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EdTech Thoughts 2/27 - 3/5
A Meteor strike in Gainesville
On to the news!
Funding / M&A
Bitwise Industries raises $80M: Fresno-based Bitwise is a fast-growing software development agency that uses an apprenticeship model to build its talent roster. The company also focuses on building their teams outside of traditional software development hubs like San Francisco, New York, and Boston. The funding from this round will be used to double down on this strategy, building out physical locations in 40 cities across the US.
Edurino raises $10.5M: Munich-based Edurino builds learning apps, often supported by physical toys, for young children. I wrote about Edurino after their February 2022 fundraise, when the platform was used in 12 kindergartens and their smart fox, Mika, was about to launch in retail stores. Since then, the company has scaled to 160 “places of learning” and over 100,000 retail customers. The funding from this round will be used to scale the company’s presence outside of Germany.
Colossyan raises $5M: London-based Colossyan helps companies create learning and development videos. The company hopes to reduce the time and expense of creating L&D and/or compliance videos through its video-generator tool, which takes basic inputs like scripts and scene settings and turns them into shareable videos. I had fun playing around with their consumer website and encourage you to do so too!
Google acquires Photomath: Zagreb-based Photomath translates pictures of math problems into a format that the company’s platform can use to help students solve them. The company was a pandemic darling, raising $23M in February 2022. Google actually acquired Photomath ~3 months after announcing that fundraise (the raise itself usually would have wrapped 3-6 months before the announcement), but the deal is only now emerging publicly as a result of an anti-trust suit against Google in Europe.
Paper acquires Major Clarity: Richmond-based Major Clarity provides a platform and resources for college and career counselors. The Major Clarity teams joins Montreal-based Paper, which provides on-demand tutoring services for schools across the US and Canada. Paper also appears to be re-branding themselves as an Educational Support System (rather than a tutoring company) with this acquisition. Paper has taken some (earned) flak in the press over the past 6 months for their buffet-style business model, which can over-promise the specific impact of its solutions. However, I continue to like the company’s strategic direction of buying and building assets that, bundled together, have the potential to raise the floor of what under-resourced schools can achieve, especially as ESSER funds dwindle.
Bain Capital acquires Meteor Education: Gainesville-based Meteor Education designs physical spaces for K12 schools and districts across the US. Using this funding, Meteor is acquiring one of its competitors, Blankenship Associates, and expanding their product offering to include virtual spaces alongside physical ones. They’ve also added former 2U Chief Product Officer Luyen Chou to their board to help with this expansion.
IXL Learning acquires Teachers Pay Teachers: New York-based Teachers Pay Teachers (TPT) is a marketplace for educational resources that are designed and consumed by teachers. The TPT team joins San Mateo-based IXL Learning, which is a rapidly-growing, private edtech conglomerate that now counts 10 subsidiaries in its portfolio and has acquired at least one company per year for the past 6 years.
New Markets Venture Partners raises $160M for Fund III: Baltimore-based New Markets is one of the 9 independent, early-stage venture funds focused on EdTech.1 This fund will focus on investing in companies with $2-50M in revenue.
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ChatGPT’s terrestrial steward, OpenAI, released their much-anticipated business API this week. This is a legitimately positive development that will lead to a lot of new products across many industries. And a lot of open questions about what it means for incumbents. But it’s going to take some time to discern what matters.
Regardless, there will be chatGPT press releases. So many chatGPT press releases. Quizlet will have the distinguished honor of claiming the first such release in EdTech and I have a feeling there are other companies following close behind.
The consensus seems to be that the court will strike down President Biden’s debt relief plan. Back in August, I wrote about my appreciation for the deftness with which Biden’s plan attempted to balance something painful (turning loan payments back on) for something nice (significant debt relief for those most affected by having to start paying again). With debt relief off the table, it seems unlikely that loan payments get turned back on anytime soon.
Is loan relief the absolute best way to accomplish the goal of turning loan payments back on? I don’t know. But I do know that we need to find a politically acceptable way to get the student loan apparatus working again and this seemed viable.
Phil Hill (above link) continues to cover this situation best, though Inside Higher Ed and Higher Ed Dive also produced some good quotes. The TLDR: schools now have until September to report Third-party servicer (TPS) relationships to the Education Department (ED), but the definition of a TPS remains significantly more expansive than before.
Last fall I predicted that we would see more debate around the issue of screen time. However, I thought it would take a while to rise to the forefront. And I did not expect Tiktok to be a staunch supporter of restricted screen use. (Though the one hour per day limit is consistent with teenage video game use laws in China that have been in effect since 2019.)
Tiktok is in hot water in the US and Europe right now, with an increasing number of government organizations and universities banning the app from supported devices/networks.2 We will see if this move wins them any favor.
This announcement seems notable, but it is sort of puzzling to me. The release states that Rosensweig will be an independent board member. However, two of Chegg’s three biggest growth levers - Upskilling and International - have clear overlap with UpGrad.
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This list is New Markets, Owl Ventures, Reach Capital, GSV, Rethink, Learn Capital, Brighteye Ventures, Emerge Education, and Educapital. There are a number of additional emerging fund mangers, later-stage venture, PE buyout, and strategic/philanthropically-tied participants in the EdTech funding ecosystem. My cut off for this list was teams who had publicly announced one or more funds of > $50M and who have a pre-seed - Series A investment in the last 12 months. Someday I will try to put this on a Google Slide.
This move is only interesting symbolically, it is basically meaningless in practice - Tiktok works perfectly well over LTE and on personal devices - until and unless the cell phone companies join suit.