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2021 Transformational SaaS and Technology Transactions
2021 Tech-Enabled Services Transactions
With global investors racing to deploy billions of dollars across the edtech ecosystem, Tyton Partners continues to be a trusted advisor to many of the preeminent investors, executives, and entrepreneurs navigating a dynamic capital markets environment that is outpacing previous fundraising records. We are proud of the work our team has done over the first six months of 2021 and look forward to an even more productive second half of the year.
Amidst the frenzy of capital markets activity so far in 2021, Tyton Partners Investment Banking team closed twelve high-profile transactions across the pre-K-12, higher education, and corporate training landscape. This strong activity is further complemented by a robust deal pipeline as pandemic-enabled trends across the education sector are likely to persist for several more quarters. During the last two quarters of 2021, we expect to see the continuation of five key trends that will drive the global knowledge M&A markets.
Dramatic subsidies by the U.S. government fund K-12 and higher education growth – the American Rescue Plan designated $205 billion in funding for education, with roughly $123 billion going towards K-12 schools. The re-investments in education by the U.S Government will continue to fuel strategic investments in the education space, particularly for companies focused on mitigating the effects of pandemic-driven learning loss.
Record-setting valuations will continue in 2021 (and 2022) – one of the side effects of the pandemic is that startups in the education space are being driven to scale at a pace not previously experienced in the edtech market. This has played a significant role in generating the record-setting business growth trajectories and commensurate valuations we witnessed through the first six months of the year. We expect this trend to continue into the foreseeable future.
Exploding demand for education and training systems in emerging markets will unlock further digital expansion – it is estimated that a significant amount of the world’s population under the age of 30 is living in emerging markets. In many developing regions, however, participation in online education is still constrained by technological infrastructure barriers. As cash-strapped governments in emerging nations grapple with rapidly increasing learner demand, meeting the needs of its population will require a widened reliance on mobile-first and online education offerings.
High quality, lower cost curricular solutions empower a new class of alternative credential learners – private and public investors will continue to make massive bets on future global growth in this area. The 2U/EdX merger is indicative of a compelling value proposition to expand the size and reach of alternative credentials for those unable or unwilling to pay degree program prices, or who live in geographies where these options weren’t previously available.
Migration of all learning content to digital solutions (or hybrid model) – the pandemic sped up the normalization of digital education tools in mainstream classrooms (and board rooms). Solutions that enable online interactions between teachers and students will continue to experience extraordinary growth, and investors believe technology-informed supports have become a more integral and permanent part of the education landscape globally as the range of investments announced at the start of the new year reflect this conviction. While different countries’ schooling systems may have significant variation, the demand for tech-enabled and tech-delivered education solutions is universal and investors are betting this trend will persist.