Italian edtech: Europe’s sleeping giant
The headlines usually highlight the most developed European hubs, including the United Kingdom and France, but we’re seeing a new wave of small emerging edtech hubs. Amongst these, Italy standouts as one of the most promising markets for edtech.
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An untapped opportunity for Italy.
Italy’s investment in education is amongst the lowest in the EU. In 2019, Italy’s public expenditure on education as a percentage of GDP remained below the EU average (3.9% vs 4.7%). The most underinvested segment is tertiary education, which represents only half of the EU average (8% vs 16%).
Beyond the underinvestment, enrollment remains a major issue. Almost a fifth of 15-24 year-olds Italians are not enrolled in school, or training, well above the EU average (11%).
Yet, the future looks brighter. Recently the country has announced measures to tackle its lack of education funding as well as its high rate of low-skilled people. For instance, some of the initiatives include National Strategic Plan for adult competencies and Italy’s National Recovery and Resilience Plan. The latter envisages a €20B investment to strengthen the education system at all levels.
If adequately implemented, these plans could help close the gap the country has in comparison to its continent neighbors.
A few structural issues have been in the way of founders attempting to build scalable edtech businesses in Italy. We had a high-quality but sparse early childhood sector and a textbook-dominated K-12 market, while higher education leaders cared too little about their students’ needs and the corporate landscape was fragmented in a multitude of small, under-digitized companies. These hindrances are rapidly subsiding, while a new generation of shrewd, entrepreneurial, internationally-minded founders are succeeding in leveraging highly profitable niches – like test-prep or digital upskilling and reskilling – to seed fast-growing startups ready to branch out abroad.
Overview of the Italian edtech ecosystem.
Today, there are 145 HQ’ed Italian Edtech startups, the large majority (64%) of which have been created after 2017, making this ecosystem extremely young. To put it into perspective, Italy represents only 2% of all European Edtech value.
However, the country is the fastest-growing in Southern Europe and among the fastest-growing in the continent. The enterprise value of HQ’ed Italian Edtech companies has grown 5.5x since 2017, to a combined value of $564M. The top five companies representing 36% of all ecosystem value (or $195M), led by Talent Garden, EPICODE and WeSchool.
It’s positive for the Italian ecosystem that such a large portion of startups have been formed in recent years. We can expect a maturing process to take place in the coming period including more deals, larger rounds, and the formation of stronger Edtech hubs as the number of Edtech specialists increases. The Italian market is large enough to be on the radar of any serious investor and Edtech founding team as an option for European expansion. But to date, this presence on the radar hasn’t materialized into much investment or expansion activity, relative to Europe’s most active hubs. The momentum the market has witnessed in recent years tells us that this shift is happening and happening quickly. The market represents an attractive opportunity for early stage investors like Brighteye Ventures.
Edtech’s investment in Italy is picking up the pace. From $21M raised from 2014 to 2018, the VC investment has been picking up in the last three years, up to a total of $121M from 2019 to 2022YTD, up 5.6x compared to the period 2014-2018.
The ecosystem is driven by early-stage rounds, which counted for the total VC investment in 2021. The only Late VC round happened in 2019 when Talent Garden raised $48.4M.
Domestic vs. international investment.
Domestic investors dominate the funding landscape at large. In 2021, 84% of all investment into Italian edtech startups was made domestically. Some of the most active local VCs are CDP Venture Capital, LVenture Group, and P101 Ventures.
International investors, including those at early stage, tend to take interest in companies with the potential to expand internationally. At present, few Italian Edtechs have proven their intention to expand. We hope that increasing numbers of larger rounds will put international expansion firmly on the agendas of Italian Edtech startups. This will be a necessary step in attracting the serious interest of international VCs and the wider investment community
Lifelong learning startups dominate the funding landscape, with $95M being raised in this segment since 2017. Of course, Talent Garden’s $48.4M Late VC round has contributed to the bulk of the total investment (50%).
The next big segment is Formal Education (Pre-K, K-12 and Higher Education), which raised $28M since 2017, followed by Corporate Learning ($21M).
What sectors are booming?
Upskilling (B2C) and STEAM startups are picking up momentum. The landscape analysis shows that these startups have raised a total of $90M over the last five years, with these segments attracting 70% of the total VC investment into Italian Edtech.
Amongst the most innovative solutions are immersive tech startups:
- UpSurgeOn: a cadaver-free simulation-based platform for the psychomotor surgical skill enhancement.
- HeadApp: AR and VR solutions to train employees and support on-field operators in mission-critical contexts.
- Wedu: virtual artistic and cultural heritage tours for schools.
- Txc2: AI for personalized and summarized lectures.
- Beyond the gate: interactive multiplayer experiences for K-12.
Explore more of the Italian edtech ecosystem.
Further, we also recommend Brighteye Ventures’ third annual European Funding report, made with the support of Dealroom data.
Mapping European Edtech ecosystems
There are several other European ecosystems we’re also keeping an eye on. If you or your organisation is keen to collaborate with us to further expand our coverage, please reach out and keep up to date with our regular Edtech updates by subscribing to our newsletter: