EdTech Thoughts 1/23 - 1/29
Hello!
This week was really fun. There were a couple particularly newsworthy items that created a lot of internet chatter and pushed me to re-think several of my positions. Today’s story is my first attempt to capture this chatter and I have a feeling it will be something I return to in the future. Thank you to everyone who was willing to engage on it.
On to the news!
Funding / M&A
Gemba raises $18M: London-based Gemba is an executive training company that pivoted to VR in 2019. The company now offers high-end ($7250/person) technical simulations on topics like Lean Manufacturing and Supply Chain Management. Gemba calls their courses “Masterclasses”, which is a little too on-the-nose for me, but their product pivot with an established client base in the corporate market bears watching.
Evulpo raises $8.3M: Zurich-based Evulpo is a K12-focused homework help platform offering video and interactive content aligned with the curriculum standards of the countries it operates in. One question that strategies like Evulpo’s raise: what are the relative advantages of controlling your content and audience on your own platform relative to building on a larger-scale platform like Youtube?
CareAcademy acquires NextStep: Boston-based CareAcademy was one of the early examples of the training-and-placement trend that is now being used across many vocations.1 They are also one of the more successful examples, adding $20M in funding last summer. Seattle-based NextStep competed in the same Certified Nursing Assistant (CNA) training-and-placement market as CareAcademy. It sounds like this acquisition only covers NextStep’s technology platform, it is not clear if the NextStep team will disband or pivot to a new project.
Go1 acquires Anders Pink: Brisbane-based Go1 is 1 of the 17 EdTech startups to call itself the “Netflix of Education.” They also raised $100M last year June, with the specific intent to roll up companies in different geographies, including Swiss-based Coorpacademy. Go1 acquires London-based Anders Pink to gain a stronger footing in the UK market.
Eduhouse acquires GoLearn: Eduhouse and GoLearn are two of the larger publishers in Finland and Denmark, respectively. Eduhouse’s private equity backers hope that with ~$100M in revenues, the combined company will have a better time competing in the broader European market.
2022 European EdTech Funding Report: Great work from the folks at Brighteye Ventures, particularly in placing European EdTech funding in context to the rest of the world’s funding.
Looking for a job or hiring in EdTech? Check out the ETCH job board.
Story
Taking big swings in Higher Ed
Two head-scratching moves this week in a higher ed market that is feeling increasingly chaotic. First, it came out that the University of Arkansas was negotiating the acquisition of the University of Phoenix (UoP). Then, it came out that Youtube partnered with Arizona State University (ASU) and two brothers in Montana to start offering for-credit (and for-profit) college-intro courses.
I’m not sure what either Arkansas or Youtube has to gain from the deals.
UoP is publicly traded and not a failing business like Zovio; Any buyer will have to pay 100 cents on the dollar to get the deal approved by UoP’s board. Any public institution buyer would almost certainly have to destroy UoP’s greatest asset, its name.2 Further, Arkansas would be the seventh state system to announce a significant investment in an owned online division (either bought or built) - behind Indiana (via Purdue), Massachusetts, Arizona, North Carolina, California, and Florida.3 All to compete in a market where every large incumbent is struggling for enrollments except the leader (SNHU), who is looking elsewhere for growth. How many of these institutions can the market reasonably bear?
Youtube seems to think the answer is one. Intentional or not, that is sort of the implication of their partnership with ASU. The dirty secret of higher ed is that Introductory courses are the most profitable item universities offer and Youtube just put their weight behind a competitive product! It feels simpler, and more profitable to Youtube, to let all universities compete for ad space rather than risking client relationships by putting a stamp on one specific credential-bearing sequence.
There’s still a lot to be learned about both of these deals. For all we know, Arkansas offered the classic $1-and-a-friend-for-life OPM deal, UoP balked, and that was the discussion. ASU may be just the first of many university partners to buy in to Youtube’s course program. (I’m still not sure that’s a great deal for universities, but at least then the playing field is levelled.) Youtube may actually be doing this as a more of a favor to the two brothers, Hank and John Green, whose 14 million subscribers probably generate as much advertising revenue as a top university client.
What’s possibly more interesting to think about is just how plausible every crazy move in higher ed feels right now. Why not take a huge swing at the market? The Ivy League is bailing on the rankings-industrial complex, prices are coming down, college athletes are now millionaire-moguls, everyone - including accreditors - is campaigning for new and better accreditors.
It seems like more companies and institutions, even some of the bigger and more-established one, are taking this to heart.
Asks
Goldie is looking for early-stage startups to be contestants in the annual SXSWedu Shark tank competition. Founders can apply here
I am looking for an Austin local who would be willing to lend me either a cow bell or vuvuzela so that I can cheer on any readers who pitch in said competition from the front row
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Links
With enrollments from China down 45%, universities are looking further abroad to diversify their incoming classes. Full-pay international enrollments have also historically played a role in staunching budget shortfalls.
Schools speed up COVID spending
Schools have now spent 27% of the $122B in American Rescue Plan dollars allocated to the US K12 system. The deadline for spending this funding is September 2024.
Question of the Week
Note: votes are anonymous
Results of last week’s poll: Not close! I will look for data on this topic and try to do a write-up sometime soon
Ed Tech Thoughts is a short ( ~ 5 mins), weekly overview of the top stories in EdTech, with a few (hopefully interesting) gut reactions attached. If you enjoyed this edition, I hope you will subscribe and/or forward to your friends!
If I missed something, or there is a topic you’d like to learn more about, I encourage you to submit a story! Submissions can be named or anonymous
Disclosure
This strategy has been around for a long time, but wasn’t really a trend industry folks talked about until Revature’s exit in 2019. Founded in 2013, CareAcademy was years ahead of the trend
The UoP story is more complicated than I would like to get in to here. Whatever you think of their history, the UoP brand is well-known throughout the US and that is valuable
I’m sort of ignoring Arkansas’ own acquisition of Grantham University, but the scale of that deal was far smaller than any of the others. A reasonable wedge against my argument here is that Grantham prepared Arkansas to try for a much bigger fish but I believe the market’s increasing competitiveness outweighs any advantages gained from that deal