Ed Tech Pulls in $1.37 Billion in Venture Capital

Written by via CB Insights

Education technology (or EdTech) has become a major focus area for venture capitalists with 235 companies building education-oriented tools & services raking in $1.37 billion between Q2’11 to Q2’12.  Since 2010, CB Insights data shows an average of 53 venture capital financings per quarter to education focused startups   Deal activity peaked in the first half of 2011, with 80 deals in the first quarter and 85 in the second but with recent notable financings such as Udacity’s $15 million from Andreessen Horowitz, sentiment to the space clearly remains high.  Funding per quarter has also been significant with ed tech startups pulling down an average of $294 million per quarter over the Q2’11 to Q2’12 period.

As you can see in the chart below, funding and deal activity took a break after hitting record levels in Q2’11 but continues to mount a slow but steady come back.  Venture capital funding to Ed Tech has remained choppy after Q2’11 but Q2’12 did see it jump significantly coming in at the best levels in the last 10 quarters.

 

The Q2’12 funding pop to EdTech can be attributed to several mega deals as some companies that had previously raised early stage seed and Series A funding came back to the well looking for larger financing rounds to help them scale their businesses.  The emergence of mega deals within Ed Tech boosted Q2 2012’s average deal size to $9.2 million, a significant uptick from the 10-quarter average of $5.5 million. Median deal size was $3.5 million in Q2 2012, which is still a 75% increase vs. the 10-quarter median of $2 million.

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