Ed tech capital investments are slowing down closer to early pandemic levels with companies raising a total $2.8 billion in 2023, according to a February analysis by ed tech investor Reach Capital.
The analysis reviewed 218 ed tech deals encompassing companies that mainly “focus on teaching, learning and and increasing access to economic opportunity, across early childhood, K-12, higher ed, workforce development and lifelong learning,” Reach Capital said.
Investments in ed tech have dramatically slowed from their 2021 peak of $8.2 billion — which represented a $6 billion jump from 2020. The onset of COVID-19 in 2020 marked a pivotal time for ed tech when schools nationwide had to rapidly switch to remote learning, requiring 1:1 devices and more apps to facilitate instruction from home.
This decline in capital that initially flooded the ed tech industry during the pandemic comes as school district leaders prepare to commit their remaining Elementary and Secondary School Emergency Relief funds by the end of September. As that critical deadline approaches, Reach Capital noted that district leaders are preparing to cut out ed tech contracts that are not totally necessary and fail to demonstrate efficacy.
Major investments in the ed tech space have lately focused on staffing and supporting student mental health needs. Companies like Swing, which connects schools with substitute teachers, raised $38 million in Series C funding. Coursemojo — a firm that provides remote teachers to virtually stream live instruction — received $4 million in Series A, according to Reach Capital.
The ed tech landscape itself has also shifted since the pandemic with generative artificial intelligence taking center stage.
While AI startups collectively raised nearly $50 billion in 2023 across all industries, ed tech “may not be far away” from seeing a similar influx in investments as it continues to embrace AI technology, the analysis said. For instance, the AI assistant tool developer Replit raised $97 million in its Series B extension while OpenAI, a research and deployment company, continues to expand its influence in education by partnering with Arizona State University and Common Sense Media.
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