Edtech startup funding has drastically slowed compared to this time last year, recent data shows. The trend is in line with the larger VC funding slowdown in 2023, with the exception of AI deals. While venture capital funding to the sector saw meteoric growth during 2020 and 2021 along with, recent data shows that the pace of funding into education startups in the first quarter is well below what it was a year ago.
"2020 was a year where COVID growth pulled forward a ton of edtech adoption, and some companies raised massive rounds on the back of that," said Avalanche VC's Katelyn Donnelly, who primarily focuses on pre-seed and seed-stage edtech startups."I think that there's just some realities that mean that the overhyped market is coming down to Earth."
Yet, despite a funding pullback, it's not all doom and gloom for edtech VC firms. Reach Capital recently raised aAs has been the case in other sectors, the AI boom is also having an influence on edtech and where those VC dollars are going. Severalstartups like Pressto and Kira Learning have incorporated AI into their product offerings. For Avalanche's Donnelly, there's still plenty of deals at the earliest stages of edtech.