Funding for edtech firms has exploded in India, but China leads with mega-deals

In March, we had reported that edtech firms had got more investment than last year’s hot favourites, fintech and foodtech. It is now becoming clear that funding in edtech is exploding.

There were about 50 funding deals in the edtech sector in 2015, an increase of more than three fold since 2011. But this year is set to be more bountiful.

Since January, 18 funding deals have been done. That implies edtech startups are on track to beat last year’s record, with about 60 deals expected by the year-end, according to data from researcher CBInsights.

The highest funding was test prep platform Byju’s $75 million round, which made it the most well-funded Indian ed tech startup in a single sweep.

Edtech in India was not among the hot startup sectors in the last two years. Out of nearly $8 billion in venture funding in startups last year, only $114.7 million went towards edtech companies.

China leads with big deals

Screen Shot 2016-05-02 at 2.16.33 PM

Edtech deals in India, China, UK from 2011- 2016 (projected)

Meanwhile, China has become a major location for edtech, since outpacing the United Kingdom in 2012 as the second-ranked market after the United States for ed tech deals.  It held that rank in 2013 and ’14, until it was overtaken by India in number of deals. However, the average deal size remains much bigger in China.

This year, China has had only four deals. English-learning platform Tutor Group is the most well-funded, with $315 million in total disclosed funding from investors like Alibaba Holding, Goldman Sachs and Singapore’s GIC. It had a $200 million Series C round — China’s largest — in November.

Ed tech funding has been concentrated in a few countries worldwide, with US-based startups raising the biggest rounds. China comes a close second, and took 20 per cent of global ed tech venture funding, in just 5 per cent of deals. India, on the other hand, received only 3 per cent of global venture funding in ed tech, despite attracting 6 per cent of total deals.

China’s average deal size is about $24 million, compared to $4.8 million in the US and $3.4 million in India.

Chinese startups had four mega-deals — above $100 million rounds — last year, compared with one in 2014. In comparison, India’s biggest deal was the Byju funding round.

The rest have all been under $30 million, with the majority being under $10 million in size. That indicates a much easier availability of funds at the start, than at later stages of funding, and will present a challenge for startups when they seek to raise bigger rounds for expansion.

Also read:

Philippine edtech Ritmo closes second seed round led by Future Now Ventures
India: Edtech startups are finally attracting investor interest after lacklustre 2015
Indian edtech startup Byju’s raises $75m from Sequoia, Belgian Sofina

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.