Education market activity started the year strongly, with nearly 70 announced deals across the first month of 2021. We were involved in several at Tyton, including advising TeachTown on securing a growth investment from Bain Capital Double Impact and representing Helix Education in its sale to RNL. Both deals reflect the renewed commitment to EdTech models across the sector.
As stimulus funding moves through the political pipeline, we see an education sector once again buoyed by robust federal spending that will cushion state budget challenges affecting K-12 and postsecondary education and pump dollars into workforce training and development initiatives. Deals will be coming to market quickly across the first half of 2021, and early February announcements reinforce the robust activity last month.
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Strong Start to the Year as Investors Double Down on EdTech
Even as vaccinations ramp and pressures mount for schools to reopen in the new year, investors remain focused on businesses that represent or support alternative models for teaching and learning at every level of education. Whatever the pace of a return to in-person learning, investors believe technology-informed supports have become a more integral and permanent part of the education landscape globally and the range of investments announced at the start of the new year reflect this conviction. While different countries’ schooling systems may be various, the demand for tech-enabled and tech-delivered education solutions is universal and, investors are betting, scalable across borders.
Human Capital Optimization: Investors bet on formal school alternatives
In human capital, digital platforms for training current employees and sourcing prospective employees saw activity, as did direct-to-consumer skills bootcamps.
Affordable alternatives to degree-based higher education has been a consistent theme in the education investing market for several years, and 2020 saw big increases in both consumer and investor demand for these alternatives. In January Ironhack, a Miami-based coding bootcamp company offering instruction in Europe and North and South America, raised $20 million in its latest round. The company plans to use the money to build out more virtual offerings to complement its campus-based offerings.
However, the largest deal in the human capital optimization market in January was a $44 million Series B investment in a UK-based company called Multiverse (formerly WhiteHat) led by General Catalyst. The company will use the funds in part to bring its apprenticeship business model to the U.S. Multiverse works with companies to develop apprenticeship models and then staff them with diverse candidates, allowing the apprentices to achieve attractive employment outcomes while bypassing more expensive school-based programs.
Higher Education: Funding for tools that help today and tomorrow
In higher ed, service providers supporting schools’ delivery of online learning, both for the remote education of ground-based students as well as for those studying entirely online saw cash inflows.
In what represents a quite literal doubling down on the theme of supports for remote instruction, Blackboard co-founder Michael Chasen’s ClassEDU raised another $30 million on top of the $16 million raised in September. The company, which the operators simply call “Class”, is currently still in a pre-launch mode with 60 beta customers and aims to augment Zoom in several important ways. It allows instructors to launch live assignments, quizzes and tests, which can be completed by students in real time. It also offers a range of useful administrative features including attendance tracking and participation monitoring. The additional dollars will be used to build out the Class team and in particular, support the burgeoning demand for the product outside the U.S.
The pandemic has also given new energy to the online program management (OPM) market, and colleges and universities have been variously confronted with the importance of having fully online streams of revenue. Existing service providers to the sector are increasingly feeling the need to be involved in this growing area of the market. In January RNL announced its acquisition of Helix Education (Tyton Partners advised Helix in the transaction). In the announcement RNL asserted that Helix rounds out its ability to help schools improve every aspect of the adult student lifecycle – lead generation, lead nurturing, enrollment, academic services, and retention – through what is now an end-to-end marketing, enrollment, and retention technology platform.
K-12: Supporting parents both through and around schools
At the K-12 level, investments included both supports for parent-funded alternatives to public schools and technology tools for schools in their effort to deliver learning remotely.
The largest EdTech investment to date in 2021 was in a direct-to-consumer math platform. Canada-based Prodigy Education raised $125 million in a Series B round led by TPG Growth. After nine years of operation, Prodigy boasts more than 100 million registered users worldwide. The company provides a math tutoring platform that emphasizes gamified instruction for students in grades 1 through 8 and is used by students, parents, and teachers. From a strong base in North America, Prodigy has recently expanded to India, Australia and the United Kingdom.
In the related category of tools for schools to use in supporting students and parents at home, Bain Capital Double Impact invested in Boston-based TeachTown, which provides a range of digital curriculum products that support the instruction of severely autistic students (Tyton Partners advised TeachTown in the deal). Special education – particularly education for severely autistic students – is typically a very labor-intensive, hands-on process. TeachTown’s tools help to leverage the scarce resource of well-trained educators with computer-based instruction and assessment. When the pandemic hit, demand for remote, digital solutions for these students accelerated, and Bain is betting that the products’ role in improving both efficacy and efficiency will allow the company to consolidate its pandemic-related growth and continue to expand.
Human Capital Optimization
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