EdTech Thoughts 5/31 - 6/5
VR, so hot right now
Hello!
Lots of new people again this week (welcome!), so I’m re-iterating the newsletter description so y’all can double-check that you’re in the right place:
Ed Tech Thoughts is a short ( < 5 mins), weekly overview of the top stories in EdTech, with a few (hopefully interesting) gut reactions attached.
My goal is for this email to be appointment-reading every single Monday, and I hope you will help me get there.
On to the news!
Funding / M&A / IPOs
Guild raises $175M: Guild is a platform for employee benefits, made possible by a B2B payments data layer. This is an updated definition to reflect CEO Rachel Carlson’s discussion of Guild’s product roadmap, which she says will include, “the products that sit around education—everything a worker would need to know to move into the middle class and then thrive there.” I suspect Guild raised this round to defend against the uncertainty of today’s markets, but I was intrigued to read about this new, broader product ambition in the announcement
Odilo raises $64M: Odilo aggregates and hosts a learning content library white-labelled by 8,500 different organizations in 52 countries. They are one of several players - including Degreed, Perlego, and BoClips - that have raised in the learning content aggregation space.1 We are still relatively early in the horse-trading of online learning content assets, but I will be watching for a similar business model tug-of-war between content producers and sales channels as we are seeing develop in the streaming | world2
Cuemath raises $57M: Cuemath is a personalized learning platform focused specifically on math. The company appears to be bucking the trend of EdTech companies in India by raising at an increased valuation with increasingly global ambitions
Scaler raises $50M: Scaler, founded in Bengalaru (Bangalore), India in 2019, is a bootcamp-ish platform for upskilling technology workers. The team anticipates fiscal year revenue of ~$90M, which would make it the fastest scaling bootcamp program, and one of the fastest-growing EdTech companies, ever.3 Not content to rest on their organic growth, the Scaler team raised this round specifically to acquire companies struggling with the broader downturn of the Indian EdTech market (same link as above)
Prisms VR raises $4.25M: Prisms VR is a company that makes and distributes (STEM-focused, for now) VR content to K12 schools. More thoughts on Prisms and the evolution of the VR space in “Story” below
Talently raises $3M: Talently is another, much earlier-stage, bootcamp-ish startup based in Peru. The team will use this capital to grow their operations in Mexico, Peru, Colombia, Argentina, and the US
Story
VR, so hot right now
The hardest part of being an investor is timing. With every decision - to buy, to sell, to hold - you are (or should be) asking, “why now?”
This is especially true at the early-stages of market and/or company formation, where you have unreliable financial information and buggy/incomplete technologies. Lack of information always makes it easier to say “no one will use it without a keyboard” than “this device will change human history.”
VR is kind of the ultimate example of this. VR pessimists have been “right” for almost 40 years, since Atari shuttered their virtual reality lab in 1982.
It doesn’t help that much of the discourse around VR is hype-ish. Magic Leap famously spent $3.5B over 10+ years to build a product that was…fine? Published just last week, this article (not op-ed) on VR in Education from the World Economic Forum - the World Economic Forum! - includes 906 words, zero statistics, and one link to a paper published in 2012.
But there are a few groups in the EdTech realm focused on hard work over hype. PrismsVR grabbed headlines this week with their $4.25M fundraise, which will help the team expand from serving twenty-thousand students to one hundred-thousand by this Fall. Dartmouth, Northwestern, Temple, Emory, and INSEAD all added VR courses to their business school curriculums over the course of the pandemic.
And the $500B VR gorilla, Meta (Facebook), is building VR campuses for ten different universities. These campuses actually sound pretty cool, though it seems somewhat limiting that the effort only seeks to re-create the schools’ physical campuses - the metaverse is the only place where a lazy river is financially justifiable!
Other Tabs
FDA-approved video game, EndeavorRX, partners with Roblox: EndeavorRX is a “digital medicine” racing game that is FDA-approved to help children with ADHD improve their attention. I’m not quite sure what to make of this, but EndeavorRX’s parent company is about to go public at a $1B valuation despite having only 1000 lifetime users and roughly $150K in revenue.4
Upwork launches Upwork Academy: A theme (which is like a trend, but even more vague) that I’ve been thinking about lately is the progression from entry-level roles to positions of asset ownership. The entry-level-to-owner space lies at the intersection of earning income and upskilling for future roles, but with the added stipulation that the aspirational result should be asset ownership rather than just increasing wages. It sounded like Upwork Academy would be built for just such a career path, designed for “Upwork users looking to build businesses.” Then I read the course titles, which included such financial-freedom-securing topics as “Creating Your Profile” and “Submitting Proposals”
Free school lunches under fire: In March 2020, Congress gave schools funding and broad charter to make and deliver universal school lunches. Congress has extended the program twice since, but these extensions run out on June 30. There are (probably) important debates to be had about the future state of the school meals program, but it sounds like choosing to end the current state of things right now will be particularly painful amidst continued supply chain issues and inflation
Which is harder, the FAFSA or Calculus?: Last week I wrote about Foondamate, which raised $2M to bring its B2C chatbot to more classrooms around the world. US-based Mainstay, which is known for helping college applicants navigate applying for and enrolling in postsecondary institutions, is expanding their purview to inside the classroom too. Alongside longtime partner Georgia State University, Mainstay announced the positive results of a new study on the impact of their new in-classroom chatbot product
EdTech Pop Culture
Many of you will have read that Sheryl Sandberg stepped down as Meta (Facebook) COO this week. But, did you know that a prominent EdTech figure brought her and Mark Zuckerburg together 14 years ago?
Neither did I until I read Sandberg’s stepping down post, where she thanked Chegg’s Dan Rosensweig for introducing the two of them!
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
Degreed competes the most directly with Odilo in terms of enterprise sales channels, though (to my knowledge) they spend less time working with publishers. Perlego and BoClips also work with publishers to aggregate content, but focus more on university sales channels
The takeaway from these two articles is not that Netflix or Paramount is the better business, but rather that there are different business model choices in the realm - vertically integrated (create and sell your own content consumers), horizontally integrated (aggregate other people’s content and sell it to consumers), and production-only (where you sell content to the highest bidding aggregator. There are trade-offs to each choice and the right model at one point in time may not be the right model forever
A hill I will die on: there is a difference between Annual Recurring Revenue (ARR), which is what the article calls Scaler’s revenue, and Annual Revenue (AR). Netflix, which collects money from you every month until you die, has ARR. Bootcamps, which you pay once to take the program and then move on with your life, have AR. There is a massive difference in approach to building an ARR business compared to an AR business
1000 users X $150/user retail price. It is possible that insurers pay more than $150/user, but typically they would pay less. Regardless, it is not a lot of revenue