More fodder for bubble debate: ed tech startups get $1.1B in 2012

Ed tech bubble watchers just got more fuel for debate: venture capital database CB Insights reported Monday that ed tech companies received a total of $1.1 billion in 2012 from venture capitalists, angel investors, corporations and private equity shops. That’s down just a hair from the $1.14 billion the sector took in 2011, but represents slightly more deal activity and is part of a general trend towards more financing for ed tech startups.
For those who see the recent rise of ed tech startups as a sign of a frothiness in the sector, this report could be yet more evidence that ed tech is getting over-inflated. Over the past few months, reports of a brewing bubble have swirled around the ed tech blogosphere, with some drawing parallels between the recent surge in ed tech companies and the dot com boom in 1999. Perhaps to nip that kind of talk in the bud, CB Insights headlined its report: “There is no ed tech bubble.”
Heightened funding in education technology is mirroring financing trends in the wider world of technology, the company said. About 70 percent of the deals were at the seed and Series A stage, meaning that ed tech startups will similarly face a “Series A crunch.” And CB Insights says that’s a healthy thing for the market. If too many of these emerging startups get follow-on funding, that could be a sign of a bubble. But, for now, they say, it’s just too early to tell.
According to the report, one-third of the funding last year went to just about ten companies — take a look at a list of them below.
1. Desire2Learn $80m
2. Open English$43m
3. Lumos Labs$31.5m
4. Echo360$31m
5. 2U$26m
6. Chegg$25m
7. Kaltura$25m
8. Edmodo$25m
9. The Minerva Project$25m
10. Orbis Education$24.33m
Regardless, you can be sure that 2013 will see even more investment in ed tech and the B-word will likely continue to surface. But as Audrey Watters over at HackEducation has argued before, asking whether there is a bubble in tech is a limiting question. What’s important about the new crop of ed tech companies isn’t just how much money they can raise but how much value they can generate — for students, teachers, schools and investors.