2022 European EdTech Report Reveals Trends of Smaller Rounds and Fewer Deals Amid Increased Angel Activity

This article provides an analysis of the edtech market in 2022, specifically focusing on funding trends, deal sizes, and angel investment activity. Here are some key takeaways from the article:

Key Takeaways:

1. Edtech sector remains dynamic: Despite a challenging year, the edtech sector continued to show resilience, with many fantastic companies securing funding.
2. Angel involvement increased: Europe became the market where angels were most active in 2022, with Germany leading the rankings followed by the UK, France, Sweden, and Denmark.
3. Deal sizes decreased: The portion of total funding secured in larger rounds (more than $40 million) went down to 44% from a peak of 67% in 2020, indicating smaller deal sizes.
4. Growth-stage investments slowed: Many funds that typically operate in later stages began repositioning towards making early-stage investments, including Softbank and Tiger Global.
5. Early stage deals on the rise: The edtech sector saw a larger proportion of early-stage deals relative to previous years, with 44% of funding going into deals over $100 million.

Insights:

1. Angel involvement will continue to increase: As the first few cohorts of successful founders and their teams become more mature, they are likely to invest in angel rounds.
2. Edtech sector remains nascent: The sector continues to be characterized by many new companies and a relatively low number of truly mature businesses.

Opportunities:

1. Early stage deals offer opportunities: With the increase in early-stage deals, there may be opportunities for investors to get involved with promising edtech startups.
2. Angel investment activity provides insights: The growing involvement of angels in the sector can provide valuable insights into emerging trends and potential growth areas.

Challenges:

1. Maturity of the sector: While the sector remains dynamic, it also continues to be characterized by a relatively low number of mature businesses, which may make fundraising more challenging for startups.
2. Decrease in deal sizes: The decrease in larger rounds may indicate a shift towards smaller, more innovative projects, but it can also create challenges for startups looking to raise significant funding.