Tyton Partners View: October 2020 Education Deals

by: Trace Urdan | Blog |Nov 4th, 2020

In September we announced the addition of two highly respected higher education executives, Greg Finkelstein and Michael Goldstein, to the Tyton Partners team in conjunction with the launch of a new initiative aimed at providing a greater range of services to colleges and universities. The Center for Higher Education Transformation is a joint offering between our strategy consulting and investment banking practices to support institutions facing a wide range of operational and market challenges. In addition to Greg and Mike, two additional senior team members with considerable postsecondary experience, Adriano Allegrini (consulting) and Dan Clary (investment banking) have also recently joined our team. 

This month, we have highlighted a number of recent deals similarly targeted at a specific and emerging pain point for higher education that is student recruitment. We believe solving for new challenges in student recruitment is going to be a meaningful edtech investment theme over the next several years.

Be well and speak soon.

Adam Newman, Founder and Managing Partner

Trace Urdan, Managing Director  

New Chapter In Enrollment Services

Among the myriad long-term challenges faced by colleges and universities that have been exacerbated by the pandemic is the breakdown of traditional marketing channels. The methods by which students send signals regarding fit to schools and schools send signals regarding fit to prospective students have come under fire in recent years. Many schools, including the University of California, have eliminated the use of standardized tests altogether because of their perceived role in aggravating systemic inequities; the pandemic has made them at least temporarily optional at many other schools. This means less information for schools to use in identifying and targeting prospective students. Of course, more prosaic methods such as college fairs, high school visits and college tours have been curtailed as well. Finally, long-established practices such as legacy preferences and athletic recruiting have also come under fire for their roles in helping to support inequitable systems. And for this and other financial reasons related to the pandemic, many institutions have sharply cut back on their varsity sports programs, limiting yet another recruiting channel.

Suffice it to say that the marketing infrastructure for the $670 billion post-secondary education industry in the United States has been significantly disrupted, creating ample room for creative solutions and innovation. Schools need new ways to identify and engage promising candidates for their institutions while broadening their reach into historically underserved groups. On the flip side, prospective students and families need new ways to find schools that match their needs and budgets. Into this breach has moved a new generation of companies trying to solve this complex equation. Larger higher ed services businesses in the sector have taken notice and attempted to lean into the new solutions.

In September, EAB announced its acquisition[1] of Cappex, a platform for students and families searching for schools and scholarships. EAB cited the shifting trends in the college search process and the need expressed by its client schools for new ways to find and engage prospective students. EAB also noted survey data that indicates college search sites are a growing source of information for students and pointed to the waning advantages of the standardized tests to effectively connect schools with prospective students.

In a similar vein, earlier in the year CampusLogic, which provides software-based solutions to schools’ financial aid offices acquired RaiseMe, a social platform focused on expanding access to higher education, especially among low-income and first-generation students. CampusLogic cited the addition of RaiseMe to its offering as one that would empower colleges and universities to enroll, engage, and retain more students, while also supporting goals of improving diversity. The RaiseMe platform offers students the ability to demonstrate their aptitude for college beginning as early as ninth grade, in exchange for which participating colleges offer scholarships, effectively discounting their prices for students that show a strong likelihood of being successful at their institution.

Most recently, Liaison, a provider of application service technology as well as related recruitment marketing, processing and support services announced the acquisition of TargetX, a customer relationship management (CRM) software company that helps colleges and universities manage their applicants, students, alumni and donors. Together the two companies serve more than 1,500 colleges and universities in the U.S.

We expect to see more consolidation of point solutions into larger services platforms, but perhaps more strikingly, we also expect the larger platforms themselves to trade as investors develop a greater appreciation for the scale of the coming disruption and the resulting need that is developing in traditional higher education. With literally billions of dollars of tuition revenue at stake and traditional approaches and systems collapsing in real time, we expect to see those private sector players with compelling solutions to these pressing challenges emerge as big winners over the next five years.

[1] Tyton Partners advised Cappex in its sale to EAB.

Recent Deals

PreK-12

Yuanfudao Raises $2.2B

Kahoot! Raises $215M

Knowledgehook Raises $20M

Lingokids Raises $10M

Teachmint Raises $3.5M

Sora Raises $2.7M

Simpleclub Raises $2.4M

Fiveable Raises $2.3M

Prompt Raises $1.9M

Sanmaoyou Raises $1.5M

Kokoro Kids Raises $0.7M

AhaGuru Raises Undisclosed Amount

Convertsation Raises Undisclosed Amount

Tetrika Raises Undisclosed Amount

Altitude Learning Merges with the U.S.-based Arm of itslearning

Coderise Acquires Bomberbot

Madison Dearborn Partners Acquires Carnegie Learning

Quo Vadis Education Acquires Conifers School

USATestprep Acquires Education Galaxy

Co-Creation Hub Acquires eLimu

HarbourVest Partners Acquired Significant Minority Stake in Finalsite

PowerSchool Acquires Hoonuit

IRIS Software Group Acquires iSAMS

Saga Education Acquires Woot Math

Postsecondary

Handshake Raises $80M

Engageli Raises $14.5M

Podium Education Raises $12M

Empowerly Raises $1.6M

Turnitin Acquires ExamSoft

UCAS Acquires MO University Assistant

American Public Education Acquires Rasmussen

Liaison Acquires TargetX

Human Capital Optimization

LearnUpon Raises $56M

Skilljar Raises $33M

GetSetUp Raises $10M

Arist Raises $1.9M

Immerse Raises $1.5M

Edlyft Raises $1.4M

GoMyCode raises $0.9M

Dhurina Acquires $0.1M

Expertrons Raises Undisclosed Amount

Pesto Raises Undisclosed Amount

Skillshare Raises Undisclosed Amount

Churchill Capital Corp II Merges with Skillsoft and Acquires Global Knowledge

Palatine Private Equity Acquires a Stake in Back2Work

Pluralsight Acquires DevelopIntelligence

Learning Technologies Acquires eCreators

Enact Fund Acquires Interserve Learning & Employment (ILE)

MDBriefcase Acquires OncologyEducation

Course Hero Acquires Symbolab

 

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