ETCH Weekend Reading 2/4/24
Basic Income, Buses, and Byju's
Hello!
It is Super Bowl week here in the US, which means most of your US colleagues are debating whether they will be watching 1) “for the commercials” 2) “for Taylor” 3) “for Usher and the halftime show” or 4) “for the football.”
It also means that this newsletter will greet you bright and early Monday morning…Or at least by lunchtime, depending on how the game goes.
On to the news!
Funding / M&A
Zum raises $140M on $1.3B valuation / US, K12 Infrastructure (Transportation) / GIC, Sequoia Capital, Softbank Vision Fund
Morressier raises $16.5M / Germany, Research Publishing / Redalpine, Owl Ventures, Cherry Ventures
Pintar raises $3M / Indonesia, Training Provider (Recruitment) / Havez Capital, SIG Venture Capital
iStoria raises $1.3M / Saudi Arabia, Language Learning / Nama Ventures, Classera, Flat6Labs, BIM Ventures
ETS acquires PSI / US, Assessments
Avathon Capital acquires Magical Beginnings / US, Early Childhood Providers
Report
To be named in this newsletter, a company must raise $1M+ with verifiable institutional investors, be part of an acquisition where the combined entity has > 50 employees, or raise a VC/PE fund of $10M+
ETCH Funding Database
All of the above deals, and 1,000+ more can be found in the ETCH Funding Database, available in Beta to Paying subscribers. Upgrade your subscription to learn more.
People Moves
Kristen Fox joins the Business Higher Education Forum (BHEF) as CEO / via LinkedIn
Kermit Cook joins Penn Foster as CEO / via PR Newswire
Karlo Young promoted to President of Concentric Education Solutions / via K12 Dive
GoStudent lays off 100+ / via Business Insider
Looking for a job or hiring in EdTech? Join the ETCH Jobs Community and/or subscribe to our Jobs of the Week (JOTW) newsletter!
Links
Early Childhood
DC pilots $10,800 cash payments to new mothers. A topic I’ve been waiting to resurface in the AI conversation is Universal Basic Income (UBI), since one possible consequence of the broad adoption of AI is more leisure time and fewer jobs. In fact, OpenAI’s CEO, Sam Altman, has even put money into researching UBI. / via Washington Post
Michigan’s “tri-share” early childcare program - where states, employers, and parents each pay 1/3 of childcare costs - to be tested in New York, Kentucky, and North Carolina. Color me intrigued! / via EdSurge
K12
OpenAI partners with Common Sense Media to build AI safety guidelines. To OpenAI’s credit, they have realized that one of their biggest hurdles to adoption is not a technical feature, but trust. Partnering with a respected non-profit provider like Common Sense is both impactful - I expect these standards will be good! - and business-savvy - the company can point to this partnership anytime someone wants to write a “dangerous hallucination” or “robots replacing teachers” headline. / via Techcrunch
Speaking of robots replacing teachers, MIT says “fear not! It is still too expensive for robots to replace teachers.” A highly practical, though also sort of unsatisfying rebuttal to job fears. / via Quartz
An inexpensive way to train a robot? Sticking a GoPro on an infant’s head for 1.5 years to watch how they learn. This very real, DARPA-funded project captured 61 hours of video from forehead of a 6 month-old, who was (intermittently) strapped in until his second birthday. / via MIT Technology Review
“Surprising” progress in student learning loss recovery from pandemic. Lots of work still to be done, but nice to read some positive results. / via New York Times
Among the work to be done, helping COVID toddlers (now COVID Kindergartners). / via Washington Post
New LAUSD policy would prevent charter schools from using public facilities. I cheered when LAUSD Superintendent Alberto Carvalho advocated for “winning students back” into the public system. It seemed like the intent was to compete based on learning outcomes and student experience - important goals for a public school leader. This policy, which was written by Carvalho but mandated by the school board (it is not clear whether Carvalho actually supports it), is the polar opposite - its core goal is to prevent change, no matter the student or financial cost. / via 74 Million
NWEA launches new assessment - Distance Dash - as a game on Roblox, as assessment providers get serious about incorporating gaming elements into tests. I could not be more “in” on this trend - more learning should come from games! / via 74 Million
How EdTech has fueled the parents’ rights movement. Ryan Craig argues that having our children’s academic standing at our fingertips 24/7 has encouraged parents to desire a more active role in how their child is educated. While this is sort of hard to prove definitively, it was a connection I had not made before and something I will be thinking about. / via Gap Letter
Road Rules for the Disney+ set: Road Schools. The reality show we didn’t know we needed, where children learn from their family’s RV, stopping all around the country at historic and/or interesting locations. / via 74 Million
The transportation vessel whose lunch is being eaten by the RV (and other personal vehicles)? The yellow school bus, which now serves just 33% of US students (don’t tell Sequoia!). 53% of students now get driven to school by private vehicle, an all-time high. / via Washington Post
Higher Ed
How college consultants invent perfect Ivy League applicants. Business is booming for college consultants, to the point that the 28-year-old CEO of Command Education, featured here, bounces between his $7.5M house in South Beach and $2.3M Manhattan condo. “The real boon came in 2019 when news of Operation Varsity Blues broke and the larger world learned that even celebrities and multimillionaires were so worried about college admissions that they were willing to commit a crime to get their kids into the right school.” / via Intelligencer
State support for Higher Ed set to grow 10% in 2024. This report felt particularly novel given how dominant the narrative around disinvestment has been for the past ~decade. / via Inside Higher Ed
The big Shaqtus invests in Campus. Shaq immediately becomes EdTech’s tallest investor, though we will have to wait a few years before we can evaluate where he ranks among the best EdTech investors - his only other EdTech investment that I am aware of is Edsoma’s seed round just 4 months ago. / via Fortune
EdTech
The Byju’s saga continues. As I have written | about | ad nauseam, the core issue with Byju’s is one of governance. The company rode zero-interest-rate capital for 11 years, prioritizing growth above everything else, including basic financial management. When interest rates started climbing in 2022, everything started unraveling. The company, controlled by the eponymous founder, his wife, and his brother, is now in hand-to-hand combat with its investors - some of the biggest names in venture capital. This week:
Byju’s seeks new capital at 99% discount to previous valuation as company faces significant cash crunch. If the bank called you and told you that you needed to produce an additional down payment to keep the house you bought 5-10 years ago, you’d probably be pretty frustrated, right? At a high level, that is sort of what is happening here. / via Techcrunch
Byju’s investors seek to remove edtech group’s founder. True to form, Byju’s investors were not happy with the above move, and started exploring legal remedies to remove him. Officially officially pulling the rip cord on any solution that involves Byju remaining as CEO. / via Techcrunch
Byju and family strike back by declaring bankruptcy in the US (but not India) and, well, basically giving investors the middle finger by saying, “we would emphasize that the shareholder’s agreement does not give them the right to vote on CEO or management change.” / via Reuters and Techcrunch
There are so many different takeaways one could have from this saga, which has not yet written its final chapter. For me, it reinforces a lesson KKR’s Richard Sarnoff articulated in 2019, that education is a “get rich slow” industry. There are no cheat codes, magic acquisitions, or fancy go-to-market schemes that change this fact. The companies that have the most long-term impact, both financially and for students, are the ones that keep their heads low and make steady progress every day.
This email, ETCH Weekend Reading, is ETCH’s free newsletter providing links to the week’s EdTech Funding, M&A, People moves, and a curated list of Links to relevant industry news. If you enjoyed this edition, I hope you will subscribe and/or forward to your friends!
Xeet of the Week
What an amazing compendium of valuable knowledge! How much hard work it must take to develop something like this on a regular basis. Would love to learn about your process Matthew.
Akhil Kishore
GIA ADVISORS
https://www.linkedin.com/in/akhilkishore/
That Command Education story! Wow! Eye-opening.