AI funding keeps breaking records while edtech's boom goes bust

The money is still there. It is simply going to different companies. On 16 December, CNBC reported that Lovable, the Swedish vibe coding startup founded in 2023, had closed a funding round valuing it at $6.6 billion. Two anonymous sources with knowledge of the deal spoke to the network.

That is more than triple the $1.8 billion valuation Lovable reached after its July round, which brought in $200 million. Accel, Khosla Ventures and other backers participated, though none of the companies had responded to CNBC's request for comment when the article was published.

Revenue growth that justifies the hype

The valuation is not running ahead of the numbers. Lovable reported $200 million in annual recurring revenue in November, less than a year after hitting $1 million in ARR for the first time. Its platform lets users build apps and websites from text prompts, drawing on models from OpenAI and Anthropic. According to the company, 100,000 projects were being built on it every day when it announced those ARR figures. It is based in Stockholm and is opening offices in Boston and San Francisco.

Vibe coding is drawing serious capital across the board. CNBC notes that Anysphere, maker of Cursor, raised $2.3 billion at a $29.3 billion valuation in November. Replit reached a $3 billion price tag in September after picking up $250 million, and Vercel closed a $300 million round at a $9.3 billion valuation.

The other side of the ledger

Compare that with K-12 education technology. Global edtech investment peaked at $16.7 billion in 2021. By 2025, venture capital had fallen to less than $3 billion, according to Tracxn, a Bengaluru platform that tracks startup funding. The founder pool shrank too: 645 companies launched in 2025, down from almost 10,500 in 2020.

"Venture capital flows reflected a shift from volume to intention," HolonIQ wrote in a 6 February post reflecting on 2025. "Investors concentrated capital in AI-enabled products, workforce-aligned platforms, and K-12 operations solutions that address cost or operational pressures, staffing challenges, and learning support at scale."

The failures are instructive. Byju's, once the world's most valuable education startup at $22 billion, crumbled under a financial crisis and aggressive sales tactics. Nigeria's Edukoya shut down in 2025. In China, the government's double reduction policy in July 2021 ended the K-12 online sector overnight, pushing Yuanfudao, once valued at $15.5 billion, into AI hardware.

Loot Drop, a database of more than 1,700 startup closures, points to high customer acquisition costs, long institutional sales cycles and weak retention as structural problems. Its analysis concludes that vertical tools integrating into existing workflows will beat platforms trying to replace institutions.

What the split says

One sector sells to developers and enterprises with a credit card and a deadline. The other sells to school districts and parents, often through procurement cycles measured in years. Investors have noticed. The gap between Lovable's $6.6 billion and edtech's sub-$3 billion year is not a story about AI enthusiasm versus AI scepticism. It is a story about who pays, how fast, and whether the buyer can walk away.