Are Edtech Investors Getting *Schooled* on Valuations?

LoEstro Advisors
5 min readFeb 15, 2022


Decoding the reasons for the fall in public market edtech valuations, its impact on private markets, and outlook for the sector

Photo by Tim Gouw on Unsplash

When we had last written about edtech valuations, in May 2021, the air was filled with optimism for the sector. COVID-19 came in as what seemed to be the final piece to the large-scale-edtech-adoption puzzle — investors jostled to invest in the sector.

Here’s a quick highlight of global edtech funding in 2021:

  • ~$21 billion of VC funding, 30% higher than 2020, and 3x pre-pandemic levels
  • 61 mega funding rounds ($100M+)
  • 17 new unicorns and 5 IPOs

This frenzy was fed by the delta variant/second wave forcing countries into more lockdowns, keeping people inside, whilst aided by the fact that children were ineligible for vaccines and schools were shut. It reinforced the idea that edtech is here to stay, considering that children were still stuck at home, and adults continued to e-learn whilst working from home. And therefore, investors doubled down.

However, things quickly changed by the end of 2021.

If 2021 was a party, 2022 is the hangover

In 2022, and for a couple of months at the end of 2021, countries had started to fully open up, despite the omicron scare. Large-scale vaccine drives were successfully launched, schools and offices reopened, and mortality rates fell — signaling towards (dare we say it) a future which wasn’t dictated by COVID. To “normalcy”.

Normalcy meant people going to office, and children going to school. No more working in pajamas. No more zoom classes.

Just as lockdowns drove edtech to new heights, it was only natural that a global return to normalcy meant that edtech would fall. And hence, the edtech hangover had begun — valuations had started dropping by the end of 2021.

Here is a summary:

*As of Feb 5, 2022

*As of Feb 5, 2022

This is where it gets tricky — although share prices of edtech companies had taken a hit, it is noteworthy that this was despite good numbers posted by companies. Q4 2021 (Oct-Dec) suggested that revenues were robust and growing.

Extrinsic influence

Take the case of Coursera:

Coursera went public at $33 per share on March 31, 2021 and saw its share price climb as high as $62 just a week later. Over the subsequent weeks it gave back much of those gains and after the recent big decline in its stock price, now trades at $20.

All this is despite the fact that total revenues were up by 41% YoY in 2021, and Adj. EBITDA margin narrowed from -13.6% in 2020 to -8.6% in 2021.

If the companies had been performing well, why were the share prices falling? The fall in share prices has been broadly driven by 3 reasons:

  • Waning growth expectations of edtech: The narrative around online education, as compared to 2020, is vastly different. Initially, most people were reliant on edtech for all of their learning needs, whilst now, edtech is viewed as a supplemental aid to core education
  • Whilst “Back to school” is inevitable and probably on the horizon, this does not mean that online education will disappear from our lives. It could play out the opposite way: it will probably become a greater part of our lives, accompanying us not only during school or university but throughout our whole life. Lifelong learning will become mainstream, and an important aspect of the careers of most individuals
  • General sell-off of growth stocks: Growth stocks in general, across major exchanges have taken a beating in recent times. In India, too, the likes of Zomato, Nykaa, PolicyBazaar, and Paytm have fallen considerably. Generally speaking, growth stocks are nearly trading at 40–50% of their peak value
  • Investor risk appetite has reduced given the changing scenario of the pandemic, wherein they are being wary of the high valuations that prevailed in 2020 and 2021H1
  • Tightening monetary policy: Economies were in the need of liquidity at the peak of the pandemic — governments reduced interest rates to historic lows, and the US even handed out free money in the form of COVID relief cheques. But, there’s no free money. Inflation, as a result of the liquidity infusion, rose to record highs, especially in the US, where it has reached a 40-year record high of 7.5%. Such liquidity and low interest rates also drove public markets to record highs
  • In order to bring inflation under control, the Fed is expected to raise interest rates soon. There’s speculation that the Fed is going to hike interest rates by up to 175 bps, in a staggered manner across 2022. And this fear of rising interest rates has been reflected in the stock market. Investors have started moving from growth stocks — which typically represent high valuations, and thus risky investments — to value stocks

Impact on the private capital market for edtech

  • Mirroring public market Valuations: Valuations across private and public markets are directly correlated — with private markets following the trend of the public markets. Public market valuations are used as the basis of deriving valuations by private market investors — essentially following the investing adage of “the (public) market is always right”. Therefore, valuations have gone down in the private markets as well
  • Growing consolidation: Given relatively more grounded valuations, M&A has become an extremely attractive option for scaled edtech companies to grow quickly, and founders/investors to liquidate in an increasingly competitive market. We can expect to see a larger proportion of M&A deals this year, as compared to previous years


Whilst the negotiation dynamics might keep changing based on public market valuations, one thing remains unchanged — the promise of edtech to be transformational. Growth is still expected to be in double-digit percentages going forward, as edtech will continue to enhance learning alongside physical classrooms.

This is reflected in the interest from private capital markets, which continue to invest aggressively in the sector. Despite only being a month or so into 2022, we have seen several large funding rounds take place in edtech. LEAD School raised $100M at a unicorn valuation of $1.1B, GoStudent raised $340M, while Scaler picked up $55M, amongst others.

The outlook for edtech looks promising — a very large population that remains untapped and an exciting tech roadmap (web3/metaverse; read more about it here) that will change the future of education forever. The sector is here to stay, and as we see it, the party is just getting started.

Watch this space for more on EdTech, Education, and everything in between.



LoEstro Advisors

Advisory firm with sharp focus on Fundraise, M&A, and Strategic Consulting.