In this special episode, we speak to Beth Havinga, Managing Director of the European Edtech Alliance, and Rhys Spence, Head of Research at Brighteye Ventures, about the state of European Edtech.
Both organizations have recently released fascinating reports about the state of Edtech:
Beth Havinga is the Managing Director of the European EdTech Alliance and the EdSAFE AI Alliance. Beth represents the EEA both in the EdTech Roundtable of the European Commission and UNESCO’s Broadband Commission. Beth has considerable experience developing interoperability standards frameworks, and represents Germany as head delegate to the European Committee for Standardization of Interoperability for Learning Technologies and EdTech. In addition to creating her own consulting firm, Beth has taught in schools, managed education software and publishing houses, founded two startups, and worked in over 45 countries to develop digital structures and strategies.
— Rhys Spence is Head of research at Brighteye Ventures. He researches geographic and product market trends, as well as supports the portfolio with business-related themes, including international expansion, marketing, HR, ESG and impact. Before Brighteye, he worked in UK education policy research, specialising in the early years and latterly edtech.
Welcome to Season Two of edtech insiders, where we talk to the most interesting thought leaders, founders, entrepreneurs, educators, and investors, driving the future of education technology. I'm your host, Alex Sarlin, an edtech veteran with over 10 years of experience at top edtech company. And this special episode of Ed Tech insiders, were talking to two leaders in the European ed tech ecosystem. First off, we have Beth having a who's the Managing Director of the European edtech. Alliance and the ED safe AI Alliance. Beth represents the European tech Alliance, both in the Ed Tech Roundtable, the European Commission, and UNESCO's broadband commission. Beth also has considerable experience developing interoperability standards frameworks, and has represented Germany as head delegate to the European Committee for Standardization of interoperability for learning technologies and ad tech. In addition to creating her own consulting firm Beth has taught in schools managed education, software and publishing houses, founded two startups, and has worked in over 45 Different countries to develop digital structures and strategies. From the venture side, we have Reese Spence, he's the head of Research at Bright eyed ventures. He researches geographic and product market trends, as well as supports the portfolio with business related themes including international expansion, marketing, HR ESG, and impact. Before Brian I Reese worked in UK education policy research, specializing in the early years and then ad tech, European ad tech Alliance and bright eye ventures. Let's get started. Beth, having a good response. Welcome to Ed Tech insiders. Great to be here. Great to be here. Thanks for having us. Yeah, I'm really excited to talk to both of you today. You've both released big new reports and sets of insights about the European ad tech ecosystem. What happened last year? What's coming for the next year? Let's start with you, Beth, what are your big takeaways from 2022 in Europe from the European edtech. Alliance? I think one of the things that struck me the most when we were looking at some of the data is just how many organizations within Europe is so small. So you know, over 60% of micro organizations, and just under 40% of organizations in total exist on yearly revenues of under 50,000 a year, we're talking about really small companies, that to me, this shows that in the past couple of years, we've had a huge influx of new ideas and innovations and a lot of new activity, which is so exciting. I think the key thing around this now is going to be raising awareness about companies of this size, about the fact that the market is just so full of them, so that we can provide the support and mechanisms that are going to be necessary to support them, and make sure we have sustainable growth. I think some of the other aspects, obviously that have leapt out are some of the things around funding to see sort of how that breakdowns evolving over time. And a lot of bigger money is coming into Europe, which is exciting as well. And then I think one thing that's very dear to the EAS heart and to my heart personally is that we have a lot of work to do in terms of sort of gender parity in terms of supporting female founders as well. Yeah, really interesting. That sort of 1000 flowers blooming moment of lots of ideas being turned into companies all over the continent, I have definitely noticed that. Reese from the bright eye perspective, bright eye ventures one of the very most impactful venture capital firms in education in Europe, what were some of your takeaways from your 2022 report? Yeah, we really enjoyed putting the report together this year, despite obviously sort of challenging conditions in 2022, there were still some positives to be found. overall funding was down. But deals weren't down so much. It tells you, as Beth highlighted that lots of early stage deals are being done. And also say that lots of investors that conventionally we're operating in slightly later stage deals, we're moving towards the early stages, and we highlight a couple of those examples in the report. Interestingly, and I suppose a positive for us as a European focused edtech fund because the European edtech showing more resilience and other major tech regions. It's still is still failed, of course, but it failed the least. But I suppose I'd caveat that by by highlighting that there's a big discrepancy in European funding and general activity between half one and half two of 2022. So I think we can, you know, reasonably expect to relatively slow first half to 2023. But I guess to the to the point I was making at the top about there being lots of activity. There were in fact more deals done in the second half of 2022 compared to the first half. So I think when you consider, you know, the lots of these investors and lots of activity at the very earliest stages happening now hopefully we have a really positive outlook and, you know, continued growth in the ecosystem as we, as we move forward in a couple of years time. There's lots of other sort of interesting takeaways in the report by shoulder we'll dive into those since. Yeah, I want to get into a few of those definitely want to talk about deal size, and the the sort of edtech winter, as we call it, and how it was less of a decrease in Europe than any other region. For some of our listeners, they think of Europe, and it's this huge continent with many, many different countries and markets, I'd love to sort of break down a little bit by country, which is something that both of your reports do really, really well, the European tech alliances map really breaks down, you know, ad texts by country. And of course, by looks very carefully at the funding in each place. One thing that jumped out to me in your reports is that countries like Spain, and even Italy, are starting to make more waves in edtech, than they have in the past, we still see that the UK and France remain countries with sort of the most and tech excitement and investment, and the most startups but you see some other countries really starting to rise. And I'd love to hear both of you talk about sort of the country breakdown, how does it sort of look when you zoom out and see the whole system? Beth, let's start with you. You know, the tech map is such an interesting visualization of exactly that's, yeah, it's been so much fun putting it together. And we're also looking to strongly expand it this year. So not only looking at edtech companies, but also distribution networks, funding opportunity, government institutions and things too. So I'm hoping to see even more there that we can pull on for our data. But one thing that has been so interesting to me in the past year is that we're seeing organizations come out of countries where there hasn't traditionally been a really strong focus on activity. So we're seeing ad tech organizations coming up in Latvia, we've got two or three coming up in Hungary, we've got one in Slovenia, as well, representing a huge number of different edtech companies. And to me, that just means there's so much activity, that they've been able to come together to see the need for community to learn from each other to grow with each other. And I think a lot of that comes from people having seen a rise in people having seen things that were extremely broken in their own systems in the past two to three years. So there's a lot of people who've gone I can do this better, and I can fix it, and I will and then trying to find that connection. I'm also seeing a lot of government support both so I'm seeing governments developing agencies or structures to better support the industry. There are even targeted government agencies, specifically building ad tech communities. So we're seeing that in in Poland, we're seeing it in Austria, we're seeing it in other areas as well. And I think there's more understanding of the technologies and how they can be included and implemented. And so I think all of it leads to growth in the industry and some really surprising entrances from regions we may not have expected it from. But I think there is that deep need, there is a level of support that governments are bringing in. So we're looking at Spain as well, there was a huge push there to move startups down there. And there's been some fantastic incentives provided. We're seeing some different government funding initiatives coming out of other countries as well. So I think, in general, yeah, it's really interesting. We're seeing movers where we haven't seen them before. But I think it's a lot of things coming together to make that happen. Yeah. You know, Reese, the bredow report focuses on you know, I think Spain made the top five countries by investment for the first time. And you mentioned Italy, the Italian tech ecosystem to sort of drill down on it, because it was one of the only countries that actually saw increases this year in deal size and sort of nascent ecosystem really taking off, but I'd love to hear you talk generally about, you know, about the the continent about how different countries approach the EdTech world. Sure. So when we look at activity by market, as you pointed out, UK does maintain the top spot, it seemed to a couple of 100 million dollars more in investment than the next place market, which interestingly, was was Germany this year, it's been on a fairly consistent increase in terms of funding and deals that in the list is Austria, but that, of course, is largely driven by gay students activity, which really does skew our figures, which is everything and Yeah, exactly. It was the same last year. And then fourth in the list. Not that it's sort of you know, strict ranking was was France, which is quite interesting because there's quite a significant drop in funding and sub deal activity in the VC world between basically the UK and Germany and then Austria and France as the next place markets are I think when you when you talk about talking about Spain, you talk about SV, they are both really interesting examples. And I think one of the things I'd probably highlight as being significant, which again, is linked to some of the points that Beth was making is increasing state involvement in investment. And so you look at the chart of the most European, most active European funds and CDP from Italy, which is a semi state run venture organization is on that top 10 list, which is, which is really interesting. And convincingly, you know, we've we've seen that companies that have looked to expand mostly from other markets in Europe, there's been some weariness or trepidation towards adopting them in within sort of state state systems. So I do think they sort of almost fostering a culture where they're ensuring that new solutions are built for their specific contexts, which I think is a really interesting approach. And it's one that we're also starting to see in France a little bit more with increasing government involvement in in private investment funds. And, of course, therefore, you know, stimulating investment into their local ecosystem. And again, making sure that the companies that are creating solutions are doing so in a way that's intentionally matching up with the policy priorities of government. And so it's a really, it's a really interesting time for us as a fund that's not tied to a specific market in Europe, because we can kind of see where those government tracks are and, and try to sort of either follow them, and hopefully, you know, start to support other companies in those ecosystems, or potentially to go towards markets where those investments from government aren't quite as prominent. And so it's a really interesting, interesting area for us, I suppose, in tech, as a sector requires a little bit more patience than some other sectors, when it comes to sort of making sure the new interventions, new solutions are really impactful, particularly if they're going into formal education settings. And I suspect that's one of the reasons why we're seeing far more concerted efforts from government to basically make sure that things that are entering those systems and entering those procurement processes are in some ways for the match to what learners need. And what the government has, has defined as its priorities. You know, it strikes me that you're mentioning how go student in Austria is such a sort of outsize, you know, Star company that it almost skews the entire country higher in the rankings. And I'm curious, when you have companies like those students in Austria or brainly, in Poland, or Kahoot, do those companies because they're so big on their own? Do you think they actually influence government policy when it comes to ad tech, when they see sort of a star player like that raising funding across the entire sector? Does it make them think, oh, wow, maybe we have an advantage here? Or is it sort of? Did they consider them just one offs? It's a very interesting question. I think when a company is such a breakout star like that usually means that they're operating in a in a number of European markets, and not just in their own market anymore. And so you know, that the size of that company isn't, you know, totally based in in Poland, or totally based in, in Austria, and so its influence is probably slightly more spread than being defined in that single market. But one, one way I would say it's it is potentially very sort of impactful is in the fact that if companies are succeeding, and they are founded in one of these markets, then they are creating lots of people who can become very active angel investors in that first market that in which the company company was created. And that sort of speaks to one of the trends that we've noticed in this report for the first time, which is basically looking at the fact that angels have been increasingly active in Europe. And now there, there are more Angel involvements and deals in Europe than there are in other comparable regions. And I think that's probably one sort of very interesting way that having such a huge, huge success story in one market might lead to a far healthier ecosystem, or at least accelerate that quite significantly. That's a really interesting point. And it makes a lot of sense, but I wouldn't have connected those issues together. But it makes a lot of sense. You know, you look at the whole European system. And as you say that the breakout stars are almost always International, obviously, they go into many different markets, they span many different places. One of the things that I found interesting about both of these reports is that they sort of break down the ecosystem by country, but also even by city. And there are these sort of superstar cities throughout Europe that have become ad tech startup hubs. One city jumped out a lot. It was by far the most startups on the European edtech. Alliance map. And so Beth, I'm curious for you, you know, why did parrot Why do you think Paris became such a hotspot for edtech? Especially given that France, as we just mentioned, is actually the fourth most most invested country? I think one thing at the start, we were also pulling from some of the data that already existed and France did a really great job at mapping that startups already so the startups were prepared and had all their data ready. So I think that's one thing that definitely can skew some of that data. But the other thing that we want to do this year is really drill down and explore some of the reasons behind a lot of the trends that was starting to come out from our data, looking at things like whether centralized systems actually lend themselves to more sustainable innovation, because the systems are in place and the structures and known the interoperability is a given like whether that can compete in a different way, with environments like Germany, where there's extremely different regulations and structures from state to state. So I think we definitely want to look more at the sort of causality as opposed to sort of making a statement that Paris really is the epicenter all Ed Tech, we know, it isn't that it definitely was leading sort of in the trend there. And I think one of the things that we're seeing, we've launched a market Discovery Series in 2022, where we're sort of exploring the best ways of entering each of the different markets and some of the trends we're seeing there. And we're really unpacking the differences between each of those areas. And I think there's so many different factors that go into having a really good environment, to found and to have collaborations and that's anything from rent to talent to local supporting funding structures and collaboration, possibility, inspiration, the connection to the ministries, or key decision makers. So I think, definitely something we want to drill down on more to make sure that we're understanding the reasons behind some of it, and maybe also be able to make some recommendations, especially out at the policy level, to try and help build out some of those ecosystems. And that also being said, some of the most successful startups and scale ups that we've seen, didn't necessarily start out in any of the big cities for I think some of them end up moving there is research also saying, because there's some of the infrastructure that I think we shouldn't discount some of the smaller areas. And, and also, in the last year, I've seen a big move out of the cities as well, and a lot more of remote teams working together. So that makes sense. And we saw a similar similar migration in the US people leaving New York, San Francisco, Boston, Austin, some of the some of the places that we're magnetic hotspots are now getting a little more dispersed. I want to ask the follow up question there. I think it's a great caveat that you're saying that, you know, maybe it's that the Paris startups are better mapped that are documented, but it doesn't necessarily mean it's the hottest spot? From what I'm hearing, you both say, there are a lot of angel investors in places where there have been a lot, you know, at where Ad Tech has really sort of started to take off, then there are these sort of superstar cities, Paris, London, Madrid, Berlin, of course, I'm curious, you know, if you were an European ad tech founder right now, and you're just starting, you're one of those 1000 flowers, you have an idea, you're really excited about how to how to make a difference? How would you look at the entire continental ecosystem and try to figure out, you know, where should I? Where should I look for funding? And where should I, you know, what countries are sort of the most startup friendly? I know, it's, I know, this is a tough question. But how should a European tech founder sort of think about the various regulations and the and the different amounts of money flowing in different spots in Europe? Beth, I'm curious to start with you. And then I'd love to hear from you, Reese as well. Sure, I think counter intuitively, I would say don't follow the money. And what I mean by that is some of our biggest countries are not necessarily the most friendly to founding and the easiest to have access. And I think our best candidate there is Germany, where it always looks great on paper, because of how much is spent within the market, and also sort of the sheer number of schools and students. But when you start drilling down and go into exactly the mechanisms of moving in that market, it becomes so much more difficult. And we see so many companies struggle and leave again. So I think the things to watch out for are definitely market access your understanding of the systems, your ways into those systems, the ways of being able to access support. So is it in an environment that has some kind of thing like a testbed, for example, where you're able to even test your innovation out with teaches? Is there some kind of mechanism in place like in Finland, where you're able to have sort of the scientific processes around testing your product as well and get certification? Is it a country that provides really good documentation around all of the processes and there's great documentation in France, for example, so you know exactly where you stand in terms of the entire ecosystem and what you have to do to participate? Is there a really good understanding of things around the GDPR? Or the interpretation of it? Is there documentation around what your roles and responsibilities are with cloud like there are in Italy? I think there's there's different aspects that you need to look at, but it would be finding the situation that complements your knowledge, your skills, that you really have that access, and that it may not be the biggest market to Start with that you may be able to sort of expand if you have, like market. That's a fantastic, very comprehensive answer. Reese, do you have anything to add to that? If you're an ad tech founder? How do you sort of decide where to go city or rural? Do you go to Germany? Because it's hot, but it's regulated? Or do you go to Italy or the Nordics? What do you do? Yeah, I think, Well, firstly, firstly, it would obviously depend on the sort of business that you're starting. But then I guess that's a complete cop out. If you if you were, I like to think of it as if I was in one market, how would I understand what works for me in that market? And then compare that to how conditions or those variables could be compared in, you know, an ideal market? So what would you want to see if those conditions, and then you start to sort of track which markets match the conditions that you think has been really suitable for you, and I guess the way that you'd categorize those would be, you'd need to understand your market size, you need to understand policy conditions that might really, really suit your business. For example, if it's individual learning budgets or training budgets, there are certain markets that provide that and Europe and others that don't, if it's retraining policy, or other areas like that, you know, that can be a major, major help. And there are certainly attacks that have been built on huge contracts with government. So I think you know, that's a really important thing to consider. The other areas to think about consumer as a macro factors, so consumer disposable income with that, if you're looking to sell to lifelong lifelong learning products, or things like that. And then of course, you've got the other category, which is effectively the practicalities of, of working in that market. And depending on whether you need to sort of resettle there, and therefore, you know, what time differences are language barriers, there are, what localizations would be necessary, where Polit were sort of consumer priorities or other government priorities are and how they align with, with with what you're trying to build. So if I was to try and pinpoint a market right now, that would feel like a really suitable choice, I think it'd be difficult to not go to somewhere like Germany, for me, but then at the same time, you know, I think the UK is a very sort of interesting model. It's incredibly competitive, but it is one of the markets that I feel like if you can, if you can win out in the UK, you can either, you know, expand to the Netherlands and then into the rest of the European continent, or you can expand to the US. So I think for me, you know, you have to think about those expansion routes beyond your first market, if you're looking for venture backing. So I hope there's not too much of a cop out. But there's some perspectives that hopefully he's I think interesting as well, is that what what we were seeing is how little expansion there is. So I think one of the things that was very clear from our numbers is just looking at the fact that most of them are staying within their country, there's very few that are expanding within Europe, and even fewer that are expanding overseas. So I think making a good choice about where you're founding is very important, because most of them actually staying there and are not being able to expand or not at the degree that they may have wanted to. And I think we see this a lot where startups have grand ideas about expansion. But the reality is just very different in terms of the regulations and what has to happen also retroactively to their product to be able to localize or internationalize. I think I think that's one of the reasons why we're seeing more North American funds take an interest in Europe, because it's now quite broadly acknowledged that you can grow a huge business, you can grow a unicorn in a single European market, as opposed to the old perspective, which is basically that if you wanted to build one of these companies at this scale, you'd have to go to the US. And so that's a nice realization, it doesn't make, of course, our lives slightly more or slightly more competitive now for the very best deals, that that's the you know, it's a good problem is a good problem to have. And it used to be the used to be the way that the attitude of us founders tends to be, you know, we'll raise and then we'll build, whereas the attitude in Europe seems to be we'll build and then we'll raise and then we'll raise the exact amount that gets us to the next fun, as in the next sort of funding round, etc. I guess that's one quite significant difference in sort of attitudes, and that kind of, I guess, has some bearing on on where you decide to base yourselves if you are needing to secure funding to start the business in the first place. So that's an extra extra bonus thing to consider, I guess. I think that also has cultural roots. So I think traditionally, European investment has just been more conservative and a lot of it required so much more data and so much more proof than, you know, 10 years ago pitching to some of the US investors, I think they're just different cultural concerns. The new set of risks associated with that. But I can hear people taking notes, as they listen to you both talk about all of the different factors that go into where to start the company and how to sort of how to think about it, you're talking about expansion routes, internationalization, localization, language GDPR, knowing every country has policies or whether their governments are in the market to do contract, there's so many different pieces. But it, you know, I think it's very exciting that, as you both said, you know, the European ecosystem is feeling less constrained, it's feeling less policy driven, and hopefully less conservative than it has in the past. I mean, we saw some enormous mega rounds happen in Europe this year that I would imagine are, are last year that I imagined are not just, you know, the exact amount of money that they need to survive. That said, I bet a lot of the smaller companies are going under that conservative idea that they have to sort of have all the proof points have all the contracts in place before they go raise and hopefully maybe there's a little bit of a of a rubbing off from the American hubris slash frontier spirit overconfidence, however you want to frame it, where you raise before, you know, if it's working, because I think that there's there's, you know, in the VC world, sometimes that's, that's important. You want to have the money to expand before you necessarily know everything that you're going to do. We've all mentioned that 2022 was was actually a really tough year for Ed Tech funding globally. And there were decreases around the world in every region versus the year before. Race. You mentioned earlier that European tech didn't fall as much as any other region, it went down by 28% versus 64%. Reduction in the US 46%. In India, I think 30 Something in rest of world. What do you attribute that to? Why do you think Europe didn't fall as much as other regions? It's a very, it's a very interesting question. And it's not one that we have a very satisfactory answer to, I'm afraid, it's, I think one of the things that you you, you could think about is that, obviously, market conditions were varying, all of them were on a negative path. And I guess, you know, in Europe, you've got the sort of state by state differentiation, whereas if you consider the US and Canada as a single block, you know, it's was one sort of single macro environment in that market, whereas in, in Europe, there's 27. Plus, I think the other the other thing I would I would probably highlight is that the three deals that happened in in 2022, that were over 200 million in Europe are all done in the first few months of the year. And so you ask yourself, you know, was that sort of perfect timing of those companies? Would they have been able to raise such large rounds later in the year? The answer is probably, you know, they probably they probably would have been able to raise those rounds, but it might have taken them a bit longer to do that. And I think actually, if you look further down, so the list of the top 10 deals, I think eight or seven out of 10 Roll down in first half of the year. So it's quite a significant slowdown. So I wouldn't necessarily say that Europe is sort of fully an outlier in terms of the resilience. So we're just sort of say that perhaps it was slightly more delayed. And I would say if we were talking about the outlook for half 120 23, I would expect more of what we saw at the end of last year at this stage, which would be lots of early stage deals, but few sort of really large deals. But that said, you know, there's been a great deal for pack the box, which is, which is one of our portfolio companies, which has raised a fantastic round already this year. And so clearly, there's capital available for the companies that are most suitable for VC investment. So I hope that's a satisfactory answer. With a just some sort of reflections on the data we've seen, I think it's a very fair answer, you know that the first half of the year saw a lot of these enormous deals. So those three mega rounds, those $200 million rounds, that was go student that we've mentioned in Austria multiverse in the UK and coach hub. In Germany, those deals were all in the first half of the year, as you mentioned, we saw two new European unicorns last year, which is multiverse and domestica. Making, I believe there are six total European unicorns. You know, it's I think it's very fair to say it's not that Europe is just maintaining throughout this, this sort of ad tech slowdown doing incredibly well. Maybe it's just that a few of these companies were were really well placed to do these mega rounds earlier in the year. And then since then, things have gotten a lot smaller. So Beth, I want to I want to ask you, you know, you mentioned at the beginning of the call that you know, we're seeing many more small and early rounds in Europe and what what the broader report sort of got into it basically said that, you know, globally, there are many more small and early stage rounds than there were in 2021 increase of almost 50% from from 350 to Almost 500, small and early stage rounds, and definitely a decrease in 100 million plus rounds, a significant decrease between 2021 and 2022. So more early stage and and fewer mega rounds. But because of these three big rounds end to end, the top 10 That that Reese just mentioned 42% of all funding in 2022 came from these mega rounds, these 100 million or more compared to 27% in 2021. I know I'm throwing a lot of numbers out. But basically the the takeaway here, I believe, correct me either of you if I'm getting this wrong is that globally, everything shifted to more small and early stage rounds. In Europe, even though there are still plenty of smaller stage rounds, because of some of these humongous rounds, the percentage of funding still, even more so in the past went to mega rounds. So the long and short of it. Beth, how should ad tech founders be thinking about small early stage rounds and large rounds? Or investors? How should they be looking at this ecosystem? is are we expecting more and more small rounds going into the first half of 2023? Or are there is there going to be a snap back to some of these larger rounds? I'll have to defer to reef for some of the actual sort of funding questions. But I think what we're seeing definitely is there's a stability in the smaller stage. So I think in terms of the percentage of the money that was invested, yes, a high percentage of that went to a few sort of the 1%. Whereas what we're seeing is, you know, 48%, almost, we're getting those sort of early stage rounds, and frequently. So I think we've got something like 48%, we're getting under sort of 500,000 or something, which is, which is really good. That's, that's hundreds of companies that are being supported. And I think that's a slightly different way we have to look at it, it might be that we've already got that really, really big money going to a select few. But there are hundreds of companies that are getting funded and are going through rounds, sort of supporting them and their ideas to get to the next stage. And I think, to the point that we were talking about before, in terms of Europe, potentially not decreasing as much as others at this stage. Some of that also goes back to a now I'm gonna say it in a positive way, the conservative nature, the funding here, I think the way that some of the systems are set up a set up so that the companies don't burn out quite as quickly. There's a lot of state support, there's different funding mechanisms you can use, and have been made available through the pandemic, specifically for Ed Tech in different countries as well. So there's other mechanisms they were able to use to help support them get through various stages in the past couple of years, which I think has also then helped boil all of this up where in the States, you are sort of being funded for a great idea that if the idea never evangelizes, then goes out. And so I think there that conservatism has helped be able to keep that stability in there at this stage. But I would also looking looking forward to think that it will be even more conservative into the first half of next year. However, we do know that there's a lot of capital out there. So I think the spending possible, we need to have really good solid ideas, I believe to move them forward. Great answer. So raise you know, you mentioned hack the box, we also saw a Valpo our friends and Switzerland get a $17 million round this week, do you think that it's going to be many more small rounds, spread the wealth $500,000, you know, low rounds going to many more companies, or is there going to be a snapback to larger midsize or larger rounds, I'd be very surprised if there was a very quick snap back to larger rounds, you know, the pace of the pace of new deals being done by even the more active edtech investors in Europe has significantly slowed since the first half of the year. And that's something we can probably expect to continue. And I think that's partially because of the nature of adventure as a as the route of investment. Because ultimately, a lot of the time, you know what, what we are sort of funding is 18 months to 24 months worth of experimentation finding routes to monetization. And at the moment, obviously, because the conditions are as they are because disposable income is lower, because there's a cost of living crisis and in many markets in Europe at the moment, and therefore, you know, less less disposable incomes flying around and therefore, you know, less tax revenue, finding routes to monetization very early stages is really important at the moment. And so that's one of the things that I guess is a slight change in, in our sort of priorities is making sure that there are those those routes to monetization, but but again, you know, Bill deals are being done, which shows you both that, you know, there's a lot of positive activity but also that it's possible to get a conviction for investors in these conditions. I think if you were again to go back to the US versus your example, you know in the US if you Raising your your you're raising, usually a larger round, usually at a higher valuation than you might be in Europe. And that's partially because if you're you're raising to prove a concept in your first market, if your first markets the US, that's a pretty big opportunity, isn't it. So if you if you can get that right, it's worth incredible, incredible value. Whereas if you're sort of proving concepts in a single European market, and particularly, you know, one of the smaller ones, you can think about basically charting a course with a smaller amount of money of 18 to 24 months to proof of concept in that market. If it's particularly one of the smaller ones, then you can look to raise again, to expand it, but you were basically sort of, you know, you've got 18 to 24 months to, to prove that it's, it's going in the right direction. I think if you were an ed tech founder now, and you're in new craze that precede round last year, and you raised half a million dollars or something, and then you're basically looking at AXA last year, sort of 12 to 24 months, potentially, to try and prove concept. Ultimately, you need to be prepared to sort of be you know, be giving up 15 to 20% of equity, because that's the typical sort of size, or amount of dilution in in a venture round. And I think that's such an important consideration to make, when you're you're sort of deciding on the size of round that you want to raise, you need to both, you know, be giving up a portion of equity that you're happy with, but then also be receiving enough investment, to be able to prove what you need to be able to prove in venture timelines, which are extremely tight. And so it's been kind of positive, I guess, to see slightly more Angel involvement, more accelerator involvement, or incubator involvement in the sector. And it's something we, you know, we're monitoring quite closely and looking to continue to say that in the months ahead, I'm hearing a really interesting sort of thread between what you're both saying, again, I'm not sure I'm getting this exactly perfect. But you know, the idea that if you're starting within a single, relatively small European market versus the US or India, the amount of you know, funding, you need to prove out the concept within that market can be relatively low. And, you know, Beth, you mentioned earlier that a significant majority of the companies that the European tech alliance has been tracking are raising small amounts of money or bootstrapping, and then staying, as you said, within their market, so it feels like and then, but then you look at some of these giant companies that go students in the multiverses. They're already super International, NGOs, student and multiverse, both open us, you know, offices this year, although student I think is pulled back. And I think that there's this feeling of maybe, you know, the smaller rounds are to prove your concept within the smaller market, and then those that sort of can make it and start to grow and potentially start to go internationally, then they need a lot more, you know, cash on hand, because they're trying things that are newer, that are much more scaled and extended. Do I have that sort of right? It's a really interesting, interesting idea. Maybe from my perspective, yes. And I think another cultural thing I'll throw in there is that within Europe, there are predominantly middle sized companies, we have some really big leaders, but there is that traditional understanding of having a local company and a local family run thing, and there is this that tradition, and it also carries over then into the education market. And so I think it's it's full, its tracking with other industry as well. That's a really interesting point as well. One aspect of all of this that I think is in both of your reports, and you're starting to really look at is about the about gender equity in European ed tech. And you know, Beth, the European tech Alliance, runs the Ed Tech female founders Fellowship, which is this amazing program, bringing together communities of female ed tech founders. But you've also found at mean, you have also found in your reporting, that you're not yet seeing gender parity among startup teams and founders. So you know, what some of the stats from your report is that 73% of European ed tech CEOs are male, and and that there are more than three times as many sole male founders as sole female founders. But I also found it interesting. I think it was 40% or so of ad tech companies in Europe have a male and a female founder together, which is actually something we don't see that often in the US. Tell us a little bit about your findings around gender, some of the progress maybe that's happened, but some of the progress that's left to go in the future. Yeah, I think there's a difference as well between some of our numbers, obviously, because we can only have the numbers from the companies we've mapped and some of the numbers that I think Reese is going to be able to speak to as well. In general within Europe, we see females across all sectors getting between one to seven maximum percent funding, which is extremely low. So education is low within that as well but it is something that is within your app to the problem that I see with that within education, though, is that a huge percent of our users are female. So we've got in depending on which level of education at 68%, upwards of female users, including sort of all staff. And we also know that pedagogically speaking, there are differences in learning styles, up to certain ages between the genders. And whether we like it or not, there is some inherent bias that goes into the development of products, especially initially before they've had massive testing. And so we have the possibility of at least capping the learning opportunities for certain learning groups with the products that we're introducing, if we continue along a path that doesn't actually bring in those other perspectives. Also, other diverse perspectives. I mean, we haven't even started looking at other cultural breakdowns and things like that. But I think there's, there's a very real issue that we do need to address there in ensuring that we do have that representation. I think, to me, the thing that was shocking is that even some of the founded companies by women then also end up being run by the males. And we would love to go and look at it look more at that as well. And I think one of the things that we're trying to do with our fellowship is really provide these female founders with some of the network with the tools with some of the knowledge that they need to succeed at a different level, because there is just a difference in the way that they are perceived in funding, it's there's a difference in the way that they're perceived also, in the general discussions with governments. And so I think there's a lot of work we have to do there as well. And we've had some fantastic women come through our first two cohorts, we've just started our third cohort, which I'm extremely excited about, as well. And just some phenomenal ideas, phenomenal women who are hopefully building a network out that we can then use to multiply these effects throughout the entire industry. But it definitely is something we all need to be focusing on a little bit more. Yeah, it really, really interesting to hear that even some of the female founded companies end up having male CEOs I, yeah, it's a complex. It's a complex issue, but there's definitely a lot of work to be done. Reese, what have you been seeing from Brandeis perspective? You have a lot of data on this. How do you see the gender parity issue? Yeah, so we, we started looking at the portion of funding and deals in European it's like by and global, it's like, by founder, gender and gender teams last year. And we do see sort of margin improvements from last year. But obviously, given the difficult market conditions, it's difficult to see, you know, any or see any kind of causation in that. One thing I would say is that it's really positive that lots of mixed teams are able to raise significant funding rounds, the portion of funding secured by mixed teams jump from from 20% of overall funding, but just under 26%, this year, that's partially skewed by some of the larger deals being for companies that have mixed teams running them like multiverse and, and gilt I think one of the things that we're really focused on, I guess, is not getting necessarily totally hung up on the portions by funding received, but more looking at the portion of sort of the whole ecosystem, that is, you know, female, lead, mixing, lead, male team lead, etc. And I suppose that's one area where we're sort of thinking quite hard about what more we can do to, to level the playing field, I guess, and encouraged people from a range of backgrounds and demographics to be starting companies to be pitching investors, and then of course, to be securing investment. I think one of the things that one of the reasons that's sort of an interesting and quite difficult thing to promote, I think, is that when you look at the nature of friends and family rounds, you know, one of the preconditions of that is that your networks in the, in a friends and family group that's able to have that kind of disposable investment. Of course, you can kind of network your way into those things. But that's a, you know, that's a process that takes quite a long time. And if, and if you're not sort of ready, and, and part of that community already, you know, that's kind of where some of these issues are entrenched. And so that's why we're sort of taking steps to broaden, broaden our support and level the playing field where we can and I guess we'll come with a couple of the initiatives that I'd highlight that we've we've put together that have been relatively impactful, I think, in terms of volume of users and feedback we've received as our course, that introduces VC to people that aren't necessarily familiar with how VC works and also a course that we've, we've, we've put together on, on raising around. And the idea there is that you know, there can be perfect, you know, founders that don't know their founders yet who also don't know how VC works yet and also don't know then you know how to raise around and hopefully we're helping to bridge that gap. But of course there's a lot more work to be done but I guess you know, one of one of the things we are doing is tracking this states over time, and hopefully we'll continue to see positive trends in the right direction. It's great that both of your organizations are really focusing on closing this gap through through education, as you said, you know, courses around venture capital and bringing people into the system. And of course, this amazing ad tech female founders Fellowship, which just every time I see anything about it on LinkedIn just gives me hope for the future. It's an amazing set of set of founders. So we're coming on the end of our time, this has been an incredibly interesting discussion. I think Europe is just on the rise. I've, you know, I debate with with Ben, my co host, Ben Cordell every week, he thinks India is India's rising, and I always like I think it's Europe. So it's really interesting to hear where things are going, even if we're in a little bit of a lull now. All right, I'd like to ask each of you to make two or three predictions about what will happen next year in 2023. In the European tech ecosystem, Beth, let's start with you. For starters, from a policy perspective, I know that there's going to be a lot of work on quality assurance mechanisms and certification. So there's a lot going on at the moment at the EU level, and in just about every single country, there is some kind of framework matrix discussion going on about what Ed Tech's will have to go through to be officially approved, what kind of mechanisms are going to be in place what they need to have proven before they're able to even get market entry. So I think there's a lot of work that's going to happen around here. And there's a lot of funding going into this as well. It's going to be a big topic next year, and probably in the two years after that. Other than that, I see that standardization is also coming down in a big way. So that's across education, content, that's digital, it's across all of the vehicles, to get that content into schools or into sort of education institutions. And then the last thing that I think I'll say, is AI. I think, obviously, those who actually are working with AI versus those who claim they're working with AI, and then also looking at some of the ramifications around the EU regulations that are potentially being voted on for when last time in March, around sort of the usage of AI and then also the DATA Act, that we're going to be things that are very policy heavy at the moment. But the data access, seeing what happens, for example, when a Data Protection Officer decides, for example, like in Denmark or in parts of Germany, the things that are hosted in the United States are things that are in some AWS servers and things like that are no longer viable, and the whole thing gets turned off. What happens when we have backdoors? How do we make sure that all of the data is safe and things like that. So there are big topics that I see for next year that are going to have a big impact on our startups, and potentially also change the way that some of them are able to interact within their market. Really interesting. It definitely is policy heavy, it sounds like there's a lot of policy at the EU and country levels, just trying to figure out how to keep this ecosystem safe and effective. But also make sure it doesn't sort of, you know, break privacy laws or get sort of out of control, which makes it you know, it's very European approach. But you know, the pros and cons to it. worries about you, what are your predictions for next year? Yeah, so I think I'd probably agree with, with what Beth said, certainly on government's taking increasingly detailed looks, returns on investment and the impact of specific edtech initiatives, particularly if they're working into formal education settings. And of course, that will, that will come with some kind of accreditation, we expect and that's something as Beth highlighted, that we're we're sort of hearing about as well in various European markets and something we, of course, you know, hope this hope has done well. And hope doesn't, you know, doesn't sort of inhibit any any of the innovations that that we're starting to see. Because the last one wants to stifle any of those. One sort of area or sub sector of edtech, I guess, that we're particularly excited about is climate education. We think there's there's going to be a huge wave of companies focused on creating and supporting training of people for green jobs, things that are focused on on classrooms that are promoting awareness with the next generation. And also, I suppose, again, that's something that we can expect at the government level in terms of various training incentives potentially being provided that basically reduced the price of, of environmentally conscious careers and of course, sort of incentives in to pushing people towards those things. The second thing, I guess, that we're particularly interested in again, and again, is basically the increasing popularity of apprenticeships and other alternative models and seeing increasing challenges to the higher education sector, which is, you know, traditionally fairly rigid, some, some are taking steps to be slightly less rigid in terms of what they're providing and the level of service they're providing to each end. vitual students, but we're expecting to see some significant movement in that sector this year. And I guess one sort of general market conditions type prediction that we're expecting is far more m&a and market consolidation, particularly given the fact that we do expect lots of edtech companies to be under a bit of pressure this year, particularly if they are looking to raise investment and then finding it a little bit more difficult or challenging in these environments. And I think that's, that's not necessarily a bad thing, especially if, you know, the EU is looking at pulling together policies that presumably are going to be relevant and enforceable across a number of European markets. So there's, there's sort of three areas that we're we're we're taking a closer look at. Fantastic. So hearing, you know, more quality assurance and certification, more standardization, a artificial intelligence getting really popular, and they're also probably being, you know, some some regulations and thoughts about how to keep that controlled. Government looking at ROI, but not inhibiting innovations, Climate Education, very exciting and more apprenticeship and alternative models, as well as more mergers and acquisitions, which we are already seeing in the US. I'm gonna take liberty here and add one more for my one prediction that I would add to that, from Europe, for Europe is, is focused on data privacy and cybersecurity from sort of both sides, both from the policy side and also from the training side. I mean, you mentioned hack the box. And we saw that a couple of the, you know, two, I think two or three of the largest deals this year were for ed tech companies that focus on cybersecurity. I have a feeling that might continue, especially in Europe, because Europe has always been ahead of the game in terms of seeing the downsides of this free flowing data environment. And I wonder if that might that might make its way into the market. Fantastic predictions all around and I'm really excited to see them. Then come to play. Reese Spence, Beth having a it's been awesome to have you here. And we'll put the links to both of your recent reports and the Ed Tech map in the show notes for this episode. Really appreciate this sort of special. We put this together very quickly. And you were really great, this special episode about Europe and how it's going to continue to evolve and grow in the future. Thanks so much for being here. Thanks for having us. Thank you. Thanks for listening to this episode of Ed Tech insiders. If you liked the podcast, remember to rate it and share it with others in the EdTech community. For those who want even more Ed Tech Insider subscribe to the free ed tech insiders newsletter on substack.