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 4 acquisitions across Early Childhood, K12, and the Workforce portions of the EdTech ecosystem.
With that, on to the update!
Funding / M&A
Early Childhood
The Malvern School acquired by Busy Bees International / UK (US), Childcare Centers:
Philadelphia-based Malvern School is the operator of 27 eponymous childcare centers in Pennsylvania and New Jersey. Busy Bees International is one of the largest childcare providers in the world - operating 1000+ locations around the world (their US brand is BrightPath Kids).
This acquisition is par for the course for Busy Bees, which is so hungry for growth that they have an “Acquisitions” page directly below the “Management Team” page in the “About Us” section of their website. What makes this even more entertaining is that the company has been owned for more than 10 years by the Ontario Teacher’s Pension Plan, who bought it from none other than Michael Milken (who swooped in to buy it out of bankruptcy during the 2008 financial crisis). This history of the company is worth a read!
K12
Flourish Labs raises $6.6M / US, Mental Health / Gradient Ventures, Collaborative Fund, WGU Labs, Learn Capital, One Mind: San Francisco-based Flourish Labs hosts a telehealth platform designed for peer support for mental health.
Efficacious peer support/feedback is one of the holy grails of EdTech. At base level, it removes or significantly reduces one of the biggest cost drivers in education - subject matter experts. Often, it also contributes positively to the level of engagement users have with an app or platform. For these reasons, one of my favorite EdTech platforms was Stack Overflow (before ChatGPT decimated it).
However, it is hard to do well. The only EdTech company I have seen succeed bringing research science to peer-to-peer interactions is Practice, which exited to Instructure in 2017. Since then, I remember (but, unfortunately, cannot find a reference to it) Duolingo experimenting with live conversations between learners and native speakers, but haven’t seen much else.
All of which is to say I am excited to see Flourish Labs take on this challenge. The team has already developed an 80-hour training program to make sure its “peer specialists” are ready for their roles. And is staffed appropriately - Kaiser Permanente’s former CIO (and current, practicing professor of medicine at UCSF) is a co-founder - to bring rigorous judgement to a space that is fraught with risk.
10 Minute School raises $5.5M / Bangladesh, Content Provider / Peak XV, Conjunction Capital: Dhaka-based 10 Minute School (10MS) provides live-streamed classes, recorded video content, and quizzes aligned to Bangladesh’s national curriculum.
The company is part of a small but growing number of examples (particularly in Southeast Asia/India) of EdTech companies grown out of popular YouTube channels. 10MS now boasts 2.83M YouTube subscribers that it can funnel toward its products.
The funding from this round will go towards continued development of the 10MS platform, content updates aligned with changes to Bangladesh’s national curriculum, and “exploring” in-person learning facilities.
Nord Anglia Education acquires Avenues New York & Sao Paolo / UK (US, Brazil), Secondary Degree Providers: The Avenues School New York launched in 2012 with a significant profile in the New York Times Magazine that asked, “Is Avenues the best education that money can buy?” The company, which raised $85M for the launch, quickly expanded with campuses in Sao Paolo, Shenzhen, and San Jose (branded “Silicon Valley”). By 2020, the company’s New York campus had doubled enrollments and increased tuition by over $13K/year.
It is a bit strange that this deal with Nord Anglia, a global operator of private high schools, only includes 2 of the company’s 4 campuses. My initial reaction was that something must have happened to force a sale - possibly that the company’s private equity backers needed some liquidity after 10 years and no other funds were willing to back Avenues as an independent entity amidst an uncertain macro market.
Or, Nord Anglia just offered a lot of money. It feels like there may be quite a bit of consolidation coming in this space, with lucrative offers - like the $1.25B BPEA EQT (Nord Anglia’s PE owner) paid for IMG Academy - required to win new assets. Just in the past 2 years, Stonepeak Capital, OMERS, and KKR have entered the for-profit private school space to compete with the likes of BPEA EQT and CVC Capital.
Workforce
Atana (fka Media Partners Corporation) raises $6M / US, Corporate Training: Bellevue-based Atana provides video-based workplace compliance and norms training content to corporations. This round is being combined with $10M previously raised into a $16M Series A.
This market has always struck me as a great place to build a company for strategic exit. There are relatively few barriers to entry, so, with the right content production capabilities and sales strategy, a company should be able to build up a proof-of-concept customer base in short order. Then, there are a variety of larger content platforms with some means to acquire content and/or customers.
However, raising a $16M venture round - assuming it is a traditional venture round that sold ~20% of the company in primary equity - makes this path significantly more risky. The company is taking a risky bet that a new assessment platform will justify a step-change increase in customers or valuation by potential suitors.
Escalate raises $1.26M / US, Corporate Training / RockCreek, Potencia Ventures, TEDCO, Techstars, ECMC Foundation, Gurtin Ventures, Blue Zone Partners, Future State: Silver Spring-based Escalate provides asynchronous upskilling content to frontline employees.
Escalate appears to be focusing much of their resources towards building software to power student support services. This makes a lot of sense for the population Escalate aims to serve, whose retention problems usually stem from “life problems” and not academic aptitude. It is also consistent with the previous experience of the founding team, who were senior leaders at McKinsey’s Generation initiative.
360Learning acquires eLamp / US, Corporate LMS:
New York-based 360Learning offers an enterprise-focused learning management system, designed to both build and deliver corporate training content.1 The company adds Lille-based eLamp, which helps companies (predominantly engineering firms, though they will now serve 360Learning’s more diverse client base) assess the skills of their employees.
eLamp is 360Learning’s second acquisition since landing $200M from Softbank and others in late 2021. It sounds like the two companies worked together on product partnerships prior to the acquisition.
M2 Education acquired by Humly after Humly raises an undisclosed amount of new venture funding / Sweden (UK), Education Staffing:
Gothenberg-based Humly is a platform that connects teachers looking for work with districts that have openings. The Humly team will be joined by Preston-based M2, which is a more traditional teacher staffing business.
Humly is really leaning into inorganic growth - M2 Education is Humly’s 5th acquisition of a UK teacher staffing business in the past 2 years. It seems fair to assume that the proceeds of the funding round will towards more acquisitions (though it is hard to say for certain given the limited amount of information disclosed about the round).
Question of the Week
Results of last week’s poll:
Part 1:
Part 2: