The pandemic initially drove a surge in online learning investments, with global edtech funding reaching $16.7 billion in 2021 due to widespread lockdowns. However, by 2025, this figure had plummeted to under $3 billion, as reported by Tracxn. Most of this funding was sourced from US-based venture firms. This decline in edtech funding is part of a broader trend in startup investments, where efficiency is prioritized over hype. HolonIQ noted a shift in focus towards AI tools and training platforms that enhance hiring, cost-cutting, and skill development. The number of new edtech startups also saw a sharp decrease, with only 645 companies launched in 2025 compared to nearly 10,500 in 2020. The sector faces challenges such as high customer acquisition costs and low retention rates. Notably, Byju’s, once valued at $22 billion, faced a financial crisis, while Nigeria’s Edukoya shut down due to poor profitability. In regions where online education remains crucial, nonprofits and local innovators have stepped in. In China, the “double reduction” policy severely impacted the K-12 online education sector, prompting companies like Yuanfudao to pivot to AI hardware. The edtech industry is increasingly focusing on career-oriented and corporate learning programs, particularly in wealthier markets, with an emphasis on vertical-specific tools that integrate into existing workflows.
Is edtech funding collapsing after the pandemic boom?
