Funding for EdTech Companies Hits a 10-year Low in Q1 2024
Funding for EdTech companies is down 90% from the 2021 high and is down 50% from this time last year, according to a study published by HolonIQ.
In addition, Q1 2024 saw a significant decline in demand in the core and ‘nice to have’ EdTech categories.
Overall, EdTech startups are cutting their headcount (shrinking), and global VC funding continues to wane, driven in part by high interest rates and cost of capital, as well as a lack of confidence in growth projections over the next 3-5 years.
The EdTech sector is in a holding pattern as investors try to understand the impact that AI will have on their product and service offerings. At the same time, many leading established EdTech companies are experiencing strong organic growth in international education, education finance, ‘brick and mortar’ schools, and K12 market segments. This makes it much more difficult for a startup to compete and gain market share.
Financial investors and strategic buyers look at VC funding rates as a leading indicator of trends in M&A valuations. As a result, we expect that the valuation multiples for EdTech companies will decline over the next 12 months.
About the Author and Jackim Woods & Co
Rich Jackim is an attorney, investment banker, and entrepreneur. For the last 25 years, Rich has been providing boutique investment banking services to small and middle-market companies in over 30 industries.
In addition to running a successful M&A advisory firm, Rich founded a successful training and certification company called the Exit Planning Institute, which he sold to a private family office in 2012.
Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses. It became an Amazon best-seller in the business consulting category the year it was published.
If you own an education or EdTech business and are interested in exploring your options, I would welcome an opportunity to speak with you. There is no cost or obligation to you and all discussions are completely confidential.
Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.
