Authored by Aidan Nuttall
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With the release of the Techcrunch database for funded startups in the US, I decided to look at what the numbers mean for investment in education startups. There are some useful insights we can gather from this data around how much funding, who gets the funding and where that funding is.
The big headlines are:
- $3.1b has been raised since 2005, with the majority going to a handful of startups
- East Cost has the largest total investment, however, the West Coast has a higher average investment per startup
- There is growth in investment across all stages but especially in the Series A, hopefully indicating education startups coming of age
How much and who gets what?
Since 2005 there has been an increase in the number of deals and the amount of money raised every year. A total of $3.1b has been raised since 2005.The bulk of this money raised is by a handful of startups, with nearly $1.4b being raised by just 5 startups (including the top startup raising $750m). The next 65 firms raised $1.3b and the remaining $450m is spread out over the remaining 225 startups. This is to be expected with small bets being placed on early stage companies which have a higher failure rate and larger amounts given to more established firms.
Where is the money going?
There are clear winners with the East Coast having the largest number of startups and the highest investment at $1.5b. This is to be expected given the large volumes of educational institutions on the East Coast. However, surprisingly the West Coast has a significant number of startups and significant investment. The West Coast has a significantly higher average investment per startup than the East Coast. This is compounded even when we include for large anomaly of $750m investment by the University of Maryland on the East Coast.
Angel and Series A funds have consistently increased their investment since 2006. For Series A investments, 2013 is already proving to be the biggest year on record. Hopefully this means that a boom in education companies is coming with lots of the Angel investments from prior years maturing to be worthy of Series A investment.