Hello!
I hope you enjoyed Sunday’s edition of Weekend Reading.
The Funding + M&A Update is a newsletter for paid subscribers that provides analysis of recent financial transactions in the education space and short essays on trends I am seeing. If you are not a paid subscriber, see below for how to upgrade.
Today’s Funding + M&A Update covers 4 funding rounds and 5 acquisitions across K12, Higher Ed, and the Workforce portions of the EdTech ecosystem.
With that, on to the update!
Funding + M&A
K12
Concentric Education Solutions raises $5M / US, Student Support (Analytics) / New Markets Venture Partners: Baltimore-based Concentric Education Solutions (CES) provides student support solutions to schools battling chronic absenteeism.
While Chronic absenteeism has been a problem for some schools and communities for a long time, COVID pushed the rate of chronically absent students from 15% to 28%. To make sure that sinks in, more than a quarter of US public school students missed > 10% of the school year in 2021-2022, including more than 40% of public school students in NYC, LA, and Chicago. This trend showed no signs of slowing down last year despite most schools returning to in-person learning.
There is an obvious moral reason for schools to invest in services like CES provides. I can see how the business case is growing too. 6 states, including Texas and California, tie school funding to attendance. Additionally, as more states adopt voucher and educational savings account approaches to education funding, each incremental student that a school can get/keep in the public system takes on more importance.
Class Companion raises $4M / US, Teacher Tools / Index Ventures, OpenAI Startup Fund: San Francisco-based Class Companion provides automated feedback on student writing assignments.
Student feedback is the second-most popular application of AI in education right now, behind only language learning.1 Applications in these two sub-sectors provide a good balance of value to users and technical accessibility. (i.e. you don’t have to customize the models that much to provide something useful to users).
Most of Class Companion’s competitors, like Magic School, Khan Academy, and Class, bring sector-specific experience to their teacher support AI tools. Class Companion brings a generalist approach to the problem, supported by software powerhouses Index Ventures and OpenAI (but no sector specialists). To me, this provides an interesting test of how pliable LLMs really are. If Class Companion can deliver value to teachers right off the bat, it suggests that company-building will become even more of a go-to-market problem than it is today. If they can’t, it suggests that sector-specific R&D work is still a good way to differentiate a company.
Nominis raises €340K / Spain, Curriculum Materials (English Language Learning) / Ship2B Ventures, First Drop, Aticco Ventures: Speaking of teacher tools and language learning, Barcelona-based Nominis aspires to be the “Disney of languages” through AI.
Hyperbole aside, I actually like world-building/choose-your-own-adventure applications because they offer repeated opportunities for both the user and the application to course-correct. If the user is struggling to navigate a dungeon, the application can re-route them to a grassy field.
I’m less convinced of the educational impact of applications like Nominis is building. For example, Nominis highlights that one of their projects allows a user to “find, care for, and evolve virtual educational pets that will guide him on his adventure with English.” My mom likes to joke that playing Pokémon taught me to read, but I’m not sure how well the game holds up as a standalone literacy tool.
Accelerate Learning acquires Kide Science / US (Finnland) / Curriculum Materials:
Houston-based Accelerate Learning is one of very few course materials providers to have successfully navigated the venture funding path in the past ~10 years, crossing the chasm to “big company” earlier this year when they sold a majority stake to Providence Equity.
The Accelerate team adds to their STEM-focused content portfolio with the acquisition of Helsinki-based Kide Science, which focuses on producing STEM content for children aged 3-8. Kide Sciences is also Accelerate’s first international foray that I am aware of, which may be a sign of things to come.
Higher Ed
Ellucian acquires Tribal Group / US (UK), School Software Infrastructure: Reston-based Ellucian is, according to Listedtech, the largest player in the university enterprise resource planning (ERP) market with a 41% share of the North American market.
While Ellucian has a large percentage of the ERP market, the market is also fairly mature, leaving limited options for the company to grow organically. Further, Ellucian faces a relatively serious challenger in North America in Anthology, which now offers a more comprehensive product portfolio after acquiring Blackboard.
Ellucian could have gone looking for companies to buy or invested in building products to go product-for-product with Anthology in North America. Instead, the company looked abroad for growth. Tribal Group, which offers an ERP for the European market, allows Ellucian to leverage their financial strength - the company was bought by Vista Equity and Blackstone in 2021 - without taking on the R&D risk of trying to compete with Anthology.
CollegeDekho acquires ImaginXP / India, Student Recruitment: Guguram-based CollegeDekho helps students in India find, apply for, and attend university in India.
Since raising a $9M funding round at the end of 2022, the company has invested in building more career resources for its user base. ImaginXP, which provides off-the-shelf curriculum for employability skills to universities across India, is a further investment in this part of CollegeDekho’s strategy.
Workforce
TAP raises $1M / Netherlands, Career Bootcamp / Wamda Capital, Loyal VC, World Bank: Amsterdam-based Talent Acceleration Platform (TAP) provides 16-week bootcamps to prepare students in the Middle East for remote jobs with European companies.
Learnster acquires Kaspian / Sweden / Corporate LMS: Stockholm-based Learnster offers a relatively nascent (founded in 2017) learning management system (LMS) focused on the enterprise market.
Kaspian, also Stockholm-based, helps corporations search through their various applications faster. My best guess is that this deal was a stock-based acquihire given both companies are small (Learnster with 39 employees, Kaspian with 4) with no publicly announced venture funding rounds that would provide an influx of capital to do an acquisition at an early stage.
3B Scientific acquires Wallcur / Germany, Simulations: Hamburg-based 3B Scientific provides materials for medical training simulations - they are best known for their physical anatomy models - to hospitals and training facilities around the world. Similarly, San Diego-based Wallcur offers a variety of physical tools for medical simulations - think of things like practice tools for giving vaccines.
It is interesting to see consolidation among the providers of physical tools for medical simulations when a lot of the healthcare | simulation | news | I read | is virtual. It would be fun to think that new entrants like Osso are creating competitive pressure on the incumbents, but this appears to be a pretty | classic | roll-up | by | private equity.
Question of the Week
Part deux:
Results of last week’s poll:
I am working on pulling stats for this, and feel reasonably confident writing it here. I hope to have the data ready in time for my annual end-of-year post : )