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Report: Venture Capital Pours Into Education Start-ups

A recent report reveals that education start-ups raise an average of $237 million in venture capital per quarter.

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Education start-ups have long been reimagining concepts as diverse as teacher-student relationships and computer programming coursework. Now, a recent report reveals just how significant the education space has become for venture capitalists.

Venture investors put $1.37 billion into 235 companies which focus on education tools and services from April 2011 through June 2012, according to data compiled by CB Insights. Over the same period, education start-ups raised an average of $294 million per quarter.

According to the report, funding into education companies peaked in the first half of 2011 with a total of 165 venture capital financings completed and over $802 million invested from January to June.

After a notable drop in funding and deal activity in the third quarter of 2011 (37 deals compared to 85 in the previous quarter), momentum for education start-ups has increased steadily. The $431 million in second quarter funding this year represents the largest amount raised in seven quarters.

The report stated: 

The Q2’12 funding pop to EdTech can be attributed to several mega deals as some companies that had previously raised early stage seed and Series A funding came back to the well looking for larger financing rounds to help them scale their businesses.

Two of those “mega deals” from the second quarter went to online education start-ups, and the large venture deals into the sector haven't stopped yet.

Last April, the Minerva Project raised a $25 million seed round from Andreesen Horowitz and Coursera received $16 million in venture backing from New Enterprise Associates and Kleiner Perkins Caufield & Byers.

 

IMAGE: capl@washjeff.edu
Last updated: Nov 6, 2012

MATTHEW WONG is a digital journalist whose work has also appeared in Dow Jones VentureWire and The Wall Street Journal.
@mlcwong




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