EdTech Expansion in Europe: Lessons & Insights

The Current Landscape of Edtech Investment and Growth

Today’s investment climate often demands demonstrable upward trends from companies seeking funding. Specifically, edtech businesses are now expected to showcase revenue growth exceeding 3x year-over-year to attract attention from venture capital funds.

While some companies, such as GoStudent, Ornikar, and YouSchool, are successfully achieving these growth rates, others are encountering challenges, particularly those less favorably positioned by recent market conditions.

A Survey of Edtech Expansion Strategies

Brighteye has observed a common trend among emerging companies: a focus on international expansion as a key driver of growth. To gain deeper insights into this strategy, a survey was conducted among edtech firms regarding their expansion plans, priorities, and potential obstacles.

A total of 57 responses were collected, supplemented by interviews with industry leaders and investors. The survey revealed that 49 of the participating companies are based in Europe, with six located in the U.S., and three in Asia.

The respondent base was evenly distributed across companies targeting different customer segments – institutions, businesses, and individual consumers – and represented a diverse range of home markets. The U.K. and France contributed the largest number of responses, with 13 and nine respectively, followed by the U.S. (seven), Norway (five), and Spain, Finland, and Switzerland (four each).

Approximately 40% of the surveyed firms had not yet expanded beyond their domestic market, while the remaining had already ventured internationally.

The Nuances of International Expansion in Edtech

International expansion represents a complex yet crucial phase in the development of an edtech company. Unlike fintech firms, it’s often assumed that edtech businesses require expansion into multiple major markets to achieve the scale necessary to attract venture capital.

However, this assumption is becoming less rigid, as the widespread adoption of digital education and remote work now allows for the potential to build a billion-dollar edtech company within a single, substantial European market.

Nevertheless, most ambitious edtech founders recognize the need for overseas expansion to achieve investor-attractive growth rates. This belief is supported by the documented complexities of selling to schools and universities, leading some to view international expansion as a means of diversifying risk – for example, mitigating potential declines in one market by capitalizing on opportunities in another.

Defining International Expansion

We sought to understand how organizations define international expansion through our survey analysis. Responses varied considerably, reflecting differences in target customer groups and sales approaches.

For companies offering web-based products with broad accessibility, reaching customers in numerous markets (50+) is relatively straightforward. These firms can then focus on building supporting teams and infrastructure.

However, when the product requires direct sales to businesses, the expansion process is more iterative and requires a more hands-on approach. In these cases, expansion is often defined by achieving a specific number of sales or establishing local partnerships – such as securing contracts with more than five universities.

The definition of “entering a market” significantly influences a company’s team-building strategy. Companies must determine both where and how to expand. For example, is an execution specialist or a head of sales needed? The answer depends on the extent to which the product requires adaptation for the new market.

If the product is readily transferable, a sales lead may be more appropriate than a general manager. This approach is particularly beneficial when the immediate priority is scaling revenue and building brand awareness.

However, the feasibility of achieving this with a small sales team depends on the capacity of existing marketing, customer success, and other teams to effectively service customers in the home market.

Budget, Regional Approaches, and Timing

The approach to team setup and market entry is heavily influenced by available budget, which is often tied to annual revenue in the home market. This explains the prevalence of regional expansion strategies, particularly in large markets.

A new region can serve as a testing ground for market-fit hypotheses and a launchpad for further expansion. A phased, “quiet entry” without a public launch is favored by 71% of respondents.

Expansion is a key consideration for many early-stage companies. Approximately 82% of respondents initiate expansion with annual revenues under $1 million, and 44% do so when revenues are between $50,000 and $200,000.

The relatively small size of some European markets – comparable to major cities – underscores the necessity of expansion for these firms. This also explains why companies with lower revenues often plan to expand early.

The Importance of a Strategic Framework

A meticulously planned expansion roadmap isn’t always essential, but strong traction in the home market is. Amit Patel, Managing Director at Owl Ventures, emphasizes the need for robust, predictable local performance before expanding, recognizing the added strain expansion places on companies.

Expanding prematurely without a clear rationale can hinder the recruitment of suitable early hires and lead to rushed user testing and product adjustments. This can also compromise the positive aspects of the company’s home market culture.

These are four of the most significant challenges facing expanding companies.

To mitigate these risks, it’s crucial to establish and follow a coherent framework for evaluating expansion options. This requires a thorough understanding of how and why market fit was achieved in the home market.

The initial steps involve defining practical constraints (such as time zones and language requirements), developing a defensible market-fit hypothesis, comparing potential markets based on their alignment with the company’s approach, and conducting user testing.

Survey data indicates that companies prioritize markets that balance size, product-market fit, and competitive intensity.

Neighboring Markets and Gateway Countries

Early-stage businesses often favor expanding into neighboring markets due to budget constraints and a desire for centralized operations. The survey supports this, with 50% of European edtech startups expanding to another European country.

This preference stems from similarities in customer profiles, purchasing power, attitudes towards education, regulatory environments, and logistical factors like time zones.

The most popular initial expansion destinations in Europe are the U.K., Spain, and Sweden, which serve as “gateway” markets, opening doors to further expansion opportunities. The U.K. provides access to the U.S. and Northern Europe, Spain to Southern Europe and Latin America, and Sweden to the broader Nordic region.

Expanding later in the company’s journey, often after securing additional funding, can make various aspects of expansion more manageable. Larger budgets enable simultaneous entry into multiple markets. A common strategy involves expanding to one nearby, similar market (a safe bet) and one larger, more complex market (a calculated risk).

International expansion remains a central focus for ambitious edtech firms. However, companies must ensure that their decisions and processes are strategic, coherent, and well-structured. While opportunities may appear promising elsewhere, it’s essential to avoid overlooking potential challenges.

You can download the survey analysis here, including the Annex splitting the data by whether companies had internationalized or not and by target customer groups (companies, institutions and consumers).