In the first quarter of 2025, venture capital investments in education technology companies around the world fell by large amounts. This decrease only foreshadows the funding drop that continued through the entirety of 2024. 2023 figures are particularly alarming for the industry, as investment continues to plummet well below levels seen in past years.

Ed-tech funding in Q1 2025 was $410 million, a three-fold increase over the first quarter of 2023. That’s a 35% decrease from the $630.77 million of Q1 2024. This drop underscores the challenges investors are experiencing when trying to raise venture capital in the current market.

Despite ETAP’s positive data, the last year was still marked by a funding trough — at least in ed-tech’s recent history. In 2024, investors flooded ed-tech companies with $2.4 billion in venture capital. This figure represents the least amount of funding in the past nine years, dating back to 2014. So far, it has fallen by 89% from its pandemic-era high of $20.8 billion.

Even as overall funding has shrunk, the average award has increased. Now sitting at $7.8 million on average. This balances out to illustrate that even though companies are getting less support, the deals they are getting are larger. This indicates a change in investor playbook, focusing capital towards categories with more defined ROI and long-term durability.

In fact, just three deals were responsible for almost half of the capital raised in Q1 2025. LeapScholar secured $65 million in funding in January, followed by MagicSchool AI with a $45 million raise in February, and Campus closed a $46 million Series B in March.

In September 2022, India based edtech company, Physics Wallah closed a $210 million round. Today, it’s preparing to list publicly in India, signalling the opportunity found in fast-growing emerging markets.

In the first half of 2025, mergers and acquisitions (M&A) activity in ed tech plunged. It fell behind 32% vs last year during the same time period. Further, firms with a primary focus on the emerging workplace learning sector made up a full third of all M&A activity in this period.

Education investment is down, but not out. - HolonIQ report

A big part of this transformational growth in the global ed-tech industry is happening in the emerging markets. Deal activity from the MENA region spiked. At the same time, Europe and Southeast Asia kept transaction numbers relatively consistent.

react negatively to the diminished growth prospects and increased uncertainty. - International Monetary Fund report