Hello!
Too much content to get through this week, on to the news!
Funding, M&A, & IPOs
Instructure announces pricing for IPO: As Phil Hill notes, this IPO is predominantly about paying down debt. Instructure’s ownership group, Thoma Bravo, will still own a majority of the company post-IPO. One eye-opening stat from Instructure’s S-1: Thoma Bravo converted operating margins from -36% to +31% in ~15 months.1
Byju’s spends $500M to buy Epic, speed US market entrance: I wrote about Byju’s Disney partnership last week and this announcement only adds to my optimism for their US market entrance. Epic is another large exit for Reach Capital this year
Blackstone invests $250M in Simplilearn: a ringing endorsement of bootcamps from one of the world’s largest investors, I’m curious to see how this plays out in valuations across the space. After an eventful 2019 and 2020 it feels like this year has been a little slower for fundraising and acquisitions of bootcamps?
Stories
This week’s stories all exemplify changes coming to the US HED system. Some involve established institutions trying new things, some involve new institutions attempting to play by established rules. All are first or early examples that I expect to set the tone for the next 5-10 years of progress in the space.
WPI creates tenure-track positions for teaching faculty
US colleges and universities serve 2 roles:2
Global/National research hub: advance the research agenda in the areas of focus for the institution’s faculty body
Talent developer: train students for their post-graduate careers
This ordering can flip for some community colleges, but, otherwise, I feel pretty strongly about it. This comes down to incentives - faculty are evaluated primarily on their ability to produce strong research, not teach students.
This move by WPI flips that paradigm. It opens an entirely new career path for academic professionals who prefer teaching. I’d like to believe it will also make WPI a more desirable employer in MA/Northeast, where there is strong competition for faculty talent.
I’m curious whether it will lead to a stronger appetite for trying EdTech products. In the Venture world, we sometimes talk about this in the context of why in-class learning solutions struggle in the market, even when they have positive efficacy data. The sad truth is I often chalk this up to “professors don’t have the time, not a priority to fix.”
Let’s hope this puts us on a better path!
Minerva University fully accredited by WASC
Minerva University, started by Ben Nelson in 2011, is now a fully accredited university, certified by the Western Association of Schools and Colleges (WASC). Minerva, which has raised $150M+ from investors, is known for putting together a strong team to chase the elite end of the HED system with a technology-enabled pedagogy.3
Regional accreditors like WASC are not well-known, but are some of the most powerful actors in the US HED system.4 I don’t envy their jobs - they balance a desire to move education forward with the need to protect students from poor-performing programs/institutions.
This tension is reflected in 2 different ways you could represent Minerva’s achievement here, both correct:
Minerva and WASC have now set a path (and the bar) for having a new pedagogical approach sanctioned by a top-tier regulator.
It took 10 years for an elite academic program developed by top-tier industry veterans to gain accreditation?
Alabama quarterback Bryce Young to make $1M before playing a snap
Name-and-Image Licensing (NIL) allows college athletes to earn income through endorsements. This used to be strictly prohibited, but a spate of new laws from Florida, Alabama, Arizona, California, and Georgia (among others) pushed the NCAA to cave on this prohibition on July 1.
I’m going to come back to this issue over time - today, I’d like to focus on athlete earning potential. ESPN did a nice graphic on the potential income distribution.
Athletes are going to get paid. Alabama’s Bryce Young will not be the only million-dollar earner this year - LSU gymnast Olivia Dunne, Fresno State basketball players Hannah and Haley Cavinder, and Tennessee State basketball player Hercy Miller (Master P’s son) will all be joining him.
On the other end of the spectrum, athletes will also get sucked into endorsements they may later regret. A quick scan of 247sports.com shows the following companies having deals signed with student-athletes: College Hunks, BOOMIN Fireworks, Flix CV, 3 Kings Grooming, and Last Stand Hats.5
So, some good and some potential for foul play. My only hope is that we can get through this breaking-in period without too much pain. It is probably better that athletes are being paid above board now, rather than with paper bags of cash.
Marlboro college bought by a…music festival?
Marlboro College, a ~150 student liberal arts school in Vermont, has been through it over the past 3 years. They almost merged with University of Bridgeport, but then didn’t. Instead, they sold to Emerson College in Boston. Then (there’s more!), the campus was sold to Degrees of Freedom, who ran into legal issues. Now, the Marlboro campus will be home to a music festival.
Unwinding a college is hard. In addition to doing right by students and faculty, end-of-life stewards must keep in mind the campus employees and local townspeople who will impacted. All while trying to be fiscally responsible with whatever funds are left!
Credit to Marlboro’s leadership team for rolling with the punches here. I hope (fear?) that their post-Marlboro lives will be filled with opportunities to help other financially precarious institutions navigate choppy waters.
Other tabs…
“Income insurance” coming to a school near you: Pretty neat take on student financing. I will be watching to see if/how it affects the degree-type distribution among Augustana’s students
In defense of the Master’s degree: Last week I posted several articles questioning the value of online MA’s, I was glad to see Josh Kim provide some good counterpoints in this one
As this email list is growing, I’m going to start linking to my disclosure page at the bottom of each note. I work hard to stay neutral here, but it’s important to me that you all know my potential biases!
I said eye-opening, not good or bad! There are arguments on both sides of this, I’m kind of surprised this number hasn’t been a larger part of the online discourse on Instructure.
There is a third role, but it is a bit of a tangent from this story. That role is Local employment engine. In addition to providing jobs for on-campus faculty, administrative, extra-curricular, facilities, and technology staff, the spending power of on-campus staff and students drives a significant amount of local business hiring needs.
The Minerva team does care about impact - they now license their software to high schools and universities serving students across the spectrum of learning and socioeconomic status. I highlight their focus on the elite end to make a point about how hard getting accreditation is.
In the US, Regional accreditors are typically seen as stronger voices than national accreditors (which exits). Adding to the confusion, regional and national accreditors are non-profits, not government bodies!
I don’t mean to throw too much shade at these companies - I do prefer that my fireworks BOOM instead of boom and that my College Hunks…well, I’m not exactly sure what they do