Cherry Tree & Associates | January 2021 | Volume XV, Issue 7
Wiley Acquires Hindawi

John Wiley & Sons (NYSE: JWA) has acquired Hindawi, an open-access and growing publisher of scientific research. John Wiley reported paying $298 million for Hindawi which is 7.5x its 2020 revenue of $40 million. Hindawi, based in London, has a portfolio of over 200 peer-reviewed scientific, technical, and medical journals and reportedly grew revenue 50% in 2020.
Pluralsight Acquires Next Tech

Pluralsight (Nasdaq: PS), the technology workforce development company, has acquired Next Tech, the provider of cloud-based computing environments, enabling the authoring and hosting of labs in software development, data science and machine learning. The acquisition of Next Tech enables Pluralsight to strengthen its technology skills platform for customers.
SchoolMint Acquires Whetstone Education 

SchooMint, the enrollment management platform, acquired Whetstone, an observation and coaching platform. Whetstone reportedly serves over 1 million students and more than 2,000 schools. SchoolMint, which is backed by BV Investment Partners, reportedly serves over 10 million students across 16,000 schools.
Prodigy Education Raises $125 Million

Prodigy Education, the edtech platform known for its math game, raised CAD 159 million (about $125 million USD) in a series B round led by TPG Growth with participation from the Canadian Business Growth Fund. Prodigy Education reports having over 100 million registered users worldwide.
Bain Capital Double Impact Fund Invests in TeachTown 

TeachTown, a provider of evidence-based education curriculum software for special needs students, secured a growth investment from Bain Capital Double Impact. TeachTown reportedly serves over 50,000 students diagnosed with autism spectrum disorders, intellectual disabilities, and developmental disabilities across the U.S.
The Big Know Acquired by mPulse Mobile

mPulse Mobile, a conversational AI solution for the healthcare industry, acquired The Big Know, an education-based health and wellness platform owned by LFE Capital. mPulse Mobile reportedly engages over 50 million Americans through various engagement channels. “When we think about healthcare delivery, member and patient engagement must include education,” said Allison Gage, current President of The Big Know, and mPulse’s new Chief Engagement Officer.
Learning Care Group Acquires U-GRO Learning Centres

Learning Care Group, an early education and care provider, acquired U-GRO Learning Centres which operates 14 preschools in the northeast. U-GRO will add to the Learning Care Group’s portfolio which includes 900 schools across 36 states. Learning Care Group, headquartered in Michigan, is reportedly the second largest for-profit early education and care provider in the US.
BrainStation Acquires Wyncode Academy 

BrainStation, a digital skills training company, acquired Wyncode Academy, a Florida-based coding bootcamp. “Acquiring Wyncode is a strong and strategic step to expanding the BrainStation business and will accelerate our mission to reshape the future of digital skills training across the country,” said Jason Field, Founder and CEO of BrainStation.
CrunchTime Acquires DiscoverLink

CrunchTime, an operations platform provider to the restaurant industry, acquired DiscoverLink, a restaurant focused e-learning platform. DiscoverLink has reportedly worked with more than 400 restaurant brands in developing their e-learning solutions.
Ironhack Raises $20 Million 

Ironhack, the provider of coding bootcamps across Europe, North American and South America, raised $20 million in a round led by Endeavor Catalyst. Since its launch in 2013, the company has graduated more than 8,000 students.
uLesson Raises $7.5 Million 

uLesson, a Nigerian-based education platform, raised $7.5 million in a series A round led by Owl Ventures. Founded by entrepreneur, Sim Shagaya in 2019, uLesson is trying to bridge educational gaps for K-7 to K-12 students across Africa by delivering affordable, high-quality, and accessible education using technology.
Frontline Education Acquires Forecast5 Analytics  

Frontline Education, the school administration software provider, acquired Forecast5 Analytics. Forecast5 provides decision support software like financial forecasting, benchmarking, student performance reporting and other analytics for K-12 school administrators. Riverwood Capital was the majority owner of Forecast5 Analytics and Thoma Bravo is the majority owner of Frontline Education.
Penn Foster Acquired by BayPine & Two Sigma

Penn Foster, the workforce development company formerly controlled by Bain Capital’s Double Impact Fund, received a significant investment from BayPine and Two Sigma Impact. The new investors will partner with Penn Foster to bring new capabilities in data science and advanced technology to help the company continue to offer practical, affordable solutions to its students. Penn Foster delivers skill-based training for more than 300,000 working learners each year.
Zuoyebang Raises $1.6 Billion 

Zuoyebang, China’s massive consumer facing online education platform, raised another $1.6 billion in a series E+ round from notable investors including Alibaba, Tiger Global, Softbank, Sequoia and more. The raise comes only 6 months after its $750 million series E raise. Zuoyebang has the largest user base in China's online after school education market with more than 50 million daily active users and 800 million user-registered devices in total.
Nerdy Goes Public Through SPAC 

Nerdy, the platform that owns Varsity Tutors, will go public through a combination with TPG Pace Tech Opportunities (NYSE:PACE), a special purpose acquisition company. Nerdy’s multi-format learning platform covers more than 3,000 subjects and includes one-on-one instruction, live small and large group classes and adaptive self-study tools.
Higher Ground Education Acquires Altitude Learning 

Higher Ground Education, the operator of Montessori schools that recently raised $40 million in a series C round, acquired Altitude Learning’s LMS technology. Higher Ground will bring the Altitude software and engineering team in-house to help expand the depth and breadth of its current offerings. Higher Ground claims to operate the largest network of Montessori schools, with over 80 locations across the US and Asia, and at-home and virtual learning programs across the globe.
Impero Acquires Netop

Impero, the provider of online student safety and classroom and network management software, has acquired Netop, an international software solutions provider to the education and corporate sectors. Justin Reilly, CEO of Impero Software said, “I am thrilled at the opportunity to bring Impero and Netop into one organization. I firmly believe that the acquisition of Netop will accelerate our ability to deliver innovative and market-disrupting solutions into the hands of those who need them the most.”
Jiliguala Raises $100 Million 

Jiliguala, the Chinese provider of online English classes for children, raised $100 million in a series C round led by Tencent and Trustbridge Partners. The company helps kids learn English through media such as animation, music, and picture books, and develops artificial intelligence-driven online interactive classrooms.
Verge Learning Acquires XceptionalED

Verge Learning, a marketplace for special education tools and resources, acquired XceptionalED, a professional development platform of online courses disability-focused professionals, educators, and parents. Verge Learning will expand their marketplace of solutions to XceptionalED's customer base, bringing the combined company user base to over 30,000 therapists, educators, parents, and advocates from over 12 countries.
Multiverse Raises $44 Million 

Multiverse, the UK-based education startup formerly known as White Hat, raised $44 million in a series B round led by General Catalyst. Multiverse, which provides an alternative to the typical four-year college by matching users with on-the-job training opportunities, plans to enter the US market, hiring 200 new employees.
Sounding Board Raises $13 Million 

Sounding Board, a cloud-based coaching platform, raised $13 million in a series A round led by Canaan Partners. Sounding Board's coach network covers over 60 countries and 15+ languages around the globe.
Esme Learning Raises $7.5 Million 

Esme, an AI-enabled upskilling platform, raised $7.5 million a series A round led by Adit Ventures. The company was founded in 2019 by Beth Porter, formerly of edX and Pearson Education, and David Shrier, who has worked at University of Oxford, MIT and Imperial College Business School.
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
Thanks to Chad for letting me take this month’s commentary out for a spin. My name is Mike Buttry and I joined Cherry Tree last January. Prior to joining Cherry Tree I spent a decade as an executive at a publicly traded education company and before that I cut my teeth in government and politics. It’s safe to say I could have picked a calmer year to launch my career in investment banking. The team at Cherry Tree is a remarkable group and I’m proud to be part of an organization that did so much good work helping our clients reach their goals in 2020. Through all the turmoil, Cherry Tree had a record year last year (me taking any credit for this is like the Kansas City Chiefs long-snapper taking credit for Patrick Mahomes). 

The great Leonard Cohen once said, “The older I get, the surer I am that I’m not running the show.” This quote popped in my head as I approached writing our monthly commentary on the education market. The more time I spend in education, the surer I am that nobody is running the show. The response to COVID-19 has presented challenges in the education market nobody conceptualized just twelve months ago, and the pace of change across all sectors of education has accelerated in breathtaking ways. We are standing in the middle of a hurricane and it isn’t clear what the education landscape will look like when it stops raining. 

As anyone who has tracked our monthly updates knows, the education capital markets continue to be active. This is born out by our anecdotal experience as well. I haven’t found a good crystal ball yet for what 2021 will look like (imagine trying to predict what 2020 was going to be like last January) but the “new normal” is still a way down the road. 

Here are some modest observations I’d make to help guide your thinking about you consider the best way to approach the year ahead: 

  • 2021 is a budget year in most states and the economic turmoil of the last year will likely create intense budget pressures. Those states that can provide clarity and confidence to state educational systems about what the next 18-24 months will be like will put them on higher ground as they navigate the next two years.  

  • One of the enduring consequences of the response to COVID in K-12 is the growing chasm between have and have-not school districts. The disparity in how districts can support students in distance learning and the speed with which they are able to return them to in-person learning is jarring. This will drive even greater equity gaps. Solutions aimed at filling this gap will be in increasing demand and funders will be looking for ways to support them.

  • Higher education’s shift to digital and asynchronous learning has been dramatically accelerated. There was a time when anyone who wanted to watch Cheers had to be in front of the television at 8 pm on Thursday night. Now, any shows can be streamed any time anywhere. The same is true with college classes. That’s not to say in-person, synchronous learning will go away, but it will cease to be the default method of course deliver. The tools to facilitate digital asynchronous learning will continue to grow and become increasingly sophisticated. 
  • Pressure on the cost structures of higher education institutions will continue to intensify into 2021. 

  • As the Biden Administration’s Department of Education and Congress are confronted with a full plate of challenges, they need to have an opportunity to think creatively about new solutions to meet educational needs in the country. These could include:

  • Extending Pell Grant eligibility to cover non-degree training programs. States or employers who commit to hiring program graduates should be responsible for determining program eligibility, essentially performing the role of accreditor. Creating incentives for Pell offerings that widen the aperture on student options and create incentives to decrease time to complete is a responsible risk to take.

  • Creating federal policy and funding incentives for states to thoughtfully liberalize their treatment of transfer credits and the credits they will allow for work experience within state systems. Out-dated transfer credit policies are one of the biggest drivers of cost in college education. This would normally take years. It could be done in 3 months.

  • Add data to the Department of Education’s College Scorecard on the percentage of institutional funding spent on student instruction and student support. 

The turmoil of the moment is difficult to escape. But from the chair of someone who is talking to companies in the education space every day, I see a lot of reason for optimism. The imagination and passion around work to innovation and improved outcomes across the education spectrum shouldn’t be underestimated. This is an important moment education community and there are a lot of reasons to be excited about what is to come.  

For a confidential discussion about your company’s strategic alternatives for exiting, merging, acquiring, or obtaining venture financing, and how trends in education affect your prospect, please contact us at 952-893-9012. 

Prepared by:
Mike Buttry, Senior Executive Director | 952.253.6027

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.