Europe Lags Behind China and United States On Edtech Investment

BrightEye Ventures recently released a new report on global edtech investment. The report’s findings suggest that Europe continues to lag well behind both the United States and China when it comes to investing in edtech. However, the report also found that this doesn’t mean that edtech isn’t actively gaining ground in Europe. In fact, more edtech companies were funded in Europe than China in 2018, but the amount of money exchanging hands was significantly lower.

Key Findings

According to Brighteye Ventures, in 2018, Chinese investors poured $3.3 billion into edtech while American investors invested $1.7 billion and their European counterparts spent $0.7 billion. However, the report also found that in Europe, edtech investment is on the rise.

In 2014, European investors only poured $70 million into edtech in 87 transactions. By 2018, this amount has risen to $449 million across 152 transactions (the same year, Chinese investors only invested in 118 projects, but as already noted, at much higher amounts on average). The Brighteye Ventures report also 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.

In short, European investors are not putting as much money into edtech as their Chinese and American counterparts, but they are investing. The Brighteye Venture report also discovered where and at what stage they appear to be targeting their funds.

Consumer- and Corporate-Facing Companies Dominate EU Edtech Investments

According to BrightEye Venture’s new report, in Europe, consumer and corporate-facing edtech companies continue to attract the most funding from investors. Consumer-facing edtech companies include those companies serving general markets (e.g., platforms designed to help people acquire a second language on their own time). Corporate-facing companies are primarily edtech companies that deliver training solutions to businesses. By contrast, a relatively small amount of funding went to edtech companies serving schools and universities (school-facing companies saw 10% of investment funding and university-facing companies saw 12% of this funding). In the United States, the situation is notably different. According to BrightEye Ventures report, the majority of U.S.-based edtech investment is school- and university-oriented, but the report speculates that this may reflect a higher level of digital penetration in U.S. schools than European schools.

The United Kingdom Is No Longer Europe’s Only Edtech Leader

For many years, U.K.-based companies dominated the edtech market with close competition from the Nordic nations. This is no longer the case. As noted in BrightEye Ventures report, the edtech sector is gaining ground across Europe:

“Three new players have emerged over the last 5 years: Germany, France and to some extent Spain. Between 2014 and 2018, these three countries have seen an increase in EdTech investments of 135%, 133% and 60% respectively. Surprisingly, France surpassed the historical leader, the UK, for the very first time last year (2018) with all-time record investments of $147M.”

In fact, in 2018, OpenClassrooms and Klaxoon, both based in France, received the most funding. They acquired $60 million and $50 million respectively. Two British companies were on the top-five list but reported lower levels of funding. Fuse Universal saw $20 million in investment while Pi-Top received $16 million.

Short- and Long-Term Predictions for Edtech

BrightEye Ventures completes its report with a series of predictions for edtech, including four predictions for 2019.

First, BrightEye Venture’s analysts expect that edtech will continue to roll out more alternative financing options for postsecondary and lifelong learning in 2019. They also predict that more U.S. players will enter the European market to help scale these lifelong learning solutions. Third, they predict that over the coming year, there will be at least five new edtech transactions in Europe that top the $20 million mark. Finally, BrightEye Ventures’ analysts predict that combined, French and British edtech companies will see in excess of $350 million edtech investments over the coming year.

You can read the complete BrightEye Ventures report here.

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