June 2017
Volume XI, Issue 12
Hero K12 Raises $150 Million  
Hero K12, a provider of student behavior management applications for K-12 schools and districts, has raised $150 million from BV Investment Partners, a private equity firm focused on the business services and information technology sectors. The company plans to use the additional funding to invest in education technology businesses that expand its platform
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Coursera Raises $64 Million
Coursera, a provider of online courses, has raised $64 million in a Series D round of funding from New Enterprise Associates, Kleiner Perkins Caufield Byers, Learn Capital, GSV Asset Management, and the Lampert Foundation. The company has now raised a total of $210 million, with the most recent round reportedly valuing the company at $800 million
Trilogy Education Services Raises $30 Million  
Trilogy Education Services has raised $30 million in a Series A round of funding led by Highland Capital Partners with participation from Rethink Education, First Light Capital, and other investors. Through university partnerships, Trilogy offers skills-based training programs in web development, data analytics and visualization, and UI/UX. Since September 2015, the company has established 21 university partnerships
Ridibooks Raises $20 Million
South Korea-based Ridibooks, a provider of e-books, has raised $20 million in a Series C round of funding from Praxis Capital Partners, ShinHan Finance Investment, and Company K Partners. The new funding will reportedly be used to improve the user experience of its products. The company has raised a total of $35 million to-date
CVC Capital Partners Agrees to Acquire QA Group
CVC Capital Partners has agreed to acquire U.K.-based QA Group, a provider of training courses for technical IT, project management, IT service management, and business systems development, from Bregal Investments. The company has reportedly grown EBITDA over the last 10 years from £2 million to over £50 million. Financial terms of the transaction were not disclosed
CallidusCloud Acquires Learning Heroes
CallidusCloud (NASDAQ:CALD), a provider of cloud-based sales, marketing, learning and customer experience solutions, has acquired Learning Heroes, a provider of e-learning modules. Learning Heroes will reportedly be combined with CallidusCloud's Litmos Mobile Learning Platform. Financial terms of the transaction were not disclosed
Certica Solutions Acquires Unbound Concepts
Certica Solutions, a provider of K-12 data management software and education content solutions, has acquired Unbound Concepts, a provider of metadata solutions for reading content. Unbound Concepts' Artifact platform encompasses a taxonomy of over 700 terms which are used to enable discovery of content. Financial terms of the transaction were not disclosed
Carson-Dellosa Acquires Rourke Educational Media
Carson-Dellosa Publishing Group, a children's publisher, has acquired Rourke Educational Media, a publisher of informational texts and children's books. The transaction will add over 7,000 titles to Carson-Dellosa's portfolio of products. Financial terms of the transaction were not disclosed
Top Hat Raises $7.5 Million
Top Hat, provider of a teaching platform promoting student engagement, has raised $7.5 million in follow-on funding from Leaders Fund. This investment completes the company's Series C round with a total of $30 million ($22.5 million was announced earlier this year). The company has also announced that it has launched a content marketplace to help teachers collaborate
Yogome Raises $6.6 Million
Mexico-based Yogome has raised $6.6 million in a Series A round of funding led by Seaya Ventures, with participation from Variv Capital and Endeavor Catalyst. The company provides a subscription-based educational gaming service for children. The games are accessible through iOS and Android tablets. Yogome had previously raised $3.2 million in seed funding
Apptegy Raises $5.7 Million
Apptegy, a provider of communication and content publishing solutions for K-12 school districts, has raised $5.7 million in funding from Five Elms Capital. The funding will reportedly be used to enhance the company's product offerings and accelerate sales and marketing efforts
Lingokids Raises $4 Million
Lingokids, a developer of language learning applications for children, has raised $4 million in a round of seed funding led by Holtzbrinck Ventures and JME Venture Capital, with participation from Bessemer Ventures Partners, Sabadell Venture Capital, and Big Sur Ventures. The new funding will be used partly for expanding the company's applications to the web and Windows/MacOS
MyTutor Raises £3 Million 
London-based MyTutor, a provider of one-to-one online tutorials, has raised £3 million in a Series A round of funding led by Mobeus Equity Partners, with participation from angel investors. The company has approved 3,500 tutors and plans to scale by having approved tutors interview additional tutors for the platform
Mrs. Wordsmith Raises £2 Million 
Mrs. Wordsmith, the provider of a monthly subscription-based vocabulary program, has raised £2 million in a round of seed funding led by Kindred Capital, with participation from Reach Capital, SaatciNvest, and Ropart Asset Management. The company will reportedly use the funding to continue developing its subscription-based paper product, while also building out its technology team and expanding internationally
Wonderschool Raises $2 Million 
Wonderschool, a network of early childhood programs, has raised $2 million in a round of seed funding led by First Round Capital, with participation from Cross Culture Ventures, SoftTech VC, Lerer Ventures, FundersClub, and Edelweiss. The funds will reportedly be used to build the initial product and team
Mystery Science Raises $2 Million 
Mystery Science, a provider of inquiry-based K-5 science curriculum, has raised $2 million in a round of funding from Y Combinator, Reach Capital, and Learn Capital. The company's online program is designed to help generalist teachers teach science lessons by solving "mysteries."  
BookNook Raises $1.2 Million 
BookNook, a provider of web-based literacy platform for learners in grades 1 to 5, has raised $1.2 million in a round of seed funding led by Reach Capital, with participation from the Urban Innovation Fund, Impact Engine, and Better Ventures. This year, the company expanded its pilot program to nearly 30 schools
Sage Tutoring Acquires Club Z! Tutoring 
Sage Tutoring, a provider of tutoring services, has acquired Club Z! Tutoring, a provider of in-home and online tutoring services. Financial terms of the transaction were not disclosed
MC Monthly Commentary:

In the 1992 presidential campaign, strategist James Carville employed the phrase, "the economy, stupid," as one of three messages he wanted Bill Clinton's campaign workers to focus on. In the early 2000's, in my less diplomatic days, I once suggested to an ed-tech company that one of its employees' mantras should be, "the implementation, stupid." 

I was reminded of this recently, when someone suggested that the future of learning is adaptive technology, at the exclusion of all other education resources. 'Yes,' I thought, 'that is the future... and it will always be.'  

There is no doubt that adaptive learning is already having an impact. And that one of technologies' benefits, not just its promise, is greater personalization of learning. Assessments, whether formative or embedded with content in an adaptive solution, can determine a student's knowledge, ability, and readiness level. Using this information, it can tailor resources and instruction to that learners' needs. 

Ed-tech solutions can personalize, make us more productive, and provide greater insight through better reporting and analytics. But we must remember, as providers of these solutions, that they are just tools.  It is a rare solution that can be effectively administered without an educator, especially with younger learners in the K-12 world. Digital resources need to be administered as part of a cohesive education strategy, tied to learning objectives and standards, and integrated with a variety of other resources and methodologies, to address the full scope of teaching and learning goals.
Solution providers who successfully build an education business with a lasting impact understand that their solution needs to fit within the needs of the customer (whether a corporation, a state, a district, a school, a parent, or an individual learner), and that the customers need to be ready, properly trained, and sufficiently supported to use the products effectively. 

For a confidential conversation about your company's strategic alternatives for exiting, merging, acquiring, or obtaining venture financing, and how trends in education affect your prospects, please contact us at 952-893-9012.
Education For-Profit 50 Index
For-profit education comprises more than 5% of the roughly $1.3 trillion that is spent on education in the U.S. annually. Cherry Tree created the Education For-Profit 50 Index representing a group of publicly traded for-profit education companies .
The For-Profit Education 50 Index consists of companies in the Pre-K-12, Postsecondary Education, Training and Development, and Education Products and Services segments for-profit education industry.

Postsecondary Education
Training  and Development
Education Products and Services Providers
EV*/Revenue = 1.7x
EV*/Revenue = 1.0x
EV*/Revenue = 1.3x
EV*/Revenue = 1.5x
EV/EBITDA = 11.0x
EV/EBITDA = 7.3x
EV/EBITDA = 9.6x
EV/EBITDA = 11.0x
3-Yr Rev Gr = 1.0%
3-Yr Rev Gr = -2.8%
3-Yr Rev Gr = 5.1%
3-Yr Rev Gr = 0.6%
EBIT Margin = 12.9%
EBIT Margin = 6.9%
EBIT Margin = 4.5%
EBIT Margin = 4.7%

* EV= Enterprise Value

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Important Disclosures
The information included in this publication has been obtained from public sources, and is not based upon private or confidential Cherry Tree information. Cherry Tree gathers its data from sources it considers reliable. However, it does not guarantee the accuracy or completeness of the information provided within this publication. Any opinions presented reflect the current judgment of the authors and are subject to change. Cherry Tree makes no warranties, expressed or implied, regarding the accuracy of this information or any opinions expressed by the authors. Officers, directors, partners of Cherry Tree and Cherry Tree proprietary investment funds may have positions in the securities of the companies discussed, and certain affiliates of Cherry Tree may recommend to specific clients the purchase and sale of securities discussed in the publication.  This publication does not constitute a recommendation with respect to the securities of any company discussed herein, and it should not be construed as such. Cherry Tree or its affiliates may from time to time provide investment banking or related services to these companies. Like all Cherry Tree employees, the authors of this publication receive compensation that is affected by overall firm profitability. We undertake no obligation to update any information in this publication. 

The Education For-Profit (EFP) 50 Index is a hypothetical index, and does not reflect an actual investment portfolio.  Comparisons between the EFP 50 Index and the S&P 500 are for illustrative purposes only.  Correlations in performance information for the EFP 50 Index and the S&P 500 should not be relied upon as indicative of risks involved in owning or holding a portfolio of securities similar to the EFP 50 Index. Past performance should not be relied upon as indicative of future performance.