It's a good time to work in edtech. Last year, edtech companies raised $1.45 billion, marking one of the sector's highest levels of single-year investment within the past decade.

"This trend toward funding higher education services companies is in full swing right now," said Trace Urdan, managing director at Tyton Partners, an investment banking and consulting firm. "This is a really robust area of the market."

Part of the reason for that may be an increased willingness from colleges to find third-party partners to help with some of their most hard-to-solve issues. Institutions have long turned to private partners to fund real estate and other projects, Urdan added, but they are increasingly looking for outside help to boost student outcomes amid enrollment declines and other headwinds.

"If (colleges) were going to go out and tackle that problem (themselves), (they) would have to invest in additional staff and resources, and it would be complex," Urdan said.

To better understand what's driving these trends, we asked investors and analysts to break down what several recent deals mean for higher ed.

Upswing

Upswing, which launched in 2012, provides interactive chatbots and online student services to help colleges improve their retention rates of adult, online and first-year students. So far, more than 100 colleges — including about 10% of historically black colleges and universities — have partnered with Upswing.

Those partnerships have caught the eye of investors. Just last month, the company netted $2 million in funding from the Lumina Foundation, Strada Education Network, Rethink Education and Impact America Fund. Previous funders include the Bill & Melinda Gates Foundation.

Jason Palmer, who has invested in Upswing, said the company's rising profile is likely the result of increased focus on retaining students. "Enrollment in colleges and universities is down, so (they're) way more focused on retaining the students they've already got," said Palmer, general partner at New Markets Venture Partners.

But others note that the market for student support services, including automated chatbots, is getting crowded. "You have this proliferation of companies that are all coming at this problem in various ways," Urdan said, adding that there may be consolidation down the line.

"Ultimately, you're going to see the point solutions in this student success space that work, that are successful, that can show that they've got traction and efficacy — there will be buyers for them," he said.

ReUp Education

ReUp Education, a San Francisco-based startup, is one of the few companies devoted to reenrolling stopped-out students. Using a mix of machine learning, predictive analytics and human coaches, the company can pinpoint stop-outs who are the most likely to return, and coaches them through the reentry process and up to graduation.

Since it first partnered with colleges and universities in 2016, it's brought back more than 8,000 students and recouped $25 million in tuition revenue. Investors have taken note, pouring $6 million into the company in a recent Series A funding round meant to grow its college partners.

Efforts to get students across the finish line — such as ReUp's coaching service — have been gaining steam in higher education, said Terry McDonough, senior vice president and managing director of SEI Ventures.

"Both (ReUp's and Upswing's) deals are emblematic of continued interest in supporting students to and through graduation and addressing questions inside the classroom and in the traditional student affairs realm," he said.

Coursedog

Coursedog, a New York City-based startup, bills itself as a solution to the time-consuming process of figuring out which classes colleges should offer and when. To do so, its course scheduling software takes into account the number of available classrooms and instructors' class-time preferences in order to recommend a schedule that "maximizes the use of time and space," EdSurge reported this week.

Since its launch in 2018, the edtech startup has partnered with big names in higher education, including the State University of New York, Brigham Young University and Columbia Law School. That early success caught the attention of investors that recently funneled $1.25 million in seed funding into the company.

Palmer contends such interest in companies like Coursedog reflects a desire in higher education to optimize the use of its limited resources.

"College is too expensive right now," Palmer said, adding that parents and learners are "very conscious of the price." In turn, colleges are trying to cut administrative costs that could raise tuition prices.

Osmosis

Osmosis, a startup aiming to help health care workers develop new skills, was the brainchild of two Johns Hopkins University medical students struggling to keep up in their anatomy class, TechCrunch reported. After developing a tool for their classmates to make flashcards together, the venture evolved into an edtech company, with a video library, flashcards and study questions.

This week, Osmosis snapped up $4 million in new funding. And it's not the only health care-focused startup that has garnered the interest of investors, especially as states grapple with an extreme shortage of workers in this sector.

"The labor market is screaming that they need more workers," Urdan said. Indeed, last year the health care industry surpassed the retail and manufacturing industries as the No. 1 source of American jobs, The Atlantic reported.

And in a strong labor market, which tends to pull prospective students away from higher education, colleges are taking notice.

"Health care is the one area where you absolutely need the training to work in the field and ... there's a tremendous amount of demand," Urdan said. "Basically, it’s the most attractive area of the higher education marketplace up and down the spectrum."