EdTech News Roundup - Week of 9/27
The Mutually Assured Destruction of Student Loans
Hello!
Apologies for any typos in today’s note - I proofread this during Tom Brady’s homecoming : )
On to the news!
Funding / M&A / IPOs
Andela raises $200M from Softbank: Andela provides outsourced engineering services to large companies, offering lower rates than U.S.-based outsourcing firms by leveraging engineering talent from developing countries. After a hiccup in late 2019/early 2020 where they had a lay off a collective 500 | employees, it sounds like Andela has resumed rapid growth
Multiverse raises $130M from D1 Capital and Bond: Multiverse is a company that creates apprenticeship programs for companies. This round will be used to double down on a US/UK expansion strategy begun with January’s Series B announcement. It is a big deal that Mary Meeker’s Bond Capital is involved here - she does not have much of a EdTech track record, but has hit too many home runs to list1
Vedantu raises $100M to join the stampede of Indian EdTech unicorns: A stated competitor to Byju’s, Vedantu offers live, online courses for children in grades 6-12, most of which are offered for free. They currently have 35M users, 200K of whom are paying. According to HolonIQ, India now has five edtech companies worth more than $1B, all of whom have raised venture funding this year
Fiveable raises $10M from Union Square Ventures: Fiveable started by hosting forums for high school students to collaborate on their AP coursework. They’ve since expanded to all sorts of different social use cases for high school students, now reaching 7.3M students. Now that Tiktok has amassed 1 billion users, perhaps we’re due for a new, youth-oriented social network?
Edsights raises $5M from Album VC: Edsights is a retention-focused chatbot for higher ed. They join Mainstay, Ivy.ai, and Upswing as the fourth venture-backed chatbot company focused on higher edu. This is going to be a fun market to watch!
Sylvan Learning acquired by Franchise Group for $81M: Sylvan Learning franchises eponymous centers for tutoring in the US (and formerly abroad). Sylvan deserves a much larger places in EdTech history than it will likely ever get credit for. With a revenue peak of at least ~$250M, Sylvan’s business provided the basis for Laureate Education (which has enrolled 1M+ students globally at points in its own life). Its executives, headlined by Doug Becker, are also in leadership and investor positions all over the EdTech ecosystem
Stories
The Mutually Assured Destruction of Student Loans
I’m just starting to form this hypothesis, so bear with me on this one. I read two articles this week that gave me pause:
Troubled student loan forgiveness program will get overhaul: the Public Service Loan Forgiveness (PSLF) program forgives the federal loans of students who work in the public sector for 10+ years. A seemingly simple concept, the program has been wracked with difficulties in implementation
Student loan servicer Navient to transfer portfolio: Navient is the third federal student loan servicer to exit the market this year due to the complexities of continuing to participate
There is a cruel irony in a situation where students can’t afford to pay their loans (PSLF or otherwise) and private companies can’t make any money servicing them.
This is also why I am not yet an advocate for total student loan forgiveness. Both sides of this market are broken and we need to figure out a more sustainable option before resetting the market. I recognize that that position is unfair to folks with outstanding loan, but my hope is that the (rapidly accelerating) outstanding student loan portfolio adds a sense of urgency to solving this problem.
Other Tabs
Endowments are booming: university endowments are doing well. What’s odd about the article is that the writer writes about the connection between VC returns and endowment growth, but none of the quotes or data directly supported that thesis. While I believe VC returns have been good, the stock market has also been good. And many of the top endowments have increased their crypto allocations since 2017’s bull run
Yale/NUS end relationship: in 2011, Yale and the National University of Singapore (the best university in the city-state) announced a joint venture where they created a new, co-branded liberal arts campus in Singapore. It seems Yale was only lending its name while NUS footed the entire bill for the venture and NUS decided the investment was no longer worth it
Amazon invests in “Future Engineers” program in India: Part of Amazon’s $6.5B investment into India, this program focuses on providing resources to aspiring engineers in grades 6-12. It does not appear to be directly connected to employment like their recently announced US tuition assistance program
How America could spend on child care: It is easy to get hand-wavy on topics like universal childcare. I appreciate the Economist’s careful consideration of data in talking through potential approaches the US could take towards it.
Publish or perish taken to the extreme: How familiar are you with the connection between rare earth metals detection and fatigue interventions in the training of dancers? If you answered “very”, you would be just like the author of this paper - full of isht! Apparently, 400+ papers of dubious origin have been published by both Axel Springer and Elsevier. The Chronicle’s super-sleuths believe they were published due to the intense cultural pressure on researchers to publish prolifically.
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I work hard to stay neutral here, but it’s important to me that you all know my potential biases!
I also wrote about this deal back in August on the back of a sketchy British tabloid report. I didn’t love the report then and am glad to have the formal announcement now, as many of the facts reported in August were wrong!