The funding in the edtech sector has declined by 87 per cent since 2021, according to a report by market intelligence platform Tracxn, however, the long-term outlook of the sector remains strong.
Funding in the sector seems to have bottomed out in 2023 as investors put in $164 million in the first half of 2024, up by 96 per cent from $81.9 million invested in the second half of 2023, the report showed.
In 2024 year-to-date (YTD), the edtech sector raised $215 million. The sector recorded funding worth $321 million in 2023. In the first half of 2024, the sector has witnessed $164 million, a 96 per cent increase compared with the $81.9 million raised in H2 2023.
However, it’s a far way from the industry’s 2021 peak of $4.1 billion raised. The industry’s ongoing downturn was reflected in the 2023 figure, which marks an 87 per cent decrease from the $2.4 billion raised in 2022.
Demand for online courses
Despite having over 11,000 active companies, the sector is struggling due to macroeconomic conditions and a shift back to traditional learning as schools reopen. However, there is still a strong demand for innovative online courses and professional upskilling programmes , particularly in areas where offline education falls short, offering some hope for continued growth.
In the first half of 2024, the edtech sector saw funding worth $164 million. The third quarter of 2021 was the highest-funded quarter in this space, with an overall funding of $2.48 billion.
Since Q2 2023, the first quarter of 2024 has been the highest-funded quarter over the past three quarters, with more than 65 per cent of the total funds raised in 2024.
“The Indian edTech sector has shown remarkable adaptability in the face of changing market conditions. While the funding levels are still below the highs of 2021, the sector’s growth in 2024 so far indicates a renewed interest from investors, especially as companies transition back to traditional learning methods while incorporating digital innovations,” said Neha Singh, Co-Founder of Tracxn.
Within edtech, funding in the test preparation segment dropped to $8.5 million from $175 million in 2021 while the continued learning segment also saw a drop in investment from $517 million in 2022 to $20 million in the current year so far.
Blume Ventures, Wellfound and LetsVenture are the top overall investors. For the seed-stage, IPV, We Founder Circle and EvolveX have been most active in the past two years. Blume Ventures, Alteria Capital and the Michael and Susan Dell Foundation lead in early-stage, while Trifecta Capital, Alteria Capital and Stride Ventures excel in late-stage investments.
Bengaluru dominates the Indian edtech sector, accounting for over 64 per cent of total funds raised, followed by Delhi and Mumbai.