Thank you for subscribing.

Please check your email to confirm.

Unsubscribe success..

You already subscribed and confirmed.

Please check your email.

You already subscribed.

Please check your email to confirm.

Education Industry has a Bright Future Regardless the Decreasing Number of Finances
Education Industry has a Bright Future Regardless the Decreasing Number of Finances
Globe. Image Credit: Kyle Glenn/Unsplash
Associated Company
VIPKID VIPKID

Back in the day’s education used to be simple with a blackboard, a teacher and desks in a classroom. Today, students can study various languages online, upload homework through a portal and learn chemistry through 3D immersion. Such is the rise of educational technologies. 

Government support for education per capita in developed countries is far higher than in developing countries, which can be explained by both the resourcefulness of developed nations and the high and growing populations of developing nations. Technology is becoming one of the most important tools for education

Education institutions are investing more in software solutions than in technology hardware. M-learning, Bring Your Own Device, “gamification” and virtual reality are gaining popularity and enabling teaching to be student-centered, while lectures are becoming project-and inquiry-based.

According to Holon IQ education is a USD 6 trillion industry and will grow to USD 8 trillion by 2025. Expenditure on education and training from governments, parents, individuals and corporates continues to grow to historic levels and is expected to reach USD 10 trillion by 2030.

The investments made to learning technology companies in 2018 were massive, soaring past USD 16.34 billion with 44.1% going to Chinese edtech companies. 2018 marked the first year that the US did not dominate the funding. In 2018, USD 7.22 billion went to 207 Chinese edtech companies. USD 5.23 billion (32% of all global funding) went to 248 US companies. Compared to the US, the funding amounts in China were huge.

American education technology companies were dwarfed by Chinese counterparts. Chinese educational technology companies included VIPKID which raised a staggering amount of USD 500 million and Zouyebang (作业帮) managed to raise an amount of USD 350 million.

The most noticing point in 2018 was the investors interest in AI-based Learning startups. Learning products with integrated Artificial Intelligence dominated the investment rounds. A combined total of USD 2.90 billion went to 197 companies developing AI-based Learning products across the planet in 2018.

"AI-based Learning is the one area where the US still has a commanding lead over China," said Sam S. Adkins, Chief Researcher of Metaari. "The majority (61.5%) of all global investment in AI-based Learning companies went to 102 US-based companies that raised a combined total of USD 1.78 billion. In stark contrast, USD 299.7 million went to just twelve Chinese AI-based Learning companies, a mere 10.3% of all global investments to AI-based Learning companies. In 2018, 25 AI-based Learning companies in India obtained USD 227.7 million in investments, followed by Israel at USD 169.5 million."

There was a sharp increase in investment in game-based learning companies in 2018. A total of USD 2.25 billion went to 133 game-based education companies in 2018, more than double the amount invested in the year earlier. Over USD 1.96 billion went to 74 mobile learning companies in 2018. This investment was heavily concentrated in four Chinese companies including Zuoyebang (作业帮) and 17 Zuoye (一起作业). 

Education technology is becoming a global phenomenon, and as distribution and platforms scale internationally. A report by EdTechXGlobal in 2016 said that the market is projected to grow at 17.0% per annum, to USD 252 billion by 2020. The US has set the trend and pace of the EdTech market. Asia is now experiencing the world’s fastest growth in investment into the sector, and Europe has seen increases; however, this region remains a largely under-invested and fragmented market.

According to Elearning Inside, in 2018, Chinese investors poured USD 3.3 billion into edtech while American investors invested USD 1.7 billion and their European counterparts spent USD 0.7 billion. 

In 2014, European investors only poured USD 70 million into edtech in 87 transactions. By 2018, this amount has risen to USD 449 million across 152 transactions. A report by Brighteye Ventures emphasizes “Europe is the only region where EdTech deal volumes have grown, nearly doubling from 87 to 152 since 2014.” During the same period, transaction volume dropped by 30% in the United States.

It can be seen from the data above that China is clearly leading the race in the first half of 2019 when it comes to the amount and number of investments. 

USA runners-up in the race of raising funds

EdSurge reported that for the first half of 2019, the industry saw USD 962 million raised across 65 deals, the highest amount of funding at the halfway mark since at least 2015.

By comparison, in the first six months of 2018, companies raised USD 750 million across 62 deals.

The leading deals worth more than USD 200 million were made by two US companies. The California based online learning platform provider, Coursera raised USD 103 million in a Series E round. New York-based Andela, which trains programmers in developing countries managed to raise USD 100 million in a Series D round.

These two deals make up for 21% of the total amount raised by edtech companies in USA for the first half of 2019. 

USA’s counterparts overseas have also attracted plenty of venture capital. Three Chinese companies landed nine-figure Series D deals. Two that offer online tutoring services, Dada (哒哒英语) and Gaosi Education (高思教育), raised USD 255 million and USD 140 million, respectively. Online homework platform Knowbox raised USD 150 million.

China has led education VC investment growth over the past five years

According to EDU Insight a total of 167 financing events took place in China. Other than the undisclosed amounts, a total of CNY 9.29 billion of investments were raised. As compared to 342 investments and financings in the first half of 2018, the amount has shrunk by nearly half. Although the investments have decreased, the sub-sector has changed rapidly.

Art education, children's programming, and other fields have received much attention in terms of financing. As the country continues to incorporate sports, art and other disciplines and comprehensive quality evaluation into performance evaluation standards, and the gradual opening of the after-school service market, 2019 Quality education will continue to attract investments in the second half of the year, and competition will get intense. 

In the first half of 2019, there were 36 investment and financing events in the K12 education field. Out of the total financing of CNY 9.291 billion, K12 contributed CNY 5.826 billion, accounting for 63% of the total amount. The top three of the investments raised also belong to the K12 companies, with Zhangmen (掌门1对1) raising a staggering amount of USD 1 billion for E round, DaDa ABC (哒哒英语) and Gaosi Education (高思教育) both raising D round financing of USD 255 million and USD 140 million respectively.

However, education is starved of capital compared with other sectors.

Innovation requires capital. Governments are struggling to fund education to previous levels and education is not drawing on enough private capital to fund the innovation that’s needed. Public-Private Partnerships will be critical to supporting future growth, innovation and access to education.

Education as an industry that has pinned the hopes of hundreds of millions of families around the world for a better life, social progress, and national rejuvenation, education has undoubtedly been one of the areas of greatest concern to people all over the world.

EqualOcean has sorted out the list of "The Global Unicorn Club" released by CB Insights, and compiled 382 unicorn companies from July 2010 to July 31, 2019, consisting of around20 industries.

Enterprises Information

VIPKID offers an American elementary education experience to K12 Chinese students.
CATEGORIES:
Last Funding Type
Series E
Number of Employees
more than 10000
Number of Funding Rounds
9
Total Funding Amount
825.50M
Zuoyebang is platform where students can seek answers to study-related problems and supply methods to peers who seek for assistance.
CATEGORIES: Education
Last Funding Type
Series D
Number of Employees
150-300
Number of Funding Rounds
4
Total Funding Amount
574.71M
17zuoye is an online learning platform for students K-12, as well as teachers and parents.
CATEGORIES: Education
Last Funding Type
Series E
Number of Employees
more than 2000
Number of Funding Rounds
7
Total Funding Amount
585.00M

Enterprises Information

VIPKID
VIPKID offers an American elementary education experience to K12 Chinese students.
CATEGORIES:
Last Funding Type
Series E
Number of Employees
more than 10000
Number of Funding Rounds
9
Total Funding Amount
825.50M
Zuoyebang
Zuoyebang is platform where students can seek answers to study-related problems and supply methods to peers who seek for assistance.
CATEGORIES: Education
Last Funding Type
Series D
Number of Employees
150-300
Number of Funding Rounds
4
Total Funding Amount
574.71M
17Zuoye
17zuoye is an online learning platform for students K-12, as well as teachers and parents.
CATEGORIES: Education
Last Funding Type
Series E
Number of Employees
more than 2000
Number of Funding Rounds
7
Total Funding Amount
585.00M

Reach the Author!

Ask the author questions about the copied text

MOST READ

THE LATEST

Any Question

EqualOcean is an international information service provider and investment research firm that aims to become a global platform for industrial innovation.

We strive to make technology inclusive, accessible and transparent.

Join over 800,000 of your peers