Q1-2 Trends and Transactions: Corporate Training and Workforce Development

Market activity in corporate training and workforce development across the first four months of 2021 was characterized by significant announcements, perhaps most notably Coursera’s initial public offering at the end of March valuing the online short-course provider at over $7B. While Coursera’s higher-than-expected valuation is likely due to enthusiasm for direct-to-customer-driven education models, there have also been a number of transactions indicating strong enthusiasm for B2B businesses. The most significant of these transactions are the focus of this newsletter and include:

(1) The rapid emergence of Learning Experience Platforms (LXPs) as demonstrated by Degreed’s $153M Series D and LinkedIn’s launch of their own LXP, Learning Hub, and the trend toward comprehensive (i.e., all-in-one) solutions in Human Capital Management (HCM)

(2) BetterUp’s $125M Series D and $1.7B valuation underlaid by the significant costs to organizations from employee’s heightened anxiety and depression and the desire for organizations to support their employee’s professional development, personal growth, and sustained well-being

We welcome the opportunity to discuss these trends and the implications for your business with you directly. As always we stand ready to leverage our transactional experience and data-based market insights to support your organization across both our consulting and banking platforms.

Rapid emergence of Learning Experience Platforms (LXPs) shows no signs of slowing down as Degreed raises $153M in Series D funding and LinkedIn launches its own LXP

Degreed $153M Series D (4/13): LXP pioneer and market leader Degreed raised a Series D earlier this month. The round, which was co-led by Sapphire Ventures and Riverwood Capital, values the company at $1.4B. The funding will be used to pursue global expansion and strategic acquisitions, as well as to accelerate product development, which includes technology enhancements focused on upgrading Degreed’s reporting and analytics. Degreed also announced yesterday a partnership with Watershed, a learning analytics platform, through which Degreed learning data will feed into Watershed’s dashboards in real time. Degreed’s planned product enhancements and partnership with Watershed reinforce the blurring of lines between LXPs and Learning Management Systems (LMSs). LXPs are employee-centric, designed to easily find and consume skills training content. LMSs are employer-centric, designed as management tools to help organizations administer and measure efforts to upskill employees. The two markets complement one another, but as they mature, organizations are increasingly likely to look for a comprehensive solution that enables skills discovery and data analytics, as well as compliance and certification.

Linkedin launches Learning Hub (4/20): Along the same blurred lines between LXPs and LMSs, but a step further into the full value chain of Human Capital Management (HCM), LinkedIn announced the upcoming launch of its skill building platform, Learning Hub, during the second half of 2021.Learning Hub combines a variety of learning resources – including LinkedIn Learning (formerly Lynda) content, partner content, an organization’s custom created content, and content from popular LMSs. Learning Hub also draws on data from LinkedIn’s 24M+ job postings and professional network of 740M+ members to generate an unparalleled skills taxonomy.

The launch of Learning Hub comes on the heels of other moves by LinkedIn, and its parent company, Microsoft, to position itself across the HCM value chain of recruitment, engagement, learning, and measurement. In February, LinkedIn announced integrations between LinkedIn Learning, Glint (an employee engagement data analytics platform acquired in 2018), and Microsoft Viva (an employee experience platform). Within the daily workflows of Microsoft 365 and Teams, these moves indicate a strategy of vertical integration. They also indicate a strategy for LinkedIn to serve as a platform for content providers to access and leverage Learning Hub’s skills taxonomy. However, it remains to be seen whether or not Microsoft and LinkedIn can seamlessly bring together communications, resources, and insights internally and across content partners, and whether or not customers will prefer an all-in-one platform to standalone solutions across all the steps in the HCM value chain.

While LinkedIn intends to invite other content providers into its “hub,” the content agnosticism of Degreed may turn out to be a critical component of its singular success to date. Training provider SkillSoft first introduced its own proprietary LXP Percipio in 2018 in a similarly styled vertical integration that has failed to drive the same type of growth that Degreed has experienced over the same period.

BetterUp’s $125M Series D at a $1.73B valuation serves as a signal of the importance of and growth in coaching, counseling, and mental health support

BetterUp $125M Series D (2/25): BetterUp, an online coaching, counseling, and mental health firm, raised a Series D in late February at a valuation of $1.73B. ICONIQ Growth led the round with participation by existing investors, Lightspeed Venture Partners, Threshold Ventures, and Plus Capital, and by new investors, Salesforce Ventures, Sapphire Ventures, and Mubadala Capital. The funding will be used to accelerate BetterUp’s product roadmap and to enhance its BetterUp Care offering, an enterprise-level mental health solution that provides access to specialists in behavioral health, parenting, nutrition, and sleep.

In addition to its Series D round, BetterUp also recently garnered attention for its newest employee, Prince Harry, the Duke of Sussex. Prince Harry joins as BetterUp’s first Chief Impact Officer with the goal to “lift up critical dialogues around mental health.” This goal underlines the opportunity and >$1B valuation for BetterUp: Clinical depression costs over $51 billion in absenteeism from work and lost productivity and $26 billion in direct treatment costs each year.

BetterUp’s fortunes are not limited solely to the opportunity to ameliorate employee mental health. Their core of personalized professional coaching remains strong as the International Coaching Federation estimates the North American coaching market to represent approximately $1.3B in 2019 and 12% CAGR since 2015. The International Coaching Federation also reports the number of managers and leaders using coaching skills is estimated to have risen by almost half (+46%) since 2015. These trends are validated by BetterUp’s performance in 2020, when the company more than doubled its annual recurring revenue, grew its customer base by 80 percent, and recorded a net revenue retention rate of over 140%.