Where top VCs are investing in edtech

Education is a $4 trillion market globally in urgent need of overall — so where within education are top venture capitalists optimistic about startups building large businesses by providing new solutions?

According to EdSurge, $1.45 billion of venture capital (a mere 1.1% of the $130 billion in US venture funding) was invested in education startups in the US in 2018; there were only 112 education-focused deals. In line with the trend in venture capital overall, this represented an increase in overall capital but a concentration in fewer deals (mainly large late-stage rounds).

Education is regarded as a tough market for achieving VC scale returns. Selling into school districts and universities is difficult and slow, and freemium models that go direct-to-teachers have struggled to monetize.

New software, content, and financing solutions for learning outside the traditional school system are more compelling business opportunities. This is particularly the case in vocational training where the return on investment of an educational program or tool can be quantitatively measured in job offers and salary increases

I asked four leading edtech VCs and six of the top generalist VCs (who have a track record of education investments) to share where they see opportunity in this sector:

• Jennifer Carolan, Reach Capital
• Amit Mukherjee, NEA
• Michael Staton, Learn Capital
• Annie Kadavy, Redpoint Ventures
• Aydin Senkut, Felicis Ventures
• Matt Greenfield, Rethink Education
• Hemant Taneja, General Catalyst Partners
• Marlon Nichols, MaC Venture Capital
• Jan Lynn-Matern, Emerge Education
• Charles Birnbaum, Bessemer Venture Partner

Here are their answers…

Image via Getty Images / doyata

Jennifer Carolan, General Partner at Reach Capital (an education-focused VC firm in Palo Alto with investments including Abl, BetterLesson, Epic!, Handshake, Holberton School, Newsela, Outschool, and Tinkergarten):

“Human-centered learning has been traditionally limited to one’s physical geography but technology is unlocking learning opportunities that never before existed.  We’re particularly interested in the marketplaces that are better matching supply and demand across experiential learning, educator coaching, tutoring, and online small groups.