Industry Analysis - August 21, 2023

How AI impacts EdTech funding in 2023


In today’s chart of the week, we look at the pace of EdTech funding in the equity crowdfunding market from 2019 through 2023.

  • From 2019 to 2020, we see a 9.95% rise in funding for EdTech startups. From 2020 to 2021, funding dropped by -4.65%. And 2021 to 2022 saw a rise of 2.04%.
  • Funding for EdTech startups in the ECF (equity crowdfunding) has remained relatively stable in the last few years. However, 2023 has seen a slow start in funding, with just $1.7M raised this year.
  • This could coincide with the release of ChatGPT in late 2022. Students find that free AI platforms can provide significant value, and the hype surrounding new and innovative educational offerings has become less impressive.
  • We have also seen this in the public markets, with Chegg’s stock price getting slammed earlier this year after admitting to losing market share to companies like OpenAI.
  • However, Chegg stock has sharply risen after discussing further collaboration with services like ChatGPT and ScaleAI, aiming to provide value that the free ChatGPT model can’t.
  • We saw earlier this year that investors would throw money at companies touting “AI.” Nowadays, investors are perhaps using more caution at these types of claims and the impact of AI on the market in the long run.
  • For example, the startup Papumba has implemented ChatGPT to allow parents to create novel bedtime stories by changing various inputs. However, the company has started slowly, raising just $57,000 in two months. Investors would have been throwing money at such offerings at a different time. However, investors are more cautious than ever at companies touting AI, as we see in the public and private markets.

About: Teddy Lyons

Teddy comes to KingsCrowd with a background in venture capital and investment banking. He worked at Deutsche Bank as an Investment Banking Analyst in the Technology, Media, and Telecommunications group. Prior to that, he served as an Associate at Alchemi Capital, a venture capital firm in Boston that invests in early-stage technology companies. Teddy holds a degree in Economics and Psychology from Wesleyan University, where he was captain of the varsity soccer team. He also holds a M.S. in Finance from Boston College.

View more articles by Teddy

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