Must Read Blog April 7, 2021

Making the Grade: Investors Place Big Bets on K-12

Over the last three months the U.S. K-12 market generated more than $3 billion of deal activity. As schools and districts transition back to in-person learning and experiences, they will nevertheless need to deliver more dynamic, flexible learning experiences and resources to retain and engage students. For their part, investors are active and optimistic about the role that suppliers will play in this process. 

At Tyton Partners, we’ve taken a look back at historical investment trends relative to recent deal activity. The recent activity features notable themes, including large deal sizes in a market that historically has experienced more modest transactions, and a consistency among the investors that are engaged and active.  

We’d welcome the opportunity to discuss the meaning and impact of these trends on all stakeholders with you directly. 


Adam Newman, Managing Partner

Andrea Mainelli, Senior Advisor

Tanya Rosbash, Director

Investors Place Big Bets on K-12

The U.S. K-12 market has historically been slower growing and riskier than other education technology markets. For this reason, entrepreneurs must often go through more rounds of funding at early stages and have been less likely to persist to later stages. As a function of this, announced deals are often smaller in size. However, deals across the last quarter have demonstrated an increased appetite among investors for the K-12 sector, likely spurred by the disruptions of the last year. As schools, districts and families navigate the pandemic, investors are placing considerable bets on K-12 solution providers that will have a lasting impact.

Over the last decade, companies in K-12 have completed an average of 1.8 early-stage deals compared to 1.2 in the Corporate & Professional Training (C&PT) sector. Median deal size in 2019 was $4M in K-12 compared to $11M in C&PT. Moreover, C&PT companies raise, on average, two times more in late-stage financing than that achieved by successful K-12 companies. 

Capital velocity: capital raised in subsequent rounds for each dollar invested in early-stage deals*

*Based on a review of disclosed deal data from 2010 – 2020 in the U.S.

Q1 deals in 2021 reinforce two notable trends in the K-12 sector: 

  • Larger deals: Investors have demonstrated optimism through more sizable deals, particularly as schools continue grappling with how to effectively support students, families and teachers coming out of the pandemic. Investments in high-growth digital content and platform players have taken center-stage. In a single week in late February, three announced deals accounted for more than $1 billion in transaction value, led by Renaissance’s announced $650 million purchase of Nearpod. Other selected Q1 transactions are highlighted below.
  • Expanding cohort of leading K-12 investors: Whereas the oligopoly publishers used to represent the serial acquirers in the K-12 ecosystem, a new cohort has emerged. Companies like Cambium Learning, Frontline Education, IXL, Powerschool, Renaissance, and Weld North Education are now setting the pace in K-12 M&A. Nearly all have strong support from private equity sponsors eager to press their advantage at the market inflection points accelerated by the pandemic.  

Moreover, with Powerschool planning to go public, Cambium currently in a sale process itself, and several other notable players also in – or rumored to be in – the market for sale, 2021 could shape up to be one of the most robust years for K-12 M&A and investment activity we’ve seen. 

Selected Q1 deals

So what does this mean? 

For entrepreneurs…

  • Significant funding is available for businesses with strong growth profiles across the sector
  • Demonstrate how and why growth catalyzed by Covid-19 dynamics can be sustained “post”-Covid-19 and focus on executing against it this sales season
  • Current M&A and investment activity presents a diversity of exit options and a new set of buyers has emerged 

For investors…

  • High-growth companies will require higher premiums than investors have historically paid in the K-12 sector
  • K-12 budgets are strong for the next few years, powered by federal stimulus and – in some cases – surprising resilience of state budgets 
  • Get to know the “new” buyers and how your targets align with their strategies 

The challenges for K-12 districts and schools striving to get out from underneath the pandemic are significant. At the same time, it has created a window of opportunity for both established and newer suppliers to find more, better ways to partner to help institutional customers, students, and families reimagine what can – and should – be achieved.