The distribution of edtech startups is heavily skewed towards the US.
Edtech businesses in the States raised over $240m last month, according to analysts EdSurge. The funding was spread across 22 different deals with participation from at least 33 unique investors.
London edtech isn’t quite there yet but…
“Access to capital for London edtech is improving, slowly.”
Edd Stockwell, co-founder of Tutorfair, isn’t frustrated at this pace of development however.
New tech markets usually balloon with confidence on the back of VCs willingness to contribute and invest in start ups, due to the potential growth patterns.
Not so for edtech, thinks Stockwell.
“VCs aren’t necessarily the right backers because of the speed it usually takes edtech startups to scale.”
If you’re in London, he continues, your next chance for investment lies within family offices and philanthropists, seemingly because they don’t chase such hockey stick growth.
(Tutorfair itself is known for its ethical position on education by offering free use of its tuition service to children who can’t afford a tutor.)
There are other potential funding avenues for London edtech startups to explore.
“The angel investment networks in London are really quite active, they’re really quite good…”
One of the largest networks is the London Business Angels (LBA) which cites itself as “one of Europe’s leading Angel Investment Networks”; in 15 years the network has helped over 200 companies successfully raise over $77 million (£50 million).
The British Government has also introduced the Enterprise Investment Scheme (EIS) which is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax relief’s to investors who purchase new shares in those companies.
“The tax breaks in the UK are fantastic in early stage investing with the EIS scheme.”
It seems then that there’s a discrepancy between early and late stage funding – maybe it’s the latter that is the reason for the slower growth of British edtech businesses compared to their American counterparts.
“…early bits of money, quite good, later bits of money, probably a bit harder.”