Global Impact VC Funding - Q1 2022 Update

Digital health venture funding hit the skids in the first quarter as the funding market slowed from 2021’s breakneck speed. Investment activity remained at near historic highs but a fast start to the year was followed by a sharp correction, as investors grew cautious due to wider market volatility and the lackluster performance of public digital health companies and SPAC vehicles.

Global venture capital funding contracted by 13% in the first quarter however digital health in particular felt the headwinds of market volatility, concerns around global energy supply, supply chain disruptions and the continued presence of Covid-19 variants around the world. This contraction must be seen in the context of 2021’s bumper year for digital health which saw more capital deployed than the five years 2013-2017 combined. Many of the largest deals to complete in the US market focused on clinical workflow, with standout deals also seen in wellness, patient empowerment and population health.

French startup Doctolib’s $549M funding round (valuing it at $6.4B) was the most eye-catching digital health deal of the quarter. The deal makes Doctolib the highest valued French startup across all sectors. In the US the value-based kidney care platform Somatus raised $325M as it continues its mission to reduce the ongoing cost of managing chronic kidney disease and preventing instances of kidney failure. Another significant factor in the Q1 slowdown is undoubtedly the lamentable performance of public digital health stocks.

Global EdTech secured $4.5B of Venture Funding in Q1 2022, up on Q1 2021, but representing a slightly lower run rate than the full year for 2021. Take a step back to include workforce training, performance management and capability development and capture new forms of 'growth debt' financing and you'll find nearly $7B of growth capital in Q1 re-imagining how we up-skill, re-skill and unleash human capital.

The world continues to evolve, markets are changing and for now, EdTech is still enjoying strong support and demand from investors. Q1 2022 was whispered to be ‘soft’ and ‘waning’ after a record-setting 2021, and in some markets that was certainly the case. Most major markets did gently moderate investment levels, however, they remain very high compared to long-term historical levels and whilst the market has strong momentum, there is more uncertainty in today’s financial markets than this time last year.

Through this note we’ve shared our traditional quarterly chart pack on Venture Funding in EdTech, adopting strict definitions to isolate Venture Capital deployed within a generally accepted definition of “Education Technology”, spanning early childhood, through K12 and post-secondary into traditional workforce training. In addition this time however, directly below we’ve shared a chart from our Analytics Studio (Customer Link) that expands beyond our strict EdTech definitions into broader adjacencies that capture investment in categories some would argue like beyond EdTech such as Workforce Capability Development, Performance Management and Talent Acquisition. In addition to broadening the scope, we’ve seen an increasing trend in Growth Debt Funding and Private Equity meets Venture Capital that we have traditionally excluded from strict ‘EdTech VC’ analysis.

This broader, more expansive analysis represents nearly 2x more funding than our traditional strict EdTech definitions, a total of $95B of growth funding over the last 5 years and $7B of investment in Q1 2022 versus $4.5B with a narrower, EdTech focused lens. With this insight in mind, we’ll be holding taxonomy workshops through Q2 in New York, London and Sydney to refine the Global Learning Landscape and in turn, inform and re-shape the way we segment and analyze learning technologies and human capital development.