Global venture capital investment in ed tech fell by 20 percent last year, continuing its decline from the record highs set during the pandemic era.
Venture capital investors injected $2.4 billion into ed-tech companies in 2024, according to a report from market intelligence firm HolonIQ, marking the lowest level of investment in the sector in roughly a decade.
That’s down from $3 billion invested in 2023, which had ranked as the lowest amount tallied since 2014, when venture capital funding for education companies totaled $1.4 billion.
After soaring to record highs during the pandemic, reaching as much as $16 billion in 2021 and almost $21 billion the next year, venture capital investment into ed tech has plummeted recently.
And current venture investment numbers are still far off from pre-pandemic funding levels of $7 billion in 2019.
The dramatic drop-off was expected, said Maria Spies, co-CEO and co-founder of HolonIQ, a market intelligence firm focused on the education industry.
A market as frothy as the ed-tech space became during COVID is “always going to burst,” she said in an interview, adding that now, “it’s a very tough time to raise venture funding in education.”
From about 2017 through 2022, the global ed-tech venture market was catapulted first by funding for Chinese ed-tech firms and then by an explosion of investments into the sector as a whole during the pandemic, Spies said.
Demand for Sustainability
With the pandemic-fueled boom a thing of the past, investors are now focusing on sustainability and profitability over rapid growth, Spies said. According to the HolonIQ report, 2024 marked a key year for the ed-tech venture segment, as it is “transitioning from the growth of previous years to a more measured approach.”
“Growth capital may return in 2025,” the report says, “but venture investors are holding back large sums, waiting to see outcomes of their pandemic-era bets.”
Spies said venture investments in education companies are projected to grow from the $2.4 billion mark set last year, but her firm does not predict massive increases.
“Slow, steady, solid growth,” Spies said, noting that “mega rounds” for the ed-tech sector in the future are likely to remain rare.
Mega rounds were one of the largest drivers of the prior extraordinary funding levels. Between 2019 and 2022, there were more than 115 funding rounds in excess of $100 million, according to HolonIQ.
That trend started to cool in 2023, and the downtrend in mega rounds continued last year.
More than half of the $2.4 billion invested in 2024 went to the North American ed-tech sector, according to the report. Meanwhile, 30 percent of last year’s venture investments went to European education companies, and South Asian ed-tech firms captured 20 percent of global ed-tech venture funding.
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More than one-third of global venture funding for ed tech last year went to companies in the K-12 field.
Spies said companies offering K-12 “support services” — a broad category encompassing things like student success, tutoring and homework help, teacher preparation, testing and assessment — were particularly successful in getting funded through venture deals last year.
Just under a quarter of all K-12 venture deals involved companies offering those kinds of services, which according to the report, “highlights growing demand for solutions that enhance both learning and logistical operations within K-12 systems.”
“What it says … is that we haven’t left the impact of the pandemic behind,” Spies said. “There’s still a lot of support that needs to be provided to kids outside of your stock-and-standard, ‘Come to class.’”