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Learn MoreAccording to information provided by the analytical agency HolonIQ as of January 27, 2022, the global community includes 33 unicorns in the EdTech sector. Their combined market capitalization has exceeded $100 billion. By comparison, in the summer of 2021, the number of such companies reached only 24, and their combined valuation was $77 billion. Despite restrictions on private education in China, which have negatively impacted the valuation of some local companies, the EdTech market continues to demonstrate steady growth.
We share information about the EdTech startups that demonstrated the highest results and achievements in 2021.
- EdTech projects attracted significant investment in 2021. (Spoiler: the numbers are impressive.)
- A Chinese startup that teaches English to children has faced certain difficulties due to local restrictions.
- An American platform aimed at supporting the mental well-being of NASA and Google employees.
- A system designed to find solutions to homework has been banned by the Chinese Ministry of Education.
- A Chinese company has decided to discontinue its educational programs for children.
- An Indian startup that is on track to be valued at $50 billion in the near future.
- What prospects await the EdTech sector in 2022?
The volume of investments in the EdTech sector in 2021
In July 2021, the Chinese authorities initiated significant changes in the field of educational technology (EdTech). Companies providing educational services to schoolchildren have been subject to strict restrictions on raising funds, listing on stock markets, and turning a profit. These measures have triggered an unprecedented outflow of capital from China's EdTech sector. While Chinese education firms raised $10.2 billion in 2020, this figure fell to just $2.7 billion in 2021. Although some restrictions were subsequently relaxed, this had virtually no impact on the current situation.
Topics However, the challenges facing the Chinese EdTech sector have failed to halt its growth. The decline has been offset by an unprecedented surge in investor interest in educational initiatives in the United States and the European Union. In 2021, companies from the Americas and Europe raised $8.3 billion and $3 billion, respectively, a significant increase from the $2.5 billion and $800 million raised the previous year.
Denis Efremov, managing partner of the venture capital fund Fort Ross Ventures, shared with Skillbox Media information that in 2021, the volume of venture capital investments in education startups worldwide increased by 30%, reaching $20.8 billion. Over the past year, the number of unicorns in this field increased by 17 new companies, bringing the total to 33.
VIPKid: Market Value Reaches $4.5 Billion
China vs. USA
What is this company?
VIPKid is an online platform designed for English language learning through immersion, aimed at children aged 5 to 12. This service allows students to interact with teachers via video call. Lessons are conducted individually, and each session lasts 25 minutes.
The company initially aimed to serve clients in China, but restrictions imposed in the summer of 2021 almost forced VIPKid to completely shut down its operations in this region.
Where does such a valuation come from?
Founded in 2013, the company has managed to attract $1.1 billion in investments over the years. Fast Company magazine named VIPKid "one of the most innovative companies" twice, in 2018 and 2019, while Glassdoor included the startup in its list of best employers of 2019.
In December 2021, the company launched an international version of its service in response to a sharp decline in demand in the Chinese market. In China, VIPKid now targets an exclusively adult clientele.
BetterUp: Market Value Reaches $4.7 Billion
USA
About the company
BetterUp is a startup that focuses on providing corporate coaching services. The platform aims to teach employees the basics of mental hygiene and help them maintain their mental well-being.
More than three thousand professionals work on the BetterUp platform, who organize both group and personalized sessions. In the app, corporate users can view analytical data on the development of their employees.
The service is used by 380 organizations, including large companies such as Chevron, Google, Hilton Worldwide, Snap, and NASA.
Where does this valuation come from?
Unlike other EdTech startups on the list of the most valuable, BetterUp only reached unicorn status in 2021. In February of that year, the company raised $125 million, and in October, it raised another funding round that brought in $300 million. Thanks to these investments, the startup's valuation significantly increased to $4.7 billion.
In March 2021, BetterUp hired Prince Harry as its CEO. Then, in September of the same year, it acquired Impraise, an Amsterdam-based startup that specializes in developing employee productivity software, as well as Motive Software, a San Francisco-based analytics firm.
Since its founding in 2013, BetterUp has raised $600 million. These funds were used to expand the company's presence in foreign markets and introduce innovative solutions into its offerings.
Zuoyebang: Market Value Reaches $10 Billion
China
What is this company?
The educational startup Zuoyebang was founded in 2015 by the Chinese tech giant Baidu, and was later spun off into an independent company. This platform allows schoolchildren to search for correct answers to their homework using artificial intelligence technologies, as well as organize lessons with tutors online.
Why such a rating?
Despite increased regulation of the EdTech sector in China, Zuoyebang has managed to maintain its position among the top three companies. Since the summer of 2021, the startup's valuation has remained stable, while many other educational projects from China have significantly lost value during this period.
Over the course of its history, the company has managed to attract over $2.9 billion in investments, but recent restrictions in China have led to a halt in funding. Additional complications arose after the December decree of the Chinese Ministry of Education, which ordered the removal of all services offering ready-made homework solutions from local app stores.
The future of the startup in light of the new ban remains unclear.
Yuanfudao: market value reaches $15.5 billion
China
What is the company
Yuanfudao is a leading Chinese edtech startup focused on children's learning. Since its establishment in 2015, the company has developed a vast education ecosystem. It includes a math quiz app called Xiaoyuan Kousuan, a platform for toddlers called Zebra AI, and an online testing resource called Yuantiku, among many other initiatives.
Where does this rating come from?
The increasing popularity of online learning among children in China has had a significant impact on Yuanfudao's rapid growth, especially since the onset of the pandemic. As a result, in October 2020 alone, the company managed to attract $2.2 billion in investment.
However, similar to the situation with Zuoyebang, Yuanfudao's funding was cut off after restrictions on educational technology were imposed. Although the government subsequently relaxed the restrictions, allowing free classes, the company's future remained uncertain. In October 2021, Yuanfudao announced its intention to focus on training for the enterprise sector.
ByJu's valuation reached $21 billion
India
What is this company?
ByJu’s is an Indian company that has introduced its educational platform of the same name. This service provides educational resources for students at both undergraduate and postgraduate levels, as well as for schoolchildren in the twelve-year K-12 system. In addition, the company has developed the Early Learn platform, aimed at preschool-aged children.
All educational content in the app is presented in the form of short animated videos. An exam preparation function is also available.
Where does such a rating come from?
2021 turned out to be a real triumph for ByJu’s. In March, the company raised $460 million in funding, which increased to $1 billion in April, $350 million in June, and an additional $300 million in October.
ByJu's plans to conduct an initial public offering in 2022. Since Indian authorities do not allow local companies to directly list their shares outside the country, ByJu’s has decided to list on the New York Stock Exchange (NYSE) through a merger with a specially created shell company (SPAC).
Analysts estimate that if ByJu’s succeeds in its plans, its value could rise to $40-50 billion.
Global EdTech Development Forecasts in 2022
Denis Efremov, founder of the venture capital fund Fort Ross Ventures, is confident that the observed growth will continue in 2022, and the volume of investment in educational initiatives in the venture capital sector will increase significantly. Part of this increase is explained by the low base effect in China.
“Even without growth, China’s volumes no longer play a significant role on the global stage. While large EdTech startups may be flotations on stock markets, I doubt activity in this area will exceed the levels seen in 2020–2021. "Too much private venture capital continues to flow into the segment," Efremov emphasizes. The expert recommends focusing on developing markets in Africa and Asia, where access to high-quality applied education remains extremely limited. Furthermore, we can predict an increase in investment in EdTech projects from Russian-speaking entrepreneurs. "We expect a number of startups to emerge in the near future that will be able to attract investments of tens of millions of US dollars as early as 2022." They have truly high-quality products and promising prospects, so there is every reason to expect increased investment,” Efremov concludes.
Read also:
- China's Entry into the EdTech Sector: Who Gains, Who Loses, and What Investors Think About It.
- Universities and EdTech: The 10 Highest-Ranked EdTech Startups of the First Half of 2021.