Declines.” No one likes tech blog gaffes more than other tech blogs, so there’s been a lot of crowing in the last few weeks as the investment figures from the first half of 2015 have been calculated. It looks like Techcrunch was wrong. According to investment analysis firm CB Insights at least, “Funding To VC-Backed Education Technology Startups Soars 96%.” Investments in ed-tech are at a record high, Inside Higher Ed and Education Week (among others) have observed. Whee.

This week, Edsurge published its report on ed-tech investments in the first half of the year. According to its figures, there were some $1.6 billion in deals from January to June.

Edsurge rightly notes that there are substantial discrepancies between its calculations and those of its competitors.

The Numbers
Source Deals Dollars
Crunchbase 111* $686 million
CB Insights 127 $1.4 billion
Ambient Insights 262 $2.5 billion
Edsurge 161 $1.6 billion
Hack Education 142 $1.5 billion

* thru May 2015

As Edsurge points out, much of this difference stems from the various definitions of “what counts” as ed-tech. (Is SoFi ed-tech? Is AltSchool? Does Fifty Three's funding round count since it says it plans to use the money to enter the education market?) Some of the difference too comes from the challenges in tracking on this data – despite rules requiring investments be made public via an SEC filing, investors and entrepreneurs are not always very forthcoming about their funding. Furthermore, Crunchbase, which is a crowdsourced database, is full of errors – incorrectly applied keywords, for example, that put startups in the education category when they shouldn’t be.

To me, the interesting question isn’t really “what is the correct number?” I’m also not particularly interested in whether it’s a record-breaking six months or not in terms of the dollar size. Record-breaking investment does not mean ed-tech is awesome or innovative. It means there are investors who think they can get rich(er)... or maybe at least see a nice return.

Instead I want to know who’s getting the dollars – new startups or established companies? Much of this year’s record numbers are a result of several whopping investments in Series B and beyond rounds – rounds whose size isn’t really in line with the “typical” funding. (Over half the funding rounds I’ve tracked so far this year were $3 million or less.)

According to my calculations, here are the largest investments of 2015 (that is, those greater than $40 million):

  1. Social Finance $200 million
  2. $186 million
  3. 17zuoye $100 million
  4. AltSchool $100 million
  5. Udemy $65 million
  6. Yuantiku $60 million
  7. NetDragon $52.5 million
  8. Genshuixue $50 million
  9. Orbotix $45 million
  10. Duolingo $45 million
  11. LittleBits $44.2 million
  12. Instructure $40 million

As this list indicates and as many industry observers have noticed as well, there is immense investor interest in Chinese ed-tech companies.

Of course, venture capital funding is just one side of the investment equation. On the other side: the anticipated return on investment. By my count, there have been over 60 acquisitions in ed-tech so far this year. Again, some of these are pretty notable: LinkedIn buying; NetDragon buying Promethean; Houghton Mifflin Harcourt buying Scholastic’s ed-tech business; Pearson selling The Financial Times. Rarely are the dollar figures disclosed in these deals, but they're important deals to watch nonetheless.

The steady drumbeat of acquisitions, along with some of these sizable funding rounds for established startups, suggests that the ed-tech startup world is consolidating. (I really hate the description that it’s “maturing.” FFS, ed-tech is over a century old. It's already mature; investors just don't like the shape it's taken until the last five or so years.)

When we think about the consolidation of the industry, we should reflect on it in terms of politics and power, not just finances and funding. Which investors and investment firms are intertwined most closely with education policy and with the call for education reform?

I’ve updated the Google Spreadsheet where I’m tracking on investments, acquisitions, and mergers. I have also made the data available in JSON format:

See, it’s not enough to read someone else’s report and trust that they’ve got it right; you should be able to crunch the data yourself. You can find all of this in a GitHub repo, which you’re welcome to contribute to or fork.

(This is the first year I’ve tracked on this, and next year I do plan on adding more fields so that it’s easier to see if the money is going to K–12, higher education, corporate training, and the like. I’d also like to track which investors are funding startups with diverse founders. Other suggestions welcome.)

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Audrey Watters



The Ed-Tech Industry Matrix

A Hack Education Project

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