EdTech News Roundup - Week of 8/2
P.R.E.A.M - Platforms rule everything around me
For those of you planning to be at GSV this week, I’d love to meet up for a walk or outdoor coffee.
On to the news!
Funding / M&A / IPOs
Achieve Partners acquires Freedom Learning Group (FLG): Achieve, formerly known as University Ventures, is on a roll. After announcing their new, apprenticeship-focused fund in June, they acquired Optimum Healthcare IT in July and now add FLG - a military-focused instructional design shop.1
HackerU acquires Cybint for $50M: two of Israel’s leading bootcamps (largely IT/cybersecurity) join forces here. Cybint has been on a role signing US University partnerships this year, including deals with Loras College, Houston Baptist University, Plymouth State University, Central Texas College, Grand View University, and Eureka College.
Today is a 2-fer on Coursera. I’m splitting them up because both are longer-term trends I’m following and I don’t want one to crowd out the other.
With several organizations going public this year, we have an opportunity to get sharper on the metrics we use to evaluate education companies.2 This will be something of a dance, as companies don’t always disclose exactly what you’d like them to disclose.
To their credit, Coursera provides a couple of meaty numbers in their earnings statements. Here are a few I follow:
# of registered learners: currently 87M, up 6% from the previous quarter. The number of people in the registered learner pool looks like the leading indicator for the continued growth of Coursera’s various business units.3
# of degree students: Currently 14,630, up 81% YoY. the closest indicator we have to compare to a traditional OPM business. Also interesting to think about in the context of “sell through” from the 87M learner pool.
# of monetized non-degree students: not yet broken out. Coursera’s CEO, Jeff Maggioncalda, led off the earnings call talking about professional certificates, not degrees. Another indicator I’d love to follow in the context of “sell through”
Gross margin of Degrees segment: Currently 100%, unchanged YoY. I sort of understand why Coursera can say a 100% gross margin is true, but it feels a little like taunting…
To summarize Phil’s (excellent) article, Coursera and 2U are pursuing a strategy where a large pool of registered learners (see above) sits at the center (on a platform, if you will) of an ever-growing number of educational opportunities for each learner.
Historically, the education industry resisted aggregated outcomes. University of Phoenix (UoP) and Laureate flirted with a million students each, but were unable to sustain that number for long.4 Coursera and 2U (via the edX merger) are now leagues ahead of those entities by registered learner reach and starting to translate those learners into revenue opportunities. There are some regulatory rumblings about the OPM industry and misgivings about the state of graduate education, but I’m not sure they are as structurally problematic as what un-did UoP and Laureate.
I am curious how the other MOOCs and OPMs will respond. There are still major players in both camps (Udacity, Udemy, Pearson, and Wiley, to name a few) that could do something, but it would require significant shifts in capital and strategy.
Take the exact percentage in this headline with a large grain of salt - YourStory missed Class’ $100M raise, among a slew of others. However, they are still directionally correct in that the record-breaking amount of EdTech funding is going to a small number of companies.
This skew is somewhat natural as the winners from the 2010-2015 crop of EdTech startups mature and require more capital to scale than today’s early startups need to incubate. Early-stage EdTech VCs like Reach, GSV, Learn, and Achieve (same link as above) have also grown bigger to support these companies.
I’m curious whether the later stage attention created a hole in the EdTech funding market, but haven’t seen data to support either an increase or decrease in the total number of companies being funded this year.
Sunisa Lee heads to Auburn: a small, obvious-in-retrospect detail that made me laugh, 18 year-old Olympic gold medalist Sunisa Lee has a roommate! How do you think their conversation started? “Hey Suni, it’s your new roommate Daenerys! I know you’re hanging in Tokyo and all, but, like, what kind of wall decor are you thinking?”
California invests $115M in OER: Open Educational Resources (OER) feel like they are (haltingly) edging towards broader adoption. I’m hopeful investments like this one help push them over the hump
Duolingo tests a math app for kids: feels like a logical adjacency, ripe for the same playbook as languages - start with lower-stakes consumer uses, collect data, move towards higher-stakes assessment/enterprise use cases
Things I’m thinking about
There has been a lot of discourse around this Atlantic piece on the UC system removing the SAT/ACT from admissions requirements. Among others, Inside Higher Ed’s Op-ed section responded and the Washington Post reported on it.
I’m trying to do as much of my own homework as possible here - please send along any helpful materials you have on the topic! Educational equity folks (Jon Boeckenstedt is a favorite of mine for his frequent use of data) seem pretty convinced that these tests do not improve access for lower-income or minority students.
I work hard to stay neutral here, but it’s important to me that you all know my potential biases!
It is likely that the fundraise and both deals have been in the works for some time. There are all sorts of funny rules with PE/VC fundraising about what you can say publicly and when.
I expect this to have a ripple effect on valuations all the way down the food chain, though I’m not sure which direction. I do feel that more public data is generally good though
It’s possible I missed it, but I haven’t seen an attempt at sizing the total potential pool of learners that could register. Considering a global audience of learners, it is likely far larger than 87M. Also, I am a registered learner for both Coursera and edX. How does that factor into the total pool and LTV calculations?
A topic for another day!
If you want more Byju’s, this week they both acquired and didn’t acquire companies. Betsy Corcoran from Edsurge also noted they still have at least $500M to spend on US acquisitions to complement their market entry. I am exhausted.