European, North American edtech startups see funding triple in 2021

Even as recently as 2019, the edtech ecosystem could have been likened to a shallow well. Funding and activity were centered in a couple of markets and there were just a few growing companies gaining interest.

But that’s no longer the case. Gone are the days when pitches to VCs would have to overcome skepticism on market size, and consumer readiness to adopt tech-enabled learning solutions.

2020 will be remembered in education circles for the tumult it caused at schools, universities and workplaces. But it will also be remembered as the year when the sector woke up to the solutions being developed by edtech companies to help people learn faster, more affordably, efficiently and effectively.

Not surprisingly, 2021 saw a boom in edtech investment across a spectra of investors. Indeed, edtech investment in 2020 and 2021 equaled the amount raised during the entire 2014-2019 period.

To carry on the initial metaphor, the edtech ecosystem is now a deep, thriving lake. Exciting companies are spawning across geographies and verticals, and even generalist investors are building conviction that the sector is capable of producing the same kind of outsized returns generated in fintech, healthtech and other sectors.

Generalist investors are taking interest in the sector due to both financial and positive impact returns, providing more competition to specialist funds.

Our 2021 funding report, released today, highlights key global growth and activity metrics in edtech with a focus on Europe. We used data primarily from Dealroom, with which we’ve developed an edtech-focused data platform.

A year of records

Firstly, European edtech VC investments tripled to $2.5 billion in 2021 from $790 million in 2020, compared to global funding growth of 34% to $20.1 billion in 2021 from $15 billion in 2020. The continent’s ecosystem is becoming more robust as well — the number of edtech deals in Europe accounted for 31% of all deals in the sector, up from 21% in 2019.

Edtech funding in Europe triped to reach $2.5 billion by late 2021.

Image Credits: Brighteye Ventures

This growth wasn’t restricted to the usual geographies: Six European markets raised more than $100 million in 2021, compared to only one in 2020. Most of these markets are in Northern Europe, so we hope, and expect, to see some major players breaking out in Southern Europe in 2022 (particularly in Spain, Portugal and Italy).

As EU’s VAT reform ramps up, marketplaces must focus on compliance to avoid tax risk

Electronic interfaces, platforms and marketplaces form a key layer in the digital infrastructure behind e-commerce, serving as gatekeepers between consumers and producers of digital content or digitally sold products.

These gatekeepers offer third-party companies access to a global market by providing their own infrastructure. It is therefore not surprising that their growth is often driven by a strong influx of third-party companies, which can expand internationally with their products and content without having to build their own technological infrastructure.

An increasing number of online retailers use such platforms for their e-commerce businesses, which has made these platforms an integral part of compliance procedures.

The EU VAT reform

On July 1, 2021 there was a big change in the European Union’s Value Added Tax (VAT) law, impacting online retailers, marketplaces and their e-commerce businesses across the EU. Since 1993, the VAT law in the European Union concerning cross-border e-commerce was in large part unchanged and was originally introduced for mail order businesses that used catalogues.

But EU member states realized a few years ago that EU VAT law was no longer on track with the developments taking place in the e-commerce ecosystem.

In the worst case, non-compliance with these regulations will mean that VAT will not have been paid for thousands of transactions.

This has led to many problems for marketplaces like Amazon, as they have a significant number of third-party merchants based outside the EU. For example, third-party merchants account for about 50%-60% of Amazon Germany’s revenue, and more than half of these merchants based in China.

The VAT problems that arise from this led to enormous tax losses in the past, because third-party merchants, especially those from China, did not declare the VAT that was actually due in the EU, giving them a huge market advantage over the EU merchants. The EU has recognized this and initiated the VAT reform, which primarily places responsibility on the marketplaces.

The EU VAT e-commerce package, under specific circumstances, can make online sellers and marketplaces liable to pay VAT and leads to certain challenges and risks.

Since July, it has been key for marketplaces to determine the VAT due for every transaction and establish related processes such as VAT rate determination, invoicing, filing and reporting. This is applicable to marketplaces when they are liable to pay tax on transactions by sellers not based in the EU or for distance sales from non-EU countries.

Marketplaces have to be aware of additional indirect tax regulations to avoid massive tax and financial risks. Not adapting to the new regulations can result in paying VAT and interest retrospectively for the sales made on the platform. In Germany, this would mean paying 19% VAT on the net sales, with fines and interest added on top. In countries like Italy, the surcharges can reach up to 240%.

Broad range of VAT rates across the EU

It is not only necessary for online merchants to determine the VAT rate for their products, but marketplace operators, being liable for VAT under certain circumstances, also have to ensure the application of the correct VAT rate in every EU member state.

Europe’s quick-commerce startups are overhyped: Lessons from China

More than 10 companies currently compete across Europe with an instant grocery delivery business model. Half of them were established in 2020, the year of the pandemic. These companies have raised more than $2 billion to date.

Existing and well-funded online food-delivery service players like Delivery Hero are also joining the race by launching dedicated grocery offerings. However, if lessons from the world’s largest online grocery market, China ($400 billion), matter, then it’s clear that instant delivery is not the magic bullet to crack the dominance of Europe’s incumbent supermarket chains in the overall $2 trillion-plus flat market.

Instead, China’s quick-commerce equivalents (like Dingdong Maicai, Miss Fresh and Meituan Maicai) compete alongside a wealth of other online grocery models (such as Pinduoduo, JD’s Super and Alibaba’s Taoxianda), which have helped bring total market penetration to 20% and beyond.

Quick commerce suffers from narrower profit margins compared to competing models and is addressing lower consumer demand in China than anyone in the West is expecting it to achieve in Europe and the U.S. If the performance of online grocery platforms in China (a market five to seven years ahead of Europe in terms of online retail) is anything to go by, a range of B2C business models would be more likely to displace the traditional grocery retailers.

Third-time luck for quick commerce?

The idea of ordering groceries online and having them delivered to consumers in less than an hour is nothing new. Back in the heyday of the dot-com bubble, a company attempted to do just that: Kozmo.com. Founded in 1998, it raised more than $250 million (around $400 million in today’s dollars) from investors, promising to deliver food, among other items, to consumers within an hour, while charging no delivery fees.

In 1999, it had revenues of $3.5 million and a loss of $1.8 million. However, in 2001, the business was shut down by its board after the company could not make the business model work at scale.

Some 15 years later, another company had a go. Gopuff was established in Philadelphia in 2013 and originally targeted students. What started out as a hookah delivery service soon expanded into a much broader convenience store offering and delivered to customers in approximately 30 minutes.

Gopuff was most recently valued at $15 billion after raising a total of $3.4 billion — 75% of which occurred in the past 12 months. Last year, Gopuff grew revenues from around $100 million to $340 million.

Kozmo.com went out of business after just three years. Meanwhile, Gopuff was turned down by several VCs in its early days, and it wasn’t until the pandemic that it saw a rapid acceleration in fundraising. Little did teams at either company know that they would later become the inspiration for a whole generation of founders in Europe.

Europe’s $2B instant-grocery gamble

Has anything fundamentally changed in the 20 years since Kozmo.com? Indeed, we’ve seen little technological progress that would hugely affect the operations of an instant commerce business. However, there have been much larger shifts in consumer habits.

Firstly, the number of global internet users has skyrocketed (from below 500 million to beyond 4 billion), and mobile internet has taken over. Secondly, demand for online grocery delivery has grown significantly due to the COVID-19 pandemic, as consumers have preferred to make retail purchases from home for safety reasons. Thirdly, consumers are now accustomed to paying fees for delivery services, typically around $2 per order, which Kozmo notoriously did not do.

While many online grocery business models exist, the instant grocery, quick-commerce approach has been the favorite of European entrepreneurs and VCs over the past 18 months. The model itself, also referred to as q-commerce, is not that hard to understand.

Companies maintain a small product offering of around 1,000–2,000 SKUs that consumers would otherwise find in convenience or drug stores. These products are purchased directly from brands or through distributors and are stored in self-operated microwarehouses close to customers’ locations.

Marketing tactics are aggressive, often employing vouchers for first-time users of up to $12 (50% of an average shopping basket), and many startups offer their products at supermarket price or even at a discount of 10%–15%. Delivery usually happens by bicycle, e-bike or scooter, within 10-30 minutes of an order being placed, for a fee of around $2 with no minimum order value.

Companies like Getir from Istanbul (total funding: $1 billion, last valuation: $7.5 billion) and Gorillas from Berlin (total funding: $335 million, last valuation: $1 billion) are leading the way. When Gorillas announced its $290 million Series B in March 2021, it became the fastest European startup to achieve unicorn status (nine months after launch). The company is already rumored to be seeking Series C financing at a $2.5 billion valuation.

There are more than 10 companies across Europe with more or less the same business model. Those include the 2020-established Flink (Germany-based, $300 million raised), Zapp (U.K.-based, $100 million raised), Dija (U.K.-based, $20 million raised and just acquired by Gopuff), Jiffy (U.K.-based, $7 million raised) and Cajoo (France-based, $6 million raised).

There is also JOKR, which was started by the founder of Foodpanda. JOKR was only established in Q1 2021, but right after incorporation raised one of the largest ever initial seed rounds (rumored to be $100 million) and subsequently a $170 million Series A in July to bring the model to Europe, Latin America and the U.S.

Likewise, companies coming from food delivery have pushed further into this space and received additional funding in recent months, notably Delivery Hero through Dmart and Glovo through SuperGlovo, following role models in the U.S., such as DoorDash.

Does instant grocery stand a chance of becoming profitable?

As these companies approach later-stage financing sometime in the future, questions will be asked about the path to profitability in an industry of notoriously thin margins. Indeed, this is an uncomfortable truth that hasn’t changed since the early days of Kozmo.com.

The available figures show that old patterns are repeating. Gopuff recently reported an EBITDA of negative $150 million on $340 million in revenue (EBITDA margin: -45%). Furthermore, an analysis by the German business monthly Manager Magazine concluded that Gorillas was operating at negative unit economics of -6%. Additional costs, such as overhead and technology, might push this number up significantly further.

The 2021 edtech avalanche has just begun

Last week was a good one for edtech in Europe.

GoStudent became Europe’s first edtech unicorn (IPO’d companies aside), raising its third round in 12 months and the biggest ever in the sector in Europe. Brighteye Ventures’ analysis showed that VC investments in European edtech had breached $1 billion in a calendar year for the first time, even without GoStudent’s mega-round, with six months left to go.

Edtech deal flow in 2021 looks set to match or even outpace 2020 levels, per the report: At $9.4 million, average deal size is triple 2020 levels; seven companies have raised $50 million in five different markets; and the U.K. has more than three times as many deals as the next individual market.

Deal size progression in edtech over the years

Deal-size progression in edtech over the years. Image Credits: Brighteye Ventures

It’s interesting that we are not seeing enormous increases in deal count. The $1.05-billion mark in the report is spread across 111 transactions — there were 237 in 2020, so we could expect a similar total this year. More funding and stable deal count of course means that we are seeing significant increases in deal size.

It seems generalist investors are recognizing that edtech investments can reap outsized returns, similar to sectors like deep tech, health tech and fintech.

We can draw a few conclusions from this. We can construe that companies created last year and in previous years matured significantly during the pandemic due to increased demand. Moreover, this rapid natural selection process provided insights on verticals and possible winners.

Lastly, it seems generalist investors are recognizing that edtech investments can reap outsized returns, similar to sectors like deep tech, health tech and fintech.

This is contributing to larger early rounds than we have seen in previous years — investors can’t pick the winner, but they can slant the playing field instead. We therefore expect to see a surge in the number of pre-seed, seed and Series A rounds in the second half of 2021, as companies founded during the pandemic begin to raise meaningful funding.

Another reason that edtech is being taken seriously by generalist investors is that the true size of the market (and the extent of digitization to come) is becoming more conceivable.

Spending on edtech is undergoing a similar growth to that of media spending in 2010

Edtech spending is growing like media spending did in the 2010s. Image Credits: Brighteye Ventures

Rimac Automobili founder Mate Rimac shares lessons from bootstrapping an EV company

Mate Rimac’s founder story has the makings of automotive folklore. He started Rimac Automobili in his garage in 2009 as a literal one-person operation that has grown to a company with more than 1,000 employees, supply contracts with automakers like Porsche and a new electric hypercar moving into production.

What might not be known is how close the company came to failing. “It has been such a wild ride,” Mate Rimac said during an interview at at the virtual TC Sessions: Mobility 2021 event. “The first seven years, we were like out of money and technically bankrupt all the time.”

The founder and CEO of Croatian electric hypercar and components developer Rimac Automobili joined TechCrunch on our virtual stage to talk about the company’s new Nevera vehicle, his interest in electric robotaxis and the prospect of an acquisition of Bugatti. Throughout the interview, he gave a candid account of some of the company’s lowest points, how he and the company survived and what other founders can learn from his experience.

“It was quite a ride.”

Today, Rimac Automobili is a household name in Croatia with plans to grow even larger. Rimac is currently building a headquarters and technology campus on a 49-acre site that is slated to be completed in 2023. It was a far more solitary experience the first few years of Rimac Automobili’s existence. Even when it gained recognition, the company came close to failing numerous times, Rimac said in the interview.

It has been such a wild ride. And like the first seven years, we were like out of money and technically bankrupt all the time.

We had situations where I can’t even start to explain what we survived. I set out this company 12 years ago, I was alone for two years. The first employee joined me in 2011. So it was really built from a garage.

8 founders, leaders highlight fintech and deep tech as Bristol’s top sectors

The U.K. is gaining in popularity as a great place to start a tech firm. The country is quickly catching up to China on the tech investment front, with VC investments reaching a record of $15 billion in 2020, according to TechNation. A global health crisis notwithstanding, London remained a favorite for investors. U.K. cities made up a fifth of the top 20 European cities, with names such as Oxford, Dublin, Edinburgh and Cambridge rising to the fore in 2020.

Bristol proved especially popular among tech investors last year — local businesses raked in an impressive $414 million in 2020, making it the third-largest U.K. city for tech investment. The city also has the most fintech startups per head in the U.K. outside London, according to Whitecap’s 2019-2020 Ecosystem Report.

Efforts by the city’s private and public sectors to modernize the city have helped it rank among the top smart cities in the U.K., attracting a bevy of tech entrepreneurs. Its proximity to London has meant that it is a good alternative for founders looking for a more affordable stay while letting them tap the capital’s financial resources. The University of Bristol also has the largest robotics department in Europe.


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Bristol is also home to an important startup accelerator, SETsquared. A collaborative effort by the five universities of Bath, Bristol, Exeter, Southampton and Surrey, the accelerator has supported over 4,000 entrepreneurs and helped their startups raise a total of £1.8 billion. Other startup support players include the new Science Creates VC fund, set up by entrepreneur Harry Destecroix, and TechSPARK Engine Shed.

Key emerging startups from Bristol include Graphcore, Open Bionics, Ultraleap, Immersive Labs and Five AI.

To get a better idea of the state of the tech ecosystem and the investor outlook for this city, we surveyed founders, leaders and executives involved in nurturing Bristol’s startup ecosystem.

The survey revealed that the city has a robust renewable, zero-carbon and fintech startup landscape. Robotics, VR, bio, quantum, digital and deep tech are also areas showing promise. As for the investing scene, although Bristol has a healthy angel network, the city lacks institutional VC, but with London only a drive or train ride away, this has not proved a significant problem.

We surveyed:


Coralie Hassanaly, innovation consultant, DRIAD

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol is strong in renewable and zero-carbon innovation, fintech and robotics. It’s weak in industry 4.0.

Which are the most interesting startups in Bristol?
Graphcore, LettUs Grow, Open Bionics, Ultraleap and YellowDog.

What are the tech investors like in Bristol? What’s their focus?
A lot of focus on fintech, I think.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Bristol is a great middle ground between a large dynamic city (plus it’s not far from London) and access to nice countryside area. With remote working we can expect it will attract new residents in the next few years.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Aimee Skinner, Abigail Frear and Stuart Harrison.

Where do you think the city’s tech scene will be in five years?
Second major city in U.K. innovation.

Pete Read, CEO and founder, Persona Education

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol is strong in media/animation, edtech, social impact, health and science. I’m most excited by edtech and the possibility to reach and positively impact millions of students via online learning. It’s weaker in hardware and fintech.

Which are the most interesting startups in Bristol?
Kaedim, Persona Education and One Big Circle.

What are the tech investors like in Bristol? What’s their focus?
There are several very active tech investment networks coming from several angles, e.g., university-led, groups of private angels and tech incubators. The great thing is they all collaborate and share resources, ideas and expertise in initiatives such as The Engine Shed and Silicon Gorge.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
More people are moving in, as Bristol has a great urban lifestyle with easy access to the countryside and Southwest/Wales holiday spots, and an international airport 20 minutes from the center.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Jerry Barnes at Bristol PE Club; Abby Frear at TechSPARK; Briony Phillips at Rocketmakers; Jack Jordan-Connelly at SETsquared.

Where do you think the city’s tech scene will be in five years?
It’s developing rapidly with lots of support, so it will be bigger, attracting more investment and definitely more on the international scene five years from now.

Kiran Krishnamurthy, CEO, AI Labs

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Our tech ecosystem is strong in the aerospace and defense sector. We are excited by the scope and scale of digital transformation opportunities with AI available in this sector. The main weakness in this sector is the slow pace of transformation, especially now due to the pandemic.

Which are the most interesting startups in Bristol?
Graphcore and YellowDog.

What are the tech investors like in Bristol? What’s their focus?
Compared to the U.K. tech sector average, Bristol has a very low proportion of established companies (4% versus 8%), a higher proportion of seed stage companies (42% versus 37%), and a higher death rate (21% versus 17%). It’s a particularly young ecosystem.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
It is possible that people moving out of London will come into Bristol due to the transport links, strong ecosystem and beautiful nature of the city.

Where do you think the city’s tech scene will be in five years?
I wouldn’t be surprised if Bristol turns out to be San Francisco of Europe!

Simon Hall, director, Airway Medical

Which sectors is Bristol’s tech ecosystem strong in? What does it lack?
Bristol is strong in the medtech, veterinary, industrial sectors.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Others have moved in.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
SETsquared.

Where do you think the city’s tech scene will be in five years?
We will see massive growth in five years.

Ben Miles, CEO, Spin Up Science

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Our sector is weak in entrepreneurial ambition among researchers, and so suffers from low rates of deep tech spinout activity from leading universities. We are most excited by the step change in activity we have seen in the past two years and culture shift towards innovation.

Which are the most interesting startups in Bristol?
Rosa Biotech, Albotherm and CytoSeek.

What are the tech investors like in Bristol? What’s their focus?
Medium strength in shallow tech; currently weak in deep tech.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
People are moving in.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Spin Up Science, Science Creates and Science Angel Syndicate.

Where do you think the city’s tech scene will be in five years?
Very strong in deep tech with an invested local community of entrepreneurs, incubators and investors.

Rupert Baines, ex-CEO, UltraSoC

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol is strong in wireless (5G, 60 GHz, etc.), semiconductors (especially processors, AI/ML and parallel architectures), robotics and other hard tech/deep tech.

Which are the most interesting startups in Bristol?
Graphcore, Ultraleap, Blu Wireless and Five AI.

What are the tech investors like in Bristol? What’s their focus?
It’s limited. There are some angels, but few locally focused funds.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Much the same: People choose to live in Bristol/Bath for quality of life. Much of the work is already external — commuting to London.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Nigel Toon, Simon Knowles, Stan Boland, David May and Nick Sturge.

Where do you think the city’s tech scene will be in five years?
Much stronger, with more processor and hardware activity.

Mathieu Johnsson, CEO and co-founder, Marble

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol has a strong robotics, aerospace and renewables scene. I’m most excited to see how the legacy in aerospace in Bristol will translate to future industry-defining companies. The ecosystem is weak on the investor side, though London VCs are less than a two-hour train journey away.

Which are the most interesting startups in Bristol?
Graphcore, Ultraleap and Open Bionics.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
I believe Bristol will become more attractive.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Tom Carter at Ultraleap, and Joel Gibbard at Open Bionics.

Where do you think the city’s tech scene will be in five years?
Getting closer to London and Cambridge.

Chris Erven, CEO, KETS Quantum Security

Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol has a strong biotech, quantum, digital, science-based/deep tech ecosystem. I’m excited by this eclectic city with exciting people that think differently.

Which are the most interesting startups in Bristol?
Any QTEC, SETsquared, or UnitDX members and alumni.

What are the tech investors like in Bristol? What’s their focus?
Very early/nascent, mostly angels.

With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Probably move in! Beautiful green spaces around, lots of interesting, independent shops. And (just about) commutable from London.

Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
The incubators — QTEC, QTIC, SETsquared and UnitDX; Bristol Private Equity Club; Harry Destecroix.

Where do you think the city’s tech scene will be in five years?
Buzzing. More great startups and VCs moving in.