Sector Deal Dynamics – March 2019

by: Tyton Partners | Blog |Mar 6th, 2019

February education transactions underscore traditional university’s desire for comprehensive solutions, suggesting further consolidation of the technology-based services landscape. Meanwhile, Private Equity demonstrates continued interest in subscription-based administrative software. Rapid change in the employment market continues to drive deal counts and grow ties between education offerings and employment services. We hope these observations provide insights into key trends and ignite conversation.

Best,
Adam and Chris

Postsecondary: Tech-Enabled Services Market Continues Consolidation

Instructure (INST), the publicly traded provider of the popular Canvas learning management system, announced an agreement to acquire Portfolium for $43 million, of which $25.8 million will be paid in cash and the balance in stock, according to public filings. Founded in 2014, Portfolium offers digital portfolios where learners can document their achievements and competencies and showcase work to potential employers. Portfolium says it has served more than 4.6 million students and alumni across more than 3,600 K-20 institutions in 18 countries. The start-up had raised $7.8 million in venture funding which suggests a respectable, if not quite outstanding return to its institutional investors.

The sale represents a strong validation of the e-portfolio concept, which attempts to provide employers with a more robust view of a candidate’s qualifications than that of a standard course transcript and resume. With the purchase, Instructure signals both its belief in the growth and value of the e-portfolio product, as well as its own desire to diversify beyond its core LMS offering. In its IPO, Instructure signaled to investors that growth could come in large part from a future migration to a corporate offering. And while Portfolium may serve as a strengthening bridge between the postsecondary and corporate markets, we also see in the deal an interest in broadening its offerings within its core university market; a move more reminiscent of Blackboard’s approach to growth.

We further believe this deal represents another data point suggesting that traditional universities are hungry for comprehensive versus point solutions and that greater consolidation of the technology-based services landscape is likely to continue.

K-12: Administrative Software Market Continues its Movement to Private Equity

Quad Partners has acquired a controlling interest in Austin-based SchoolAdmin, a provider of K-12 admissions and enrollment software. Founded in 2009, SchoolAdmin supplies a SaaS-based solution to 400 K-12 institutions in the area of student recruitment, as well as enrollment and billing management. Quad cited the company’s high customer satisfaction as a key differentiator and intends to support the company’s ongoing effort to build out its platform with additional products and services.

Subscription-based administrative software is a sector that continues to consolidate in the wake of Thoma Bravo’s high-profile 2017 acquisition of Frontline Education. Historically schools have lagged the corporate market in their purchase of labor and cost-saving administrative in large part because of inadequate capital budgeting. However, the advent of Web-based subscription models has led to strong growth as end markets have embraced tools that they can buy on a continuing one-year basis. Despite the attention given to digital curriculum content and educational software, the need for ever-greater levels of compliance-driven record keeping and the benefit of being able to free up staff to focus on tasks with greater educational benefit have powered growth in these less sexy, back-office solution categories.

HCM: WeWork Furthers Its Investment in the Future of Work

Landit, a technology platform designed to increase the engagement and success of women and diverse groups in the workplace and help companies attract a diverse workforce, announced a $13 million Series A raise led by WeWork. Other participants included NEA, Valo Ventures, Workday Ventures, Gingerbread Capital and existing seed funders. The platform provides users with tailored resources, including executive coaching and tools, to help them navigate and advance their careers. The platform also provides assistance to companies that are actively trying to recruit from a more diverse talent pool.

The investment is from a dedicated fund launched by WeWork last September to invest in “the future of work” and is another indication of the company’s broadening strategy in the areas of training and employment services. In 2017 WeWork acquired coding school Flatiron School, and in 2018 WeWork entered a multi-faceted partnership with 2U to provide workspace to 2U students and access to WeWork’s proprietary technology to 2U. We continue to see evidence of the growing ties between staffing and employment services and education offerings dedicated to career advancement. This trend is driven by a host of factors, including an accelerating pace of change in the employment market, excitement around new education models (and growing dissatisfaction with old ones), and of course new facilitative technologies. WeWork is at the forefront of this movement and well-positioned, we think, to benefit from this evolving dynamic.

Recent Deals

K-12

ClassDojo raises $35M

MEL Science Ltd raises $2M

Quad Partners acquires SchoolAdmin

TAL Education Group raises $500M

Nexus Capital Management acquires Pearson K-12 Courseware

GradeSlam raises undisclosed amount

Allovue raises $4M

TAL Education acquires Ready4

eCare Vault raises $4.75M

Weld North Education acquires Glynlyon

HeyTutor raises $1M

Class Tag raises $2M

Hero K12 acquires SureWatch

Microsoft acquires DataSense

Higher Ed

Instructure acquires Portfolium

Ardian acquires Study Group

Civitas Learning raises undisclosed amount

Knack raises $125K

Human Capital Optimization

Elsa raises $7M

Landit raises $13M

Project Management Academy acquires Watermark Learning

EdCast acquires Leapest

CourseStorm raises $1.15M

Hired acquires Py

My Serious Game raises $3.4M

Crehana raises $4.5M

Nurse Dash raises $125K

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