Must Read Blog December 9, 2020

Tyton Partners View: The White-Hot Market for Alternative Credentials

This month we highlight the alternative credential market, which has experienced accelerated growth during the pandemic as consumers have sought everything from self-edification to labor market reskilling. Over the past several years in both our consulting and banking practices, Tyton Partners has been at the heart of the development of this emergent phenomenon in a variety of forms. In the transaction world this has included, among other assignments, advising Carrick Capital in its purchase of Flatiron School from WeWork, as well as acting as leading sellside engagement of DevelopIntelligence to Pluralsight.

As we all look for forward to that new year (which can’t come fast enough), we wish you, your friends and family health and prosperity. As always, if we can help support your mission in any way, we encourage you to reach out.

Innovative solutions to systemic problems

Over the past 10 years, the market for private-pay educational content for adults has exploded. Whether for the purpose of developing a hobby or reskilling for employment, the ease with which content can now be offered and consumed online has allowed a robust alternative credential market to emerge. The runaway inflation in higher education tuition, combined with apprehension regarding the labor market value of a university degree, has also played a role in fueling this trend toward alternative pathways to employment. Faster, cheaper alternatives and supplements to traditional post-secondary education have become more appealing options for those that might have otherwise turned to institutional degree program offerings.

Not surprisingly, investors have heartily embraced this trend and private alternative credential providers – particularly those whose training leads directly to an occupational certification – are white hot. In November, Stride (NYSE: LRN), formerly K12 Inc., announced two such acquisitions. The longtime virtual charter school operator acquired tech training provider Tech Elevator for $23.5 million, or roughly 12x EBITDA. Tech Elevator joins coding bootcamp provider Galvanize in Stride’s growing stable of post-secondary alternatives. In the same month, Stride also announced the acquisition of healthcare training provider MedCerts for $70 million, or 17.5x EBITDA. MedCerts, which has reportedly been growing at 40% p.a., offers training directly to consumers in a variety of healthcare fields as well as a suite of services to employers looking to recruit trained professionals into those fields.

But investors remain equally enthusiastic about consumer-oriented training that is less specifically geared toward employment. With the pandemic leaving more people home-bound and reliant on screens for contact with the outside world, education as entertainment has skyrocketed as well. While some of MOOC content is geared toward reskilling and upskilling, much of it falls into the category of self-edification. Class Central reports that through August, new user growth at Coursera jumped from 8 million in the 12 months of 2019 to 20 million in eight months of 2020; EdX grew from 5 million to 8 million, and Future Learn grew from 1.3 million to 4 million during the same period.

This month, TechCrunch reported that Udemy, which serves as a marketplace for more than 130,000 courses ranging from those supporting casual hobbies to those preparing students for employment, is raising $100 million in a Series F round at a valuation of $3.32 billion, or more than $25,000 per published course.

Higher education institutions are not oblivious to this growing consumer phenomenon. In the face of declining undergraduate enrollment and demand for cheaper, faster workforce-aligned pathways, they are entering the market themselves. In many cases, institutions are doing so through white-label offerings in partnership with private companies. Examples of this phenomenon include 2U’s Trilogy and Get Smarter offerings and Zovio’s Fullstack Academy which brings university branded tech bootcamp training directly to consumers. (Tyton Partners represented Fullstack Academy in its 2019 sale to Zovio.)

We expect both consumer demand and investor enthusiasm for these new forms of credentials to continue to build in 2021 fueled by intensifying anxiety on the part of consumers to reposition themselves – as inexpensively as possible – for a rapidly shifting labor market.


Recent Deals


Empower Education Online Raises $265M

Codemao Raises $195M

VIPThink Raises $180M

GoStudent Raises $15.7M

LingoAce Raises $6M

AllRight Raises $5M

BOOKR Kids Raise $4.7M

Hellosaurus Raises $3.5M

The Student Hub Raises $2.9M

Lifecole Raises $0.7M

Codingal Raises $0.6M

Script Raises $0.5M

Edmentum Raises Undisclosed Amount

Lattu Kids Raises Undisclosed Amount

Kahoot Acquires Drops

Discovery Education Acquires Mystery Science

Frontline Education Acquires SuccessEd

GoGuardian and Pear Deck Merge


Unacademy Raises $87.5M

Didactic Raises $4.3M

ICG Acquires BIMM

Online Education Services Acquires Construct

EducationDynamics Acquires ClassesUSA

Noodle Acquires HotChalkhalk

Anthology Acquires xRM Software

Human Capital Optimization

Aixuexi Education Group Raises $200M

Udacity Raises $75M

Activtrak Raises $50M

Udemy Raises $50M

Duolingo Raises $35M

TRANSFR Raises $12M

SkyHive Raises $8M

Superpeer Raises $8M

Daylight Labs Raises $3.8M

FrontRow Raises $3.2M

AOne Raises $0.6M

eSwapp Raises $0.5M

Awign Raises Undisclosed Amount

Junoon Raises Undisclosed Amount

Skillshare Raises Undisclosed Amount

Docebo Acquires forMetris

J2 Global Acquires Inspired eLearning

Syntrio Acquires KnowledgeStart

Stride (K12 Inc.) Acquires MedCerts

Bertelsmann Acquires Simon & Schuster 

Stride (K12 Inc.) Acquires Tech Elevator