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EdTech News Roundup - Week of 1/10
Back in black! Well, mostly red, but we'll be profitable next year
After a hiatus long enough for me to miss writing but (hopefully) not get too rusty, I am excited for 2022. I had grand intentions of writing a personal update over the holiday break, but…I did not write it. Instead, I’ll have a slightly longer top section for the next 3 weeks covering each of the following announcements:
Job change! I am now working for Workshop, a venture studio focused on building EdTech and ClimateTech businesses
Results from the EOY reader survey. I am going to try to write around 1 non-news post per month, alternating between early-stage startup spotlights and growth-stage “exciting job” spotlights
Update on the goals and posting schedule of this newsletter, informed by 1 & 2. No crazy changes here, just trying to check in every 6 months on why I write this newsletter
But enough about me. On to the news!
Funding / M&A / IPOs
There were a fair amount of fundraising events over the holidays/first few weeks of January. I won’t cover all of them, but will weave some into typical weekly news this week and next.
Lead School raises $100M: Lead school provides a digital/hybrid classroom environment for K12 schools in India. They join a rapidly-growing crop of Indian EdTech companies across the preK to adult learner spectrum
Career Karma raises $40M: see “stories” below for more
Wonderschool raises $25M: Wonderschool provides something of a business-in-a-box for childcare workers, with a particular emphasis on supporting new businesses in childcare deserts. Two things that stuck out to me from the announcement: 1) the average worker on Wonderschool makes $78K, twice the median salary of a traditional preK teacher in the US and 2) Wonderschool is winning platform deployment deals all the way up to the state level
Edume raises $20M: Edume provides “microlearning” modules for “deskless” workers, particularly ridesharing and delivery companies. I made my skepticism of Microlearning known at the end of last year, but will continue to follow along with the hope that Edume or a competitor of theirs proves me wrong
Second Nature raises $12.5M: Second Nature provides AI-based training for sales professionals. There are in the neighborhood of 13M sales jobs in the US alone and a stunning amount of turnover in the field.1
Inside Higher Ed (IHE) acquired by Times Higher Education (THE): Terms undisclosed. IHE, alongside the Chronicle of Higher Education, is one of the two major sources of US traditional higher ed industry news. Hard to know how much to make of this one. The stated rationale, combining THE’s global perspective with IHE’s US-focused coverage sounds fairly logical. However, the media industry, particularly PE-backed media companies (as THE is), has been mostly down over the past ~10 years.
Owl Ventures raises $1B: Setting the standard for the scale an EdTech fund can reach. Almost every EdTech specialist VC has one or more major winners in their portfolio right now.2 Owl is choosing to double-down on EdTech and grow the size of their fund. Other funds may follow suit or increase the scope of their investment charter to more EdTech-adjacent (or totally different) verticals to justify their own AUM expansion. I’m curious what impact this will have on the funding ecosystem
Career Karma raises $40M (same link as above)
Career Karma guides prospective students towards educational opportunities. Historically, they have focused on placing learners into bootcamp programs, but they want to use this funding round to expand into Higher Ed more broadly and, eventually, become “the world’s largest staffing firm.”
With any lead generation business, there is a tension between short- and long-term revenue optimization. In the short run, it is almost always better to channel leads to the customer willing to pay the most per lead and/or with the largest overall budget. The world’s largest lead generation business, Google, showed what leaning into the short run looks like in their dealings with Facebook, which came to light this week.
On the flip side, I was glad to see Career Karma lean into a long-run vision with their comments about revenue models. In addition to re-emphasizing placement neutrality in their core business model, Career Karma will add an employer-pay business line focused on “career services” that helps the team diversify beyond a business driven purely by placement fees.
I am a strong believer in the importance of having institution-neutral platforms for learning about education/careers. I hope that Career Karma’s success to date encourages entrepreneurs building in other parts of the ecosystem to try a similar approach.
25% of teachers thinking of leaving the classroom: this issue appears to be particularly acute among Black teachers. There is a lot of worthy debate around teachers/teaching right now, but, at baseline, can we agree that potentially losing 25% of a critical public infrastructure workforce is bad?
This year’s options for 9th-grade electives are 3D Printing, Dutch & Flemish Painting, and…Moose Hunting?
“Learn with Chegg”: Chegg takes a lot flack for what is perceived as encouraging cheating among students. I argue that their business was inevitable and they are actually pushing our educational model into the 21st century - if a professor doesn’t want the students to know the questions on homework/exams, don’t use the same questions every semester! They also have a greater cross-section of student academic achievement data that almost any other player, giving them as good a shot as any at truly personalized learning path
Student loan provider Navient agrees to $1.8B fraud settlement covering 66K borrowers: the federal student loan market is a mess. We’ve got giant fraud settlements like this, most private providers exiting the market, and borrowers who haven’t had to make a loan payment in more than 2 years.3
A decade of MOOCs: Dhawal Shah of Class Central, who has been around MOOCs since their infancy, talking about where MOOCs are at 10 years in. TLDR; good for professional learning and not much else
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I work hard to stay neutral here, but it’s important to me that you all know my potential biases! This section will be updated in the next few weeks to account for my job transition
My favorite anecdote about this: the owner of the Celtics spoke at one of my college classes. He said that every March they hired ~200 sales reps to sell tickets for the subsequent basketball season. They expected 2 (not a typo) to last and be promoted by the next February
The pandemic accelerated many of these winners, but the groundwork was laid long before COVID
There are good reasons for having paused student loans, but having them paused for this long means borrowers are severely out of practice and a higher-than-normal percentage will almost certainly default when payments start again. Wiping student debt would solve this problem for this specific cohort of borrowers, but does not change the structural problems that led to the mess we are in