Cherry Tree & Associates | January 2019 | Volume XIII, Issue 7
Varsity Tutors Acquires Veritas Prep 

Varsity Tutors, the web-enabled platform connecting learners in a variety of different subjects with tutors, has acquired Veritas Prep, a test prep and admissions consulting company. Veritas Prep offers ACT, GMAT, GRE and SAT sessions delivered both online and in-person and claims to have helped over 300,000 clients. Varsity Tutors has raised $107 million in funding to date from investors including TCV, Learn Capital and the Chan Zuckerberg Initiative
GuideK12 Acquires Excensus

GuideK12, the Minnesota-based provider of geovisual analytics software used by school administrators, acquired Excensus, a software development and applications firm that has been a long-time development partner with GuideK12. GuideK12 is owned by Platinum Group, a private equity group based in Minnetonka, Minnesota .
DaDa Raises $255M

DaDa, the Chinese English language learning platform formerly known as DaDaABC, raised $255 million in series D funding led by Warburg Pincus with participation from TAL Education Company and Yonghua Capital. To date, DaDa has raised $860 million from investors .
Byju’s Acquires Osmo for $120 Million 

Indian education company, Byju’s, which raised $540 million just weeks ago, acquired Osmo, a startup that develops apps for kids. Byju’s reportedly paid $120 million for Osmo which had $32.5 million in venture capital to date.
West Academic Publisher Acquired by Levine Leichtman Capital Partners

St. Paul, Minnesota based West Academic has been sold to Levine Leichtman Capital Partners. Previously owned by Eureka Equity Partners, West Academic is a provider of legal textbooks, casebooks and study guides .
Immersive Labs Raises $8 Million 

Immersive Labs, a cybersecurity skills platform, raised $8 million in series A funding led by Goldman Sachs with participation from several unnamed private investors .
Houghton Mifflin Acquires PV Waggle 

Houghton Mifflin Harcourt (Nasdaq: HMHC) acquired Waggle, the adaptive learning solution providing differentiated math and English language instruction to grades 2-8 .
Turning Technologies Acquired by Centre Lane Partners

Turning Technologies, the provider of engagement software and audience response technology aimed at enhancing learning experiences, announced that Centre Lane Partners acquired the company from Brockway Moran & Partners. Turning Technologies claims to have sold over 20 million response solutions to K-12 schools, universities and businesses .
BenchPrep Raises $20 Million 

BenchPrep, the provider of a white-label online learning platform for education and training organizations, raised $20 million in series C funding. Jump Capital and Owl Ventures led the round while existing investors NewView Capital and Revolution Ventures participated.
Talentsoft Raises $50 Million

Talentsoft, the provider of learning and human capital management software serving the European market, raised $50 million in its latest funding round. Francisco Partners led the round with participation form Bpifrance and Goldman Sachs. The Company reports it will reach $100 Million in revenue in the near future .
Lambda School Raises $30 Million

Lambda School, the coding school that allows to students to pay tuition after completing the program as a percentage of future salary, raised $30 million at a $150 million valuation. Bedrock Capital led the round while Vy Capital, GGV Capital, Google Ventures, Y Combinator and Sound Ventures participated
EMERITUS Raises $40 Million 

EMERITUS, the company that partners with universities to provide online courses to working professionals, raised $40 million in series C funding. EMERITUS reports it will enroll 30,000 students across 80 countries in courses this upcoming fiscal year.
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
A few weeks ago, I attended my first “college night” at my daughter’s high school. She’s a ninth grader, and while it struck me that it might be a little early to start worrying about selecting a college, I was quickly educated on the state-of-the art approaches for showing “demonstrated interest” in schools, creating and marketing your “personal brand,” and beginning to prepare for college entrance exams. Highlights of the night included being provided with our children’s scores on a recent practice exam, and parents of previously graduated children participating in a panel discussion of their efforts to prepare their children (often with the help of private tutors) and to manage the process of visiting and applying to numerous schools.

A recent report on the private tutoring market clearly indicates my fellow parents are not alone in seeking ways to increase their children’s chances of getting in to the best schools. While we would disagree with how they scoped the total market, Zion Market Research this month released a report indicating it is a $100 billion market, growing 7% per year, driven by growing competition among students, and an increasing willingness and ability among parents to fund additional resources. Online tutoring is listed as a newer and faster growing phenomenon, and blended learning (online and in-home) is listed as the largest segment from a modality standpoint. We've seen other reports indicating it is a $25 billion market, and that the online segment is growing 12%, and we certainly know of players in the space growing more rapidly.

Based on what we see in the M&A and capital raising market with tutoring companies, including Varsity’s acquisition of Veritas this month, mark this segment down as “one to watch” in 2019! 

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 and Partner | 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.