ETCH Weekend Reading 7/9/24
The domino effect of a changing K12 funding model, ASU does course licensing, a man with 14 post-secondary degrees, and 2 unicorns now worth $0
Hello!
2 weeks of headlines to get through here, and just two weeks until the 4th of July break in the US when funding announcements tend to slow down. If you’re in the home stretch of putting together a deal or a round, keep pushing!
On to the news.
Funding / M&A
Zhejiang Jingzhunxue raises $27M / China, Tutoring / Alibaba
Fizz raises $14M / US, Student Financing / Kleiner Perkins, SV Angel, Y Combinator, New Era Ventures
Note: this is Fizz, not Fizz, who raised $25M last summer
Odyssey raises $10M / US, School Infrastructure Software / Tusk Ventures, Andreessen Horowitz, Bling Capital, Cubit Capital
Angel AI raises $4.75M / US, Content Provider / Cortical Ventures, Village Global
Simpleclub raises €4M / Germany, Corporate Upskilling / 3VC, HV Capital, 10X Founders, Bonsai Partners
Doowii raises $4.1M / US, Analytics / GSV Ventures, Better Ventures, Avesta Fund, Imagine Learning Ventures, Strada Education Foundation, Reach Capital, Common Sense Growth Fund
Autovivo raises €3.8M / Germany, Training Provider / Sparkmind, Coparion
Sterling Partners acquires (the rest of) Keypath Education for $190M / Australia, OPM
Imagine Learning acquires CueThink / US, Content Provider
Wilson Language Training acquires Acadience Learning / US, Early Literacy
Next Capital acquires controlling stake in Scentia / Australia, Degree Provider
L Squared Capital acquires TeachTown / US, Special Education
Elentra acquires DaVinci Education / US, LMS
OCLC acquires JJH Consulting / US, Higher Ed Software Infrastructure
To be a verified funding in this newsletter, a company must raise $1M+ from named, searchable institutional investors and disclose the amount raised, be part of an acquisition where the combined entity has > 50 employees, or raise a VC/PE fund of $10M+
Other Transactions
ETCH Funding Database
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People Moves
Curtiss Barnes joins 1EdTech as CEO / via 1EdTech
Brian Shaw promoted to CEO of Discovery Education / via PRNewswire
Paul Thompson promoted to CEO of KinderCare / via PRNewswire
Jocasta Williams promoted to GM of APAC and EMEA of Echo360 / via PRNewswire
Guild lays off ~300 / via Denver Post
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Links
K12
The most important topic in US education is the rapidly changing funding model for K12 students. To oversimplify this change, it is going from funding schools to funding students. The ripple effects are emergent but can be felt throughout the K12 ecosystem.
School choice programs have been wildly successful under DeSantis. Now public schools might close. School closures and enrollment declines are not 100% attributable to funding changes, but serve as helpful proxy for watching the impact of changes. / via Politico
Similarly, Billions in taxpayer dollars now go to religious schools via vouchers. / via Washington Post
And, it is easier for parents to vote with their feet when schools/districts make social or curriculum decisions, like when to teach algebra. / via New York Times
For the public schools that remain open, problems still abound. From scorching schoolyards, outdoor play areas that become unusable in the heat, to shell game accounting when new public money comes in. / via 74Million and KQED
On a positive note, COVID does seem to have made a major, positive impact on increasing access to school meals. If only we could get Lunchables off the menu… / via New York Times and Washington Post
Where does this leave EdTech? It (probably) means a fast-growing cohort of new purchasers from charters, microschools, and other alternative providers. Tight budgets at public schools may also incentivize the creation of new purchasing models, like outcomes-based contracting. / via Hechinger Report
These parents are shelling out to have someone else pack their kids for camp. Sounded great until I read the subtitle, which highlighted that the price tag for this service could be as high as $15K. / via Wall Street journal
Higher Ed
University of Tennessee signs $11.5M “collaboration” deal with Arizona State University. From what I can tell, the core component of this deal is a licensing arrangement for ASU’s prettiest gen ed content (including VC darling Dreamscape Learn), with some goodies attached. / via Chronicle of Higher Education
The Tennessee < > ASU deal is a great deal for ASU. They get guaranteed revenues (at least insofar as publisher adoptions are guaranteed) while bearing no risk for the growth of Tennessee’s online programs. Tennessee, on the other hand, has boxed itself into a 5-year contract for content on top of, presumably, millions more in planned spending to *attempt to* grow their fledgling online efforts. Tennessee’s online division currently enrolls 2500 students, almost all of whom are in Master’s programs. This means that the target audience for the resources included in this deal are net-new undergraduate students that Tennesse must bear the entire financial burden of recruiting.
Revenue-sharing is not the end-all, be-all for online education deals. But it is specifically designed for situations like this, where the investment required to launch quickly runs into the tens of millions and the outcome is highly uncertain. It is crazy to me that universities, and state governments like Minnesota, sprint towards this risk with little-to-no examples of DIY programs scaling successfully in the past 10 years. (Obviously this calculus changes as programs get bigger. I am supportive of at least some capacity-building, just trying to call out that institutions are now shouldering the same financial hole that OPMs have spent the last 15 years trying to climb out of.) / via Whiteboard Advisors
The man who couldn’t stop going to college. One of the rare instances where the headline sets high expectations and the story clears them. I have so many follow-up questions. / via New York Times
The dark art of enrollment management. My gut reaction, like many of yours will be, was to think, “how can a business getting more sophisticated about knowing their customer be a bad thing?” And yet, the examples provided show how higher ed may have played itself by getting into a national recruiting (and rankings) rat race instead of sticking to local roots. / via Chronicle of Higher Education
One institution that seems to have evolved beyond the rat race? Northeastern University, which is adding a New York City campus via the acquisition of Marymount Manhattan College. The NYC campus joins Arlington (VA), Charlotte (NC), Miami (FL), Portland (ME), Seattle (WA), San Francisco (CA), Toronto (Ontario), and Vancouver (British Columbia) in Northeastern’s satellite campus portfolio. / via Higher Ed Dive
With college athletes on the cusp of revenue-sharing, there are still Title IX questions to be answered. / via Associated Press
Workforce
As dual enrollment programs boom, the focus widens to career. / via Workshift
EdTech
Vista Equity writes value of Pluralsight stake to $0. Of note, this does not mean that the value of Pluralsight’s business is $0, but rather that the business cannot support the amount of debt that Vista piled onto it to complete their 2021 takeover. / via Axios
Also valued at zero (by some)? Byju’s. / via Techcrunch
The math EdTech I let my own kids use. From
, just in time for summer travel! / via
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!
Tweet of the Week
All I want is to live in a world where beating my son in multiplayer Civilization helps him earn credit towards his college degree.
Disclosure - September 2022
Hello! I try to remain as neutral as possible when writing this newsletter, but some bias is inevitable when there is overlap with an area I care about. After all, I work for companies and invest in things I am excited about! Here is a full list of my employment history and investments:
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