2014 was a big growth year for investments in education technology in the U.S. Multiple reports show that billions of dollars went to various apps and start-ups, with a handful of the companies receiving the lion’s share of the venture capital. EdSurge reported in December that ed tech companies raised $1.36 billion in 201 rounds from more than 386 unique investors last year. Venture capital database CB Insights reports that venture and equity financing for ed tech companies jumped to nearly $1.87 billion last year, up 55% from the year before.
While these numbers pale in comparison to the money devoted to consumer electronics or consumer communications technology, they are still significant for an industry that does not bring the same allure or flashing lights to the table as, say, messaging apps or taxi start-ups do. Education technology has been slow to attract large investments, but it looks as though that could be changing. The top three winners are all businesses with vastly different business models as well. PluralSight — a company that provides online training for IT professionals and other tech workers — took the cake with having raised $135 million. Social Finance — a company that is tackling the student loan crisis — raised $80 million. And the Minerva Project — a group that is building a university in which students learn via online video sessions and live in different global cities each year — raised $70 million.
Vivek Murali, Associate Partner with the NewSchools Venture Fund, wrote in a blog post for the group back in December that home-to-school communication platforms are a driver for some of these investments:
Driven by smartphone growth, the way in which educators share information about a student’s progress with parents is changing. The wedge of this disruption is text-messaging and photo-sharing apps, enabling quick and easy ways for teachers to share snapshots of learning or logistical information…We consider the unprecedented growth of mobile (mainly communication at this point) apps in K12 to be one of the most significant trends of 2014 and importantly, is helping to close the “other” education gap–the gap between parents and the classroom.
NewSchools Venture Fund was a participant in the rounds of investing that occurred last year, with other accelerators and venture capital groups like Techstars and GSV Capital as the top investors. The next questions surround whether or not such investment in ed tech will continue, and how likely the companies that have received funding are to succeed. The latter is challenging to accurately answer, but groups like EdSurge believe that this was not a singular year for ed tech investment, and that the next few years will likely see similar capital pour in as the ed tech sector aims to prove itself to Silicon Valley.