EdTech Funding Is Growing — But the Majority of Investment Isn’t for the Classroom

In 2017, edtech investment reached a record high of over 9.52 billion. But ironically, the majority of that investment will never see a classroom.

The findings were released in a recent report from Metaari, a Seattle-based research firm. The annual tally of global education technology investments, “The 2017 Global Learning Technology Investment Patterns,” contained some surprising data points and some not so-surprising data points. (Or many not-so-surprising data points, if you’re an edtech investor.)

In 2017, global investments made to learning technology companies reached over $9.52 billion, up 30% from 2016, which set the previous record for edtech funding at $7.33 billion. 813 edtech companies were funded in 2017, the highest since the record of 728 set in 2015.

Yet although this was a record year, only a small amount went towards Pre-K–20 education. Pre-K–12 companies received 13% of the overall global investment, or $1.2 billion, and higher education companies got 8%, or $682 million.

This might be a surprise to the many who instinctively think of the traditional primary, secondary, and post-secondary classrooms when discussing “education.” But these findings reveal a focus shifted from education that would be occuring in schools and classrooms, with a large sum of the investment going instead towards “consumer-” and “corporate-focused” learning companies.

This type of learning has been finding a market in offering products based on artificial intelligence (AI) and extended reality (virtual, augmented, or mixed reality). Virtual reality, for example, has been big in classroom education over the last few years, but is now being integrated into job training at companies as large as Walmart.

There are also geographical factors that come into play. The U.S. continues to account for a majority of investments, while investments in Asia also continue to be quite large, a trend over the past few years.

Metaari’s Chief Researcher, Sam Adkins said, “One consistent trend is the massive amount of funding going to educational technology companies in China. Over $1.77 billion was invested in 67 learning technology companies in China in 2017. As impressive as this is, it is down from the $2.19 billion towards edtech funding reached in 2015 and the $2.06 billion reached in 2016.”

But major edtech investment in the U.S. and China is somewhat expected. One major shift is a huge increase in edtech funding in Africa, particularly for startups in South Africa, Kenya, and Nigeria. This may be due to the growing market on the continent for edtech that goes beyond the typical classroom, an environment that is inaccessible to many children in these regions. Jamie Martin, founder of Africa’s first edtech incubator, wrote that “…the lack of an affordable or accessible formal education sector means [the people of Africa] can be the most enthusiastic adopters of learning technology.”

Hopefully, if trends persist, 2018 will prove an even better year for edtech companies and startups, and we can see many new and innovative developments yet to come.

Jonah Puskar

Jonah Puskar

Jonah is a sophomore at Emerson College studying Writing, Literature, & Publishing as well as Political Communication. On campus, he is a publication editor, radio host, and on-air news talent. When he isn’t doing media-based activities, he enjoys reading a good book and having a warm cup of coffee.