GSV Edtech 150 — The Most Transformational Growth Companies in Digital Learning
by Alex Argo
Over the last two years, we have seen the Edtech industry reach an inflection point, accelerated by the onset of Covid. As we enter into 2022, the world is adapting to a life of vaccines and variants, trying to find direction in the midst of great uncertainty. In the meantime, education technology companies continue to innovate and scale to provide learners with access to quality education no matter where they are in the world or what learning environment they face. The world has woken up to the tremendous opportunity for Edtech companies to leverage technology to not only increase access and affordability of education, but also improve quality and outcomes for learners. The companies that have figured out how to do this at scale and achieve the highest Return on Education (RoE), are the companies experiencing extraordinary growth and traction. Now, more than ever, the Edtech industry must continue this momentum to provide equal access to opportunity and education for ALL. Education is on the Edge.
Today, we are excited to release the 2022 edition of the GSV Edtech 150 — a list that represents the most transformative growth companies in Digital Learning. These companies are leading the way in providing access to quality education across the world. Since the last version of the GSV Edtech 150, an increasing number of companies have demonstrated impressive growth while achieving scale globally. In just a short time, we have seen many new companies emerge to make the list, making it more competitive than ever to narrow the list to only 150 names. We evaluated over 3,000 VC and PE-backed private companies across several factors — revenue scale, revenue growth, user reach, geographic diversification, and margins profile, to arrive at the top 150 companies. We estimate that the 150 companies reach ~3 billion people, or close to half of the global population, and generate approximately $20 billion in revenue, growing in the high double digits.
These 150 companies are finding various avenues of opportunity to achieve growth and scale. Over a fourth of the companies on this list are what GSV calls Weapons of Mass Instruction — rapidly scaling tech-enabled platforms reaching millions of learners on a monthly basis. About a fifth of these platforms, including companies like Emeritus and Quizizz, are truly global businesses playing into another theme we call Edtech as an Export. Roughly a third of the companies, like BYJU’s and Course Hero, experience strong Network Effects and extend lifetime value of learners across PreK to Gray. Overall, the companies on this list are continuing to provide tremendous value to learners, corporations, and institutions.
Over the course of 2021, the industry saw a rapid influx of capital to help spur innovation and growth globally. In just two years, global VC investment in Edtech jumped 72% year-over-year to $21B in 2021, up from $7B in funding in 2019. To put that into context, VC Edtech investment grew 33% year-over-year from 2011 to 2019, with total VC investment in EdTech being only $700M 10 years ago. Increased capital flows have helped accelerate many of the market leaders, leading to improved fundamentals and higher valuations accordingly. In just the last few months, we have seen companies like Grammarly raise a round at a $13B valuation and BYJU’s latest round at a $21B valuation.
Source: GSV, HolonIQ
The number of Edtech unicorns jumped from 40 in 2020 to 49 today, with 23 new unicorns added over the course of 2021, 6 that graduated to public companies and 8 Chinese unicorns that were removed from the list. This year’s list includes 2 decacorns — private companies that are valued at $10 billion and over, with BYJU’s returning and Grammarly as a new addition. China’s Yuanfudao and Zuoyebang, were previously classified as decacorns, but have been removed from the list due to recent government regulation on China’s K12 Edtech sector. In addition to the US, India represents a solid portion of the unicorns on the list with a total of 6, majority of which recently joined the list in 2021.
Over the last few months, the basket of Digital Learning public companies has experienced a downturn in-line with overall growth companies in the market. Since April 2021, public Edtech companies have declined 32% compared to overall technology stocks in Cathy Wood’s ARK Innovation ETF which have declined 27%. Recent declines have occurred alongside a relatively unfavorable macro environment, including higher inflation and decreased enrollment in higher ed. However, we have still witnessed good activity in Edtech over the course of 2021, with a number of significant IPOs across the industry. Coursera, Roblox, Duolingo, Udemy and Instructure successfully completed their public offerings and Nerdy went public via a SPAC. Additionally, there are a handful of late-stage private companies including BYJU’S, Course Hero, Eruditus, Quizlet, Hotmart, and many more positioned as potential IPO candidates.
Source: Yahoo Finance, Pitchbook
Last year when we released the Edtech 150, China represented ~20% of the list. China now only represents 4% of the Edtech 150, reflecting the impact of increased government regulation on the private Edtech sector in China. In July 2021, the Chinese government issued regulation on the private tutoring sector, which required private companies to register as nonprofit organizations and banned future IPOs. Overnight, publicly traded companies in the sector like TAL Education, Gaotu Techedu, and New Oriental Education lost over half their value. This regulation has decimated existing and potential growth of Chinese Edtech companies operating in the K12 sector.
North America and the U.S. specifically is the leading geography within the Edtech 150. North America is over half of the list, EMEA is close to a fifth, India is a little over a tenth and the three markets combined represent 85%. LATAM is only 5%, but has shown strong growth trends with companies like Hotmart, Descomplica and UOL Edtech leading the way.
The top 150 is distributed across three major sectors: Life-Long Learning, Higher Ed, and K-12. Life-Long Learning (inclusive of Workforce Learning and Adult Consumer Learning) is best-represented with 42% of the GSV EdTech 150 falling within the category, with an additional 5% of companies serving both Life-Long Learning and Higher Ed and another 3% of companies serving a blend of K-12 and Life-Long Learning. Together K-12 and Early Childhood account for 27% of the list, while companies exclusively serving the Higher Ed sector account for just 5%, and 9% of the 150 are serving a blend of K12 and Higher Ed. Excitingly, companies are continuing to expand their value across the entire learner lifecycle, with 9% of the companies serving all three major sectors.
Methodology
The GSV Edtech 150 list is comprised of the leading and most transformational, private companies in the Digital Learning space. These are the top 150 companies with the largest and fastest-growing global learning impact. The key criteria for inclusion are:
· VC or PE-backed companies in Digital Learning, excluding public and nonprofit companies
· Companies that have achieved meaningful scale and primarily, but not exclusively, those that are post-Series A in their development
· Companies experiencing strong, organic top-line growth
The selection is determined by our internally developed scoring system that applies scores across several KPIs:
· Revenue scale
· Revenue growth
· Active learner reach
· International reach
· Margin profile
Note: As we might have missed companies that should be included in the GSV Edtech 150, we encourage readers to let us know if that is the case.
As we approach this year’s ASU+GSV Summit on April 4–6, we look forward to seeing many of the GSV Edtech 150 companies and CEOs LIVE in San Diego.
Note: Stock market data as of Dec. 31, 2021. Edtech companies include publicly listed digital learning companies Coursera, 2U, Grand Canyon Education, Kahoot, Docebo, Upwork, Afya, Arco.
