The year is half over and we can already safely say that it will be another record year of investment in the education-technology sector -- online tutorials and textbooks, cloud-based classrooms, mathematics apps and so forth -- from venture capital firms. Ed-tech entrepreneurs and investors had plenty of reasons to cheer by the end of 2014, considering the level of interest and the amount of money invested in the sector. Investment analysis firm CB Insights tallied up the amount of money that venture capital firms poured into ed-tech in 2014, settling on a then-record figure of US$1.6-billion, up 71 per cent from US$944-million in 2013. This year will be even bigger. CB Insights figures that the first half of 2015 has seen venture capital firms invest a little over US$1.4-billion in ed-tech.

Colin Messenger, a senior market analyst at Futuresource Consulting, sums up the reason: “Despite a lull in some technology markets, education technology continues to perform, even with pressure being applied to education budgets across the world.” He said this when his company released a study last year that estimates the total market for the ed-tech sector should reach US$19-billion-plus by 2018.

There are many VC funds scouring the massive ed-tech market for opportunities these days, but the busier and more exciting ones include Accel Partners, Third Point Ventures and Shunwei Capital Partners.

Accel Partners, founded in 1983, has assets under management totaling US$8.8-billion. One of its former funds, the Accel IX fund, was managed by Jim Breyer, who decided to invest $12.2-million of the fund’s money in Facebook in 2005, becoming one of the social networking company’s earliest investors and largest shareholders, and eventually earning the fund billions while also turning Mr. Breyer into a billionaire.

Over the years, Accel has invested in many ed-tech companies, including Lynda.com, an online learning company that offers thousands of video courses in various subjects including software design and business administration. Accel led a US$103-million round of financing for Lynda.com in 2013, and then in 2015 Accel participated in a US$186-million round of financing led by TPG Capital, a Texas private equity firm. Lynda.com’s early investors were then rewarded: LinkedIn swooped in and acquired Lynda.com for US$1.5-billion.

Third Point Ventures, along with Wellington Management Company LLP and Institutional Venture Partners, subscribed to a US$200-million Series D financing of Social Finance Inc. in the first quarter of 2015. Social Finance, commonly referred to as SoFi, is a lender that provides student loan refinancing, as well as mortgage refinancing and personal loans. It was launched in 2011, placing it among the first lenders to offer refinancing of both federal and private student loans. The company claims that since incorporation it has provided over US$3-billion in loans. So far this year, it has attracted more investment than any other ed-tech company.

There are also Chinese ed-tech firms that are generating plenty of buzz and attracting investment from the venture capital community. 17zuoye, a Beijing company that has built an online learning platform for K-12 students as well as teachers and parents, celebrated Chinese New Year in 2015 by closing a US$100-million financing, which placed a value on the company of US$600-million. There are approximately 200 million K-12 students in China, creating the largest market in the world. 17zuoye, which means “homework together” in English, enables teachers to create, distribute and grade assignments, and also to share the performance of students with their parents. It claims to have over seven million students on its platform. Chinese billionaire Lei Jun, the founder of cellphone maker Xiaomi, owns an investment firm, Shunwei Capital Partners, which participated in 17zuoye’s recent round of financing.

17zuoye is just one of many Chinese ed-tech firms providing services to the world’s largest education market. Changingedu, a Shanghai online education service app-maker with a platform for connecting students and parents with tutors for after-school studies, received US$100-million earlier this year from a group of investors that included Sequoia Capital China.

In addition to the piles and piles of venture capital pouring into the ed-tech industry, there also established ed-tech firms that are now generating enough buzz to attract large takeover bids. In some cases, the firms are putting themselves on the market; we will get to that in a moment. The billion-dollar valuation of ed-tech companies is relatively new. One of the first noteworthy takeovers closed just last year, when private equity firm Hellman & Friedman LLC acquired Renaissance Learning Inc., a K-12 assessment and learning analytical company, for US$1.1-billion. The majority owner of Renaissance was a European private equity firm, Permira, which walked away from the deal with an impressive gain. Just two and half years before the 2014 sale was reported, Permira had acquired Renaissance for US$455-million. A smaller shareholder of Renaissance was Google Capital, which had invested US$40-million based on a US$1-billion valuation. It was Google Capital’s first time investing in an education company.

Days after the Renaissance sale, another ed-tech company, SkillSoft Ltd., agreed to be taken over in a US$2.3-billion deal. Charterhouse Capital Partners, another European private equity firm, acquired Skillsoft from another group of private equity firms that included Bain Capital and Berkshire Partners, which had acquired SkillSoft in 2010 for US$1.1-billion.

We already discussed the US$1.5-billion takeover of Lynda.com, which happened earlier this year, and there appears to be more blockbuster deals in the works. Blackboard Inc., an ed-tech company in Washington, D.C., that develops learning platforms used by over 19,000 schools, corporations and governments in 100 countries -- 75 per cent of U.S. colleges and universities and more than half of the K-12 districts are using one or more of Blackboard’s platforms -- put itself on the block in late July. It has asked its bankers, Deutsche Bank AG and Bank of America Corp., to run an auction for the company with hopes of fetching a pretty penny. Blackboard posted earnings before interest, taxes, depreciation and amortization (EBITDA) of around US$200-million in its fiscal 2014. Based on the hot ed-tech market, the company hopes buyers will value the company between 14 times and 17 times EBITDA, which works out to between US$2.8-billion and US$3.4-billion.

Blackboard’s majority shareholder, Providence Equity Partners LLC (yet another private equity firm), took Blackboard private in 2011 for US$1.64-billion plus a net debt of US$130-million.

Two strong indicators to determine the interest and health of a sector are investments from venture capitalists and private equity firms, and investments from governments. The ed-tech sector has benefitted from increased funding from the private sector and governments, and based on the results of the first half of 2015, the upward trend is continuing.