Edtech company Chegg's stock plummeted by 40% in one day. Others in the space may need to embrace chatbots or face major valuation declines.
Chatbot technology is threatening highly valued edtech companies.
Chegg, a prominent company in the space, recently saw its stock value drop by 40% in a single day. It attributed the decline to the rise of chatbots like ChatGPT. Meanwhile, Udemy and Coursera saw stocks fall by about 5%.
Edtech companies need to adapt quickly to avoid a similar fate. To that end, some have begun to integrate chatbots into their product offerings. For example, Khan Academy released its own chatbot, Khanmigo, in May 2023.
Using CB Insights data, we analyze the current state of the edtech market across:
- Total funding
- Top funded companies
- Most valuable companies
- Exit activity
- Revenue multiples
Total funding
The edtech space has seen significant investment in recent years, with dollars in the space peaking at $13B in 2020. However, since then, funding has slowed dramatically. Edtech companies raised only $5.3B in 2022, a 56% drop year-over-year.
Funding amounts to a mere $114M so far in 2023, indicating a potentially challenging year for edtech companies seeking investment.
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