In its fifth edition of the "European edtech funding report 2024" Brighteye Ventures provides an overview of the state of the edtech sector in Europe and provides context on a global scale.
As highlighted in the report, European edtech continued to show resilience both in terms of deal number and funding amounts. Practically, European edtech deals made up almost 32 percent of all edtech deals globally in 2023.
Growth in early-stage rounds
Looking at the data year over year, European edtech funding showed a decrease, from $2.5 billion in 2021 to $1.9 billion in 2022 and finally to $1.2 billion in 2023, but the number of deals remained higher than 2020 levels.
So, there is a decrease in funding amount on an annual basis. But the look at the investment levels over the half-year data can give us a more positive perspective. According to the report, the European edtech ecosystem secured a second increase in VC funding, rising from $400 million in H2 2022, to $500 million in H1 2023 to finally, $700 million in H2 2023.
Additionally, even though funding was lower in 2023 compared to 2022, the number of deal transactions was higher and almost on the level of 2021. All this might lead to the conclusion that there is still a demand and interest in edtech and that we might expect even higher interest or level of investments in H1 2024.
Moreover, the report states that the highest density is seen in the earliest stages of rounds (<$1 million). This also might lead us to a conclusion that in the long-term the ecosystem might strengthen, as talented founders continue to build and get their companies off the ground.
The UK still takes the top spot
A strong resilience is notable in the UK edtech sector in 2023, both in terms of funding and deal numbers. Thus, according to the report, edtech funding in the UK reached a total of $547 million in 2023, representing a decrease of less than 10 percent compared to a year before ($583 million in 2022). Still, compared to 2020 ($164 million), the numbers are more than 3.5 times higher.
France took second place, securing $162 million across 14 deals, followed by Germany with $111 million secured over 35 deals. Germany, however, saw a drop of 67 percent in funding in 2023 compared to 2022.
One-third of all deals are coming from Europe
As noted before, 32 percent of global edtech deals are done in Europe. According to the data, it might be stated that the trend of an increasing portion of global edtech deals is being done in Europe. This is confirmed by the noted growth from 26 percent in 2022 to 32 percent in 2023.
Two notable points could contribute to the further growth of the European edtech ecosystem:
- Most deals are relatively early stage and
- There is enormous diversity in the European ecosystem, requiring a diverse range of solutions in response to a diverse range of opportunities.
Knowing how important education is, especially in today's environment, it is completely justified for edtech companies to continuously and largely reflect the broader tech and investment ecosystem. On the other side, it is important to know that the investors recognise the transformative nature of the sector, which allows the inclusion of the next generation of learning products in every aspect of life.
Rhys Spence, Head of Research, commented:
“We expected this report to be tough to write, given the broad perceptions in the markets that 2023 had been a tough year for startups. Though many of the data points that we’ve now been tracking for 5 years are down on the dizzying heights of 2021 following the extreme accelerations from H2 2020, there are certainly some reasons to be optimistic, particularly in European Edtech.
"The headline venture funding figure for European Edtech fell from $1.9 billion to $1.2 billion, but we were pleased to see a rise in the number of deals done. This and other data points represented more resilience than most major Edtech markets, in deal number and funding amounts – 32 percent of global Edtech deals done in 2023 were done in Europe (relative to 26 percent in 2022) with an increasing portion in the earliest stages.
We also observed greenshoots emerging in the headline funding data, with European Edtech investment seeing its second consecutive rise in half year funding, reflecting the continuation of a muted but definite resurgence.”