EdTech Thoughts Weekly Update 5/15 -5/21
Peak Knowledge Worker
Hello!
I hope that many of you enjoyed Friday’s Weekend Reading. As a reminder, Weekend Reading provides links to many of the top stories in EdTech.
This note, the Weekly Update, is for paid subscribers and provides commentary and analysis of what is happening in the EdTech ecosystem. It breaks down why certain companies are being funded and political/strategic moves are being made.
The US has a long weekend this coming week, so the next Weekend Reading will come out on Monday (5/29). The next Weekly Update will come out on Tuesday (5/30).
Funding/M&A
Note: It was a surprisingly light funding week this week, with 0 venture funding rounds announced by US companies. News of the funding downturn is not new, but it feels notable to mention given April-June is usually one of the higher-volume “funding announcement windows” of the year.
Oneday raises $6.2M: London-based Oneday offered an entrepreneurship-focused and travel-oriented undergrad program. The funding from this round will be used to launch a similarly focused MBA program.
Springpod raises $3.7M: London-based Springpod helps universities and employers recruit students/employees through “try-before-you-buy” experiences. For universities, these experiences take the form of promo videos for specific courses. For employers, the experiences are similarly promotional, but focused on specific employers (like Heathrow airport) or functions (like accounting). The concept is interesting and the goal of pre-vetting candidates for universities and/or employers is not dissimilar to what Straighterline is trying to achieve with their shift towards workforce last fall, but I’d like to see Springpod engage with their users beyond informational videos.1
Clu raises $1.5M: London-based Clu is | the | 4th European startup to raise seed funding for a professional skills assessment product this year. (When I come up with an explanation for why European assessments are on fire, you will be the first to know.) Whereas Clu’s 3 peers all provide proprietary assessments to help employers evaluate candidates, Clu uses an in-house algorithm to parse JDs and applicant resumes to find the best matches.
Specialized Education Services (SESI) acquires New Hope Academy: Special Education is quietly having a moment in the private equity world. This deal is (at least) the 4th private equity-led acquisition of a special education provider this year - following Imagine Learning’s acquisition of Winsor Learning, Excelcore’s buyout of EPS School Specialty, and Five Arrow’s acquisition of N2Y. While we haven’t seen as much movement in the venture space publicly announced, I expect we will start to see a similar pattern emerge before the year is out.
Looking for a full list of companies that have raised venture funding this year? Founding Members also receive access to the EdTech Funding and M&A database
Story
Peak Knowledge Worker
I am, generally, grateful for the concept of Peak Oil - predicting the year where we will pump the most oil. After the concept originated in 1956 (and particularly during the oil crisis of the 1970s), it helped spur the early environmental movement and continues to be a catchy foe to Big Oil today. As a prediction, though, Peak Oil has performed remarkably poorly. In the 67 years since the original Peak Oil thesis we’ve literally had to change the definition of the concept - from believing the world was running out of oil supply to believing the world is running out of oil demand - to keep it useful.2
Peak Knowledge Worker seems like a similarly catchy and ill-fated concept. There is so much progress left to be done - we’re < 24 months from space travelling again! I’m not super worried about demand for knowledge work.
I do think that calling Peak Knowledge Worker reflects something similar to Peak Oil, though maybe not in the way way that former McDonald’s Chief Digital Officer Atif Rafiq intended. Both predictions involve the realization that the existing, highly complex system needed to change, but what those changes are would be unclear yet somehow still polarizing.
Just over a month ago we learned 56% of survey takers believed college was a bad bet and that “Americans were losing faith in college.” Suffice to say, lots of folks jumped on the “college isn’t worth it” bandwagon.
This week we learned that seven in ten Americans want the government to “prioritize” making college more affordable. This stat seems like it is at odds with the “losing faith” crowd.
There are days when I wish I saw these issues as more black-and-white. College is either good or bad. Just Stop Oil or Drill Baby Drill.
The reality is more nuanced. I don’t think that we’ve hit Peak Knowledge Worker or that college is “over,” but I do think there’s room for the equivalent of one or many movements akin to renewable energy that help ease the burden that college carries to produce every kind of knowledge worker.
Links
Most clicked link from Weekend Reading: What AI will disrupt but never replace
A helpful piece from Reach Capital’s Jennifer Carolan reminding the GPT-enthusiasts that humans remain hardwired for social interaction and that great education solutions will continue to require social components for the foreseeable future.
University of Phoenix (UOP) to affiliate with University of Idaho
The construction of the deal is similar to the rumored terms of Phoenix’s deal with the University of Arkansas - a university-affiliated non-profit would purchase UOP for $550M and that non-profit would, in turn, pay the University of Idaho $10M/year. UOP’s current owners would also leave ~$200M in operating cash for the Idaho-affiliated non-profit.
I wrote about the UOP < > Arkansas deal a couple of times and I don’t think my stance on the topic shifts based on a different purchaser. A conversation I would like to have, but do not currently have the right information to do it properly, is why this type of deal was preferable to Idaho relative to the (directionally similar) deals Purdue, Umass, and Arizona negotiated in their own purchases of for-profit universities.3
America isn’t ready for the school-funding crisis ahead
I’ve been saying this for 2 years! I’m not sure what else to do to ring the alarm bell. There is no vision for what the US K12 system should look like, either nationally or locally. That flux has led to a lot of positive experimentation with EdTech products and, transparently, business opportunity. But it continues to give me existential anxiety.
Carnegie, ETS team up on competency-based assessments
Carnegie and ETS are investing serious resources in a (figurative) joint venture to push competency-based education on the US K12 system. The initial announcement was sort of lost in the GSV hullabaloo, but it looks like a soup-to-nuts to change both the traditional credit hour and a cross-functional “suite of assessments”
Coursera continues build degree partnerships in India
One of the major unanswered questions among the MOOC providers is how user count and LTV varies across geographies (Coursera breaks out their top 5 countries by user count, none of the others disclose anything). This is particularly important for Coursera, whose user count in India is soon to surpass its user count in the US, and Udemy, who derive ~60% of their revenue internationally.
This will be hard to prove until we have more LTV data, but my guess is that investing in local university brand partnerships has a positive impact on both pricing and user registrations.
The Weekly Update 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!
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Straighterline’s articulation agreements also provide the student-side benefit of transfer credit, but I’m trying to keep the comparison apples-to-apples. Springpod’s courses do not appear to have any academic or professional skills development intent.
Again, Peak Oil served a purpose! It played a role in pushing people and governments to consider alternative fuel sources, including renewables. What I am saying here is that as a prediction it was bad.
I am intentionally leaving a lot of nuance on the table calling these deals similar. I think the question holds : )
Your comments about fears regarding k-12 education - do some of those fears also involve demographic shifts coming down the pike, like decreasing student populations due to lower fertility rates?