An interesting trend emerged in WeeTracker’s Annual Report during sector analysis of the deals. The EdTech sector registered its spot in industries closing most number of deals. Though the sector closed an impressive number of deals standing at 42 during 2018, it could not close an equally impressive funding value.
This year, African growth companies overall raised USD 725.6 Mn with Fintech sector witnessing the maximum number of deals.
Only 25 percent of the deals in EdTech sector had Venture Capital money, the rest of the deals were primarily grants, prize money and acceleration/ incubation money. One of the main reasons for the dismal performance can be attributed to the lack of strong products in the sector. Though a South African edtech did feature in the top 10 deals of 2018 and increased the average ticket size of the sector.
As per Founder & CEO of Injini [EdTech focussed incubator] Jamie Martin, “African EdTech companies struggle to raise proper VC funding, and this situation does not seem to be improving. They are stuck between Scylla and Charybdis – local investors are too cautious, and overseas investors do not consider the cheque size or potential market big enough to justify the due diligence. I don’t see this changing much in 2019. The sector needs to think harder about a commercial proposition actually wanted by parents, companies or students, and focus less on supposedly disruptive (but actually just wrong) ideas like twenty-first-century skills and student-led learning.”
2018 did not quite do its job for this sector and the need for the hour primarily is to find more value proposition for the customers than startups. The apparent gap in the education system can be filled by these companies provided they crack what end consumers want.
Note: This article is part of WeeTracker’s Annual Venture Investments Report 2018 – Africa. Please download the complete report for in-depth analysis of this year’s performance.