Cherry Tree & Associates | April 2018 | Volume XII, Issue 10
NetDragon Agrees to Acquire Edmodo

NetDragon (SEHK:777), a China-based video game and internet community developer, agreed to acquire Edmodo, a communication platform for K-12 schools and teachers, for $137.5 million. Edmodo lost $19.5 million in 2017, with $1 million of revenue.

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Thinkful Acquires Bloc

Thinkful, an online coding bootcamp, acquired Bloc, another online coding bootcamp. This is Thinkful’s second coding bootcamp acquisition, as it purchased Viking Code School last January. Terms of Thinkful’s acquisition of Bloc were not disclosed.
Frontenac Acquires TPC Training and Jade Learning from Renovus Capital Partners

Frontenac, a private equity firm, acquired TPC Training and Jade Learning from Renovus Capital Partners. TPC Training provides industrial skills training, while Jade Learning offers online electrical continuing education. Terms were not disclosed.
Campus Labs Agrees to Acquire Chalk & Wire

Campus Labs, a higher ed data analytics platform, will acquire Chalk & Wire, a provider of learning assessment and credentialing solutions. Terms were not disclosed.

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Strada Education Network Acquires Economic Modeling LLC

Strada Education Network, a non-profit organization that guarantees education loans for students, acquired Economic Modeling LLC (commonly known as Emsi), an economic data firm that tracks employment and salary trends. Terms were not disclosed.
Edmentum Raises $25 Million

Edmentum, a provider of online learning programs for educators, raised $25 million in capital from New Mountain Finance Corporation and Tennenbaum Capital Partners.
CampusLogic Receives $55 Million Investment from JMI Equity

CampusLogic, a financial aid platform for higher ed institutions and students, received a $55 million investment from JMI Equity, a Baltimore-based growth equity firm. CampusLogic had $2.1 million of revenue in 2016.
Holberton School Raises $8.2 Million

Holberton School, a coding school that offers a two-year full-stack engineering program as an alternative to college, raised $8.2 million. The Series A round was led by Daphni and Trinity Ventures, with Omidyar Network also participating.

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Nexford University Raises $4 Million

Nexford University, a provider of online courses that teach workplace competencies, raised $4 million in a seed round led by Magnify Ventures. Several angel investors also participated.

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New Harbor Capital Invests in Blueprint Test Preparation and Next Step Test Preparation

New Harbor Capital made a majority stake investment in Blueprint Test Preparation and Next Step Test Preparation, both providers of tutoring and test prep services. The companies were combined into a single entity called Blueprint Education Holdings.
Kroton Educacional Agrees to Acquire Stake in Somos Educação

Kroton Educacional, Brazil’s largest for-profit education firm, agreed to acquire Somos Educação, a Brazil-based provider of educational content and tools, for the equivalent of $1.8 billion.
Vista Equity Partners to Merge PowerSchool and PeopleAdmin as Part of Deal with Onex Group

Vista Equity Partners will merge two of the education technology companies it owns, PowerSchool and PeopleAdmin, as part of an investment deal with Onex Group, a Canadian private equity firm. The combined entity is valued at nearly $3 billion.
New Mountain Learning Recapitalized by CIP Capital

New Mountain Learning, a provider of blended curriculum and learning solutions for K-12 world languages, post-secondary, and career learning markets, has been purchased by CIP Capital from Wicks Group, both New York-based private equity firms. Terms of the transaction were not disclosed.
Credly Acquires Acclaim

Credly, a digital credential platform, acquired Pearson’s (LSE:PSON) badging business, Acclaim. Though terms were not disclosed, it was announced that Pearson will take a minority stake in Credly as part of the transaction.
Ebix Agrees to Acquire Stake in Smartclass Educational Services

Ebix (NASDAQ: EBIX), a provider of insurance software solutions, agreed to acquire a majority stake (60%) in Smartclass Educational Services, an India-based digital media repository of educational materials, for $8 million.
Vector Solutions Acquires Convergence Training

Vector Solutions, a provider of online continuing education for the commercial, education, and public sectors, acquired Convergence Training, a provider of training software and online courses for the industrial sector. Terms were not disclosed.

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Connexeo Receives $110 Million Investment from Great Hill Partners

Connexeo, a provider of administration software and payment systems for schools, received a $110 million growth equity investment from Great Hill Partners, a Boston-based private equity firm.
Edovo Raises $9 Million

Edovo, an online learning platform for incarcerated people, raised around $9 million in a Series A round. The round included Impact Engine, Lumina Foundation, Kapor Capital, as well as other investors. Edovo has now raised $12.3 million.
Teachable Raises $4 Million

Teachable, a platform where entrepreneurs can create and sell online courses, raised $4 million in a Series A round. Accomplice and AngelList co-founder, Naval Ravikant, participated in the round. Teachable has now raised $12.5 million.
BookNook Raises $2 Million

BookNook, a provider of reading instruction applications for schools, raised $2 million in a seed round. The round was led by Better Ventures and the Urban Innovation Fund, and included several other investors. BookNook has now raised $3.1 million.

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Lingumi Raises Approximately $1.7 Million

Lingumi, a London-based startup that develops English learning applications for children between the ages of 2 and 5, raised £1.2 million (approximately $1.7 million) in a seed round led by ADV. LocalGlobe and Entrepreneur First also participated.

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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.
* EV= Enterprise Value
One of the hottest investment theses in growth investing today is monetizing a SaaS platform through payments. Similar to Visa and American Express taking a few percentage points every time you use your credit card, SaaS businesses and savvy investors are finding that a significant share of transaction fees can be captured online by proprietary payment technology. Or at worst, partnering with a payments provider can allow the platform owner to share in the proceeds. For SaaS providers in cost-competitive markets, and especially with free platforms that need a monetization strategy, payments can be the difference between making a profit, or entering the slow spiral into oblivion that can result from not being able to invest in a current and robust technology.

As was seen with Great Hill’s investment in Minneapolis-based Connexeo, and the associated acquisition of RevTrak, this thesis is being followed in the education markets as well. Whether it is tuition, room and board, annual dues, corporate learning events, or the never-ending list of fees and supplies that parents are asked to pony up for their children, there are fortunes to be made processing those payments. Expect more education businesses (and investors) to pursue strategies that seek to profit from the millions of dollars that can flow through their platform, via purchases.
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

Prepared by:
Chad Johnson, Managing Director | 952.253.6010

Cherry Tree & Associates is a private investment banking firm headquartered in Minneapolis. Our firm specializes in serving middle market companies and their owners, whether private, public, or divisions of larger corporations.
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.