Metaari Reports Massive Surge in Global Edtech Investment in 2020

According to a New Whitepaper by Metaari, International Investments in Learning Technology Companies in 2020 Surged to Over $36.38 Billion

Metaari has published their annual whitepaper in the first week of January every year since 2004. The new free whitepaper has 61 pages, 6 tables, and eleven charts. It is called “The 2020 Global Learning Technology Investment Patterns: Massive Spike in Funding.”

Global investment to learning technology companies surged to a breathtaking $36.38 billion in 2020, up dramatically from the $18.66 billion invested in 2019 and more than double the $16.34 billion invested in 2018. The number of deals spiked from 896 in 2019 to 1,251 deals in 2020.

This whitepaper breaks out investments made to ten types of learning technology products: three legacy products and seven advanced learning technologies. The legacy products include Self-pace eLearning (asynchronous courseware), Digital ReferenceWare (test prep, audiobooks, videos, manuals, etc.), and Collaboration-based Learning (synchronous live online classes and tutoring)

The advanced learning technology products include AI-based Learning, Mixed Reality Learning (Simulation, AR, and VR), Game-based Learning, Cognitive Learning (behavior modification), Mobile Learning, Location-based Learning, and Education and Training Bots (both physical and virtual).

“Despite the massive funding going to Chinese companies, the US accounted for the highest amounts of funding,” comments Sam Adkins, the Chief Researcher at Metaari. “Just over $16.15 billion went to 611 US learning technology developers in 2020. This is 44.4% of all global investments made in 2020.”

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There were very large investments made to online learning companies in China, but only to a few companies. A full 31.6% ($11.52 billion) of all global investments in 2020 went to just 125 Chinese companies. Yet, this funding was highly concentrated in just two companies: Yuanfudao and Zuoyebang. Combined, they garnered 50.8% of all funding going to Chinese learning technology developers in 2020.

“Combined, the US and China accounted for 76.0% of all global funding in 2020,” comments Adkins. “Yet, there are major differences in the investment patterns in China and the US. In China, investors pumped very large amounts into a relatively small number of companies and most of them offer live online classes.”

Investments in the US were much smaller than China but went to a large number of companies. The one striking thing about the investment patterns in the US is the keen investor interest in AI-based Learning companies. A total of $8.45 billion was invested in 287 AI-based Learning companies in the US in 2020. To put this in context, a full 83% of all global investments in AI-based Learning went to US companies. In sharp contrast, “only” $534.6 million went to just 22 AI-based Learning companies in China; a mere 5.3% of the total global investments made to AI-based Learning companies.

Investment in corporate-facing companies in 2020 nearly doubled compared to 2019; investment reached a breathtaking $10.39 billion in 2019. A massive $17.22 billion went to 702 corporate-facing companies in 2020.

Funding declined for consumer-facing learning technology companies in 2019 but rebounded dramatically in 2020. Funding dropped to $6.67 billion in 2019, but spiked to $13.48 billion in 2020.

In 2019, there were only 84 deals made with PreK-12 learning technology companies and investment fell to $855.32 million. This changed dramatically in 2020, with $4.39 billion going to 107 companies serving the PreK-12 segment. In 2020, funding to learning technology suppliers serving the global higher education segments surged to $1.09 billion.

The big winners in 2020 were AI-based Learning developers, Collaboration-based Learning (live online tutoring) providers, Mixed Reality Learning developers, and Mobile Learning edtech companies. But it was AI-based Learning that attracted the largest amount of funding by a wide margin.

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An astonishing $3.67 billion was invested in 120 AI-based Learning companies in 2019. This pales in comparison to the $10.17 billion that went to 359 AI-based Learning companies in 2020. The vast majority (83%) of funding went to US startups.

Corporations (particularly healthcare firms) are the top buyers of AI-based Learning followed by federal government agencies across the planet. Companies and agencies are using AI-based Learning in cybersecurity training, pre-employment assessment, intelligent business simulations, augmented predictive analytics (also called insight engines), big data visualization, knowledge graphing, digital twins and digital employees, and a relatively new trend, AI-based IT operations and support (AIOps). AI has essentially reinvented the call center industry.

AI-based Learning is used in five major ways in healthcare: pathology, analytics, diagnosis, etiology (causation), and treatment (therapy). When enhanced with AI, platforms designed for all five become knowledge engines.

“Perhaps the greatest impact on AI-based Learning in the healthcare industry are the advances being made in precision medicine, clinical decision support, and in imaging diagnostics,” adds Adkins.

There was a sharp spike in investments made to PreK-12 learning technology providers in India. Just under $3.0 billion ($2.96 billion) in capital flowed to 114 learning technology companies in India in 2020, but 38% of this went to just one company; the online education juggernaut BYJU’S raised $1.11 billion in five rounds in 2020.

Learning technology investments spiked in the UK and Germany in 2020 but declined in France and Canada compared to 2019. Investments rebounded in the Nordic Cluster, Israel, and Australia after declines in 2019. Investment activity is inherently unpredictable and nowhere is that more apparent than the rebounds and declines in 2020.

Latin America is again a hotbed of investment in edtech startups after three years of decline. In 2019, only $98.7 million was invested in just 12 learning technology companies in the region. That changed dramatically in 2020 with 23 companies raising $346.0 million in funding.

Eighteen edtech companies in Southeast Asia raised a combined total of $327.8 million in funding in 2019, up more than four times from the $75.5 million invested in 2018. This spiked dramatically in 2020 with $595.9 million going to 41 edtech companies in the region.

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