The education technology (EdTech) sector is booming in all corners of the world. EdTech investment has been high in North America and China for a number of years, but the experience of the pandemic has led to a marked increase in EdTech interest in Europe. Brighteye Ventures has long thought this trend would cross the Atlantic, and it seems that prediction may be materialising.
Collectively, spending in the education sector is said to be around $7 trillion. This is an enormous amount of money that continues to grow as global populations increase and education systems around the world become more sophisticated. Indeed, HolonIQ predicts that global education spending will rise to around $10 trillion by 2030.
Approaches to and integration of technology within education and learning systems are expected to advance rapidly in the coming years, accelerating significantly in the wake of the pandemic and the associated changes to working models in schools, homes and workplaces.
Unsurprisingly, this is piquing the interest of many investors, both specialists like the team at Brighteye Ventures that have been focusing on opportunities in the education and learning sector for a number of years and generalists realising the untapped potential for big returns in the European EdTech landscape.
Brighteye believes that EdTech has significant growth prospects in Europe, as demonstrated in its industry-leading research on funding trends. Naturally, some will solely associate the rise of European EdTech with the pandemic, but as Brighteye’s research demonstrates, the sector had seen a 9-fold increase in ETech VC investment between 2014 and 2019.
As the most active EdTech-focused fund in Europe, a significant chunk of this growth in investment has been spurred by investments from funds such as Brighteye Ventures, launched in early 2018 to invest in early-stage companies that develop EdTech solutions for the European market and beyond.
While the bulk of EdTech investment has been witnessed outside of Europe (predominantly in the US and China), Brighteye entered the industry believing that Europe wouldn’t be far behind and that greater use and awareness of EdTech was somewhat inevitable.
Focusing on this hypothesis along with several other firm predictions (that are proving correct) is what has enabled Brighteye Ventures to become the leading EdTech-focused venture capital fund in Europe. Through early-stage investments at pre-seed, seed and series A stages, the fund has helped many start-ups develop and refine their offerings, build partnerships, and scale their services across international borders.
Brighteye is seeking passionate and driven entrepreneurs with industry knowledge, able to harness technology to build competitive businesses and become global leaders. The fund is confident that this growth in European EdTech will be sustained, given rising digital penetration across the continent in all spheres of life – a factor that’s leading to increasingly public willingness to pay for education where it has previously been considered a public good.
At the helm is Alexander Latsis, Brighteye’s Managing Partner with a background in publishing, technology, media and licensing, in addition to deep networks across the education sector. Alex Latsis is credited with establishing the fund from the ground up and positioning it as a leading authority on the EdTech sector in Europe. His extensive experience, combined with analysis by the wider team, has helped Brighteye Ventures identify some of the key trends behind the sector’s growth.
What the Data Shows
Based on Brighteye’s research of available data, annual investment in European EdTech start-ups has grown more than ten-fold from $70million in 2014 to $711 million in 2020. The sector has already seen more than $626 million invested in 2021, only 4 months into the year, with Brighteye Ventures involved in the largest deal thus far this year (Ornikar’s $120m round in April).
The number of transactions between 2014 and 2020 increased by approximately 2.5X, from 83 in 2014 to 200 in 2020. The disparity between growth in total funding and the deal count reflects that average deal sizes in European EdTech have increased significantly in the period, demonstrating both the increasing interest in and maturity of the sector. This growth in funding and deal count has concentrated at the Series A and B stages, where companies are relatively early in their journeys.
The early stages (pre-seed, seed and series A) are Brighteye’s ‘sweet spot’. Brighteye is well-placed to pick out companies at an early stage, owing to their EdTech specialism and established expertise. It is, of course, Brighteye’s hope that as this growth continues, there will be increased opportunities for large exits, as is becoming increasingly frequent in the US.
The presence of increasingly sophisticated EdTech hubs in London, Paris, Berlin, Dublin, Oslo, and Helsinki has helped establish a thriving ecosystem for entrepreneurs, talented early hires, investors and policymakers to further their interest in the sector. Further growth is expected as governments ramp up their focuses on digital education for both children and adults and accelerator hubs continue to spawn exciting new companies. As this happens and the sector becomes mainstream, we will also see more VCs, like Brighteye, beginning to turn their attention to EdTech.
Brighteye’s research revealed that study tools, online learning, corporate training and language learning are the top categories that have attracted significant investment in recent years.
Will these trends continue or will new verticals come to the fore? Based on their track record, Brighteye will already know they are coming.
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