Global edtech funding collapses from $16.7B to under $3B as investors pivot to AI

Global investment in education technology has collapsed from a peak of $16.7 billion in 2021 to less than $3 billion in 2025, according to data from Tracxn, a Bengaluru-based platform that tracks startup funding. The number of edtech companies launched also plummeted, falling from almost 10,500 in 2020 to just 645 in 2025. The downturn reflects a broader shift in venture capital toward AI tools and workforce training platforms. HolonIQ, a research firm that advises governments and investors on education, noted in a February analysis that investors are concentrating capital in AI-enabled products, workforce-aligned platforms, and K-12 operations solutions. For-profit edtech startups have struggled with weak unit economics, high customer acquisition costs, long institutional sales cycles, and low retention rates due to murky learning outcomes, according to an analysis by Loot Drop, a database of startup closures. Indian edtech company Byju's, once the world's most valuable education startup at $22 billion, crumbled under a financial crisis and aggressive sales tactics. Nigerian startup Edukoya shut down in 2025 because of weak profitability and waning investor support. In China, the government's "double reduction" policy in July 2021 crushed the K-12 online education sector overnight. Yuanfudao, once valued at $15.5 billion, ended its core tutoring services and pivoted to AI hardware, launching "learning machines." Yuanfudao is now among the top six players in China's AI learning hardware market. Across the sector, edtech is gravitating toward career-focused programs and B2B corporate learning. That model already dominates in wealthier markets such as Australia, New Zealand, and the Baltic states. Loot Drop's analysis concluded that corporate workforce development and specialized skill acquisition are more promising than K-12 general education, and that winners will likely be vertical-specific tools that integrate into existing workflows.