Last week was a good one for edtech in Europe.
GoStudent became Europe’s first edtech unicorn (without an IPO company), having raised its third round in 12 months and the largest ever in the industry in Europe. Brighteye Ventures’ analysis showed that VC investments in European edtech companies had exceeded $ 1 billion for the first time in a calendar year, even without GoStudent’s mega-round six months to go.
Edtech deal flow in 2021 is expected to reach or even exceed 2020 levels, according to the report: at $ 9.4 million, the average deal size is three times the 2020 level; seven companies raised $ 50 million in five different markets; and the UK has more than three times as many deals as the nearest single market.
It is interesting that we are not seeing huge increases in the number of deals. The $ 1.05 billion mark in the report is spread across 111 transactions – up from 237 in 2020, so we can expect a similar total this year. Of course, more funding and a stable number of deals mean we’re seeing a significant increase in deal size.
It seems that generalist investors are realizing that edtech investments can generate oversized returns, similar to what is happening in sectors like deep tech, health tech, and fintech.
We can draw some conclusions from this. We can assume that companies established in the last year and in previous years matured significantly during the pandemic due to increased demand. In addition, this quick natural selection process provided industry insights and potential winners.
After all, generalist investors seem to be realizing that edtech investments can generate oversized returns, similar to what happens in sectors like deep tech, health tech and fintech.
This contributes to bigger early rounds than we’ve seen in previous years – investors can’t pick the winner, but instead tilt the playing field. We therefore expect the number of Pre-Seed, Seed and Series A rounds to increase in the second half of 2021 as companies established during the pandemic begin to raise significant funds.
Another reason Edtech is taken seriously by generalist investors is that the true size of the market (and the extent of the coming digitization) is becoming more and more conceivable.