Cherry Tree & Associates | March 2021 | Volume XV, Issue 9
Coursera Files for IPO 

Coursera, the digital course platform, filed to go public earlier this month, aiming for a valuation of about $4 billion, or about $30-$33 per share. Coursera is looking to raise around $519 million in its IPO which will be led by Morgan Stanley, Goldman Sachs, Citigroup and UBS. The Company expects to be listed on the NYSE under the ticker “COUR”.
Pearson Acquires Spotlight

Pearson announced the acquisition of Spotlight Education, a platform that turns education data into personalized video reports. The videos are available in over 30 languages and provide useful information and infographics so that families from diverse backgrounds can understand student performance. Spotlight, founded in 2021, has 20 employees based in California that will join the Pearson team.
Houghton Mifflin Harcourt To Sell Its Books & Media Business

Houghton Mifflin Harcourt (NASDAQ: HMHC) will sell its Books & Media segment to News Corp (NYSE:NWS) for $349 million. The Books & Media segment will be operated by News Corp’s HarperCollins Publishers subsidiary and includes a large backlist of over 7,000 titles including prominent works like The Lord of the Rings trilogy and George Orwell’s 1984 and Animal Farm. The $349 million deal values the business at roughly 1.8x its $192 million in revenue and 13.1x its $26.6 million of EBITDA.
EAB Acquires Wisr

EAB, the education technology company backed by Vista Equity, acquired Wisr, an education technology company connecting prospective students and colleges. Wisr has grown rapidly since the Company began providing private, online communities for colleges that enable students to connect with peers and campus leaders. David Felsenthal, EAB’s Chief Executive Officer said, “Wisr’s innovative peer-to-peer engagement channel complements EAB’s broad portfolio of marketing and enrollment solutions and further strengthens our ability to serve institutions looking to connect with prospective students in meaningful ways.”
Finalsite Acquires SchoolAdmin

Brightwheel, the early education platform, raised $55 million in a Series C round with participation from Emerson Collective, Next Play Ventures, GSV Capital and Bessemer Ventures among others. Brightwheel will use the latest funding to invest in new product development and expand its team across Austin, Denver, and San Francisco offices, as well as support a fully distributed workforce.
SchoolMint Acquires Bright Minds

Class Technologies, the Zoom integrated classroom solution launched by Blackboard co-founder Michael Chasen, raised $30 million in a Series A round led by Insight Partners and Owl Ventures. Formerly known as ClassEDU, the Company was launched in the fall of 2020 and has raised $46 million to date. "Since our beta launch, there has been heavy demand for Class, which is built on Zoom, from the K-12, Higher Education, and corporate training markets both in the U.S. and overseas," said founder Michael Chasen.
Corporate Finance Institute Acquires Macabacus

Corporate Finance Institute (“CFI”), the online finance training platform, acquired Macabacus, a popular Microsoft Office add-in for finance professionals. By bringing together the online skills training and certification programs from CFI and the Microsoft add-in productivity software from Macabacus, the combined entity will provide the hands-on training and the tool kit for financial modeling, valuation, credit analysis, capital markets, business intelligence, and data analysis.
Symphony Technology Acquires CommPartners

Symphony Technology Group (“STG”), a private equity firm focused on investing in the software, data analytics and software-enabled technology services, acquired CommPartners, a learning management system (“LMS”) and virtual events company primarily serving the association market. The acquisition exemplifies STG’s commitment to building a market-leading software platform offering continuing education, professional development, events, learning and content management solutions to associations, non-profits, healthcare and life sciences organizations.
Southern New Hampshire University Acquires Kenzie Academy 

Southern New Hampshire University (SNHU) acquired Kenzie Academy, an Indiana-based national leader in online technology training, offering programs in software engineering and UX design. The combined entity plans to expand access to alternative credentials, creating a new, diverse pipeline of talent and closing the opportunity gap for underserved students.
PrePly Raises $35 Million 

Preply, a tutoring marketplace for language learning, raised $35 million in a Series B round co-led by Full In Partners and Owl Ventures. The raise comes nearly a year after the Company raised a $10 million Series A. At the time, Preply had 2 million booked lessons and 10,000 vetted tutors. One year later, there have been more than 10 million lessons booked on the platform and the tutor network has grown to 40,000 people. The current investor interest is attributed to Preply’s recent growth as well as the global boom in language learning.
Holberton Raises $20 Million 

Holberton, the education startup that originated as a coding school in San Francisco and today works with partners to run schools in the U.S., Europe, and Latin America, raised $20 million in a Series B round led by Redpoint Ventures. The raise comes after a rocky 2020, including a “cease of operation” from the California’s Bureau for Private Postsecondary Education (BPPE) and accusations of fraud that were later struck down by California’s attorney general. Holberton's co-founder Sylvain Kalache said, “With this now behind us, we are excited to move forward with our original mission of providing affordable and accessible education to prospective software engineers around the world.”
SchoolLinks Raises $8.3 Million 

SchoolLinks, the Texas startup founded by Forbes 30 under 30 entrepreneur Katie Fang, raised $8.3 million in a Series A round. The round was led by LiveOak Venture Partners, with participation from SJF Ventures and Juvo Ventures. The funds will be used towards expanding the team, product development and integrations, and building out new partnerships for future growth.
Hopscotch Gets Investment from Mark Cuban on Shark Tank

Samantha John, creator of Hopscotch, an app that teaches kids how to code by building games, successfully pitched her company on ABC’s Shark Tank, receiving an investment from Mark Cuban. Hopscotch, which claims to have roughly 200,000 monthly active users, received a $550 thousand investment from Mr. Cuban for 11% of the Company, valuing the Company at $5 million.

IXL Acquires Rosetta Stone’s Language Business

Cambium Learning, which took Rosetta Stone private about 6 months ago, has sold its core language business to IXL Learning. Reportedly used by 12 million students and by schools in 95 of the 100 top districts, IXL is an integrated learning platform that supports personalized learning in math, English language arts, science, social studies and Spanish. Founded in 1992, Rosetta Stone has reportedly served millions of people across 150 countries, empowering them to read, write and speak 30 languages. Lexia Learning, Rosetta Stone’s K-12 English language platform it acquired in 2013 was not part of the transaction and will continue to operate as a business of Cambium.
Byju’s in Talks to Raise Capital at $15 Billion Valuation 

Indian consumer edtech company, Byju’s, is working to raise $600 million in new funding at a valuation of $15 Billion. Byju’s prepares students pursuing undergraduate and graduate-level courses, and in recent years it has also expanded its catalog to serve all school-going students. Last year, Byju’s raised capital at an $11 Billion valuation, nearly double its July 2019 round which valued the Company at $5.75 Billion.
Apollo Global Exploring Sale of McGraw Hill…

Apollo Global Management is considering the sale of McGraw Hill Education for as much as $6 Billion. McGraw Hill is roughly a $450 million EBITDA business with $300 million of that from digital product sales. Apollo paid $2.4 Billion for McGraw Hill in 2013.

…Meanwhile, McGraw Hill Acquires Kidaptive 

McGraw Hill acquired Kidaptive, an adaptive learning platform specializing in early learning and data analytics. Kidaptive's team will join a new Center for Innovation within McGraw Hill's School group, led by Chief Innovation Officer Dr. Shawn K. Smith. "The Kidaptive team is thrilled to join McGraw Hill and bring to scale the ideas and innovations we've worked so hard to develop over the last 10 years," said Dr. Dylan Arena, Co-Founder and CEO of Kidaptive.
CDW Acquires Amplified IT

CDW (NASDAQ:CDW), a multi-brand technology solutions provider to businesses, government, education, and healthcare customers, acquired Amplified IT, an education-focused consultancy that provides a combination of technical skills and knowledge to the K12 and Higher Education markets. Amplified IT was founded in 2008 as a Google Premium education partner to provide insights, services, consulting, and solutions to enable and empower schools to get the most out of the Google Cloud. Joe Simone, Vice President of Education Sales at CDW said, “Amplified IT brings innovative, highly-skilled talent to CDW, and together, we can offer even better support of the increasingly sophisticated education technology solutions in the market.”
Knowfully Learning Acquires Rx Consultant 

Knowfully, a provider of end-to-end professional education, acquired The Rx Consultant, a subscription-based provider of pharmaceutical news and continuing education for pharmacists, pharmacy technicians, and nurses. Knowfully, which is backed by NexPhase Capital, will operate Rx Consultant under its PharmaCon division. Founded in 1991, The Rx Consultant provides pharmacists, nurses and other healthcare providers with accurate, timely and unbiased updates on top-selling drugs and common health conditions in the form of a monthly subscription.
Penn Foster Acquires Sokanu 

Penn Foster, which provides middle-skill workers economic mobility by providing workforce-relevant courses and programs acquired, Sokanu. Creator of the CareerExplorer platform, Sokanu is used by more than 10 million people annually to match and evaluate career paths. Frank Britt, Chief Executive Officer of Penn Foster said, “This partnership is not only about empowering individuals with data that can help them make better-informed decisions -- it's also about using data to tune our education and training offerings to meet the diverse needs of working learners."
Tutor Doctor Acquires Code Wiz 

Tutor Doctor, the one-on-one private tutoring franchise network, acquired Code Wiz, a coding education company catering to afterschool programs. Code Wiz, also a franchise model, is geared toward students aged 7-17. Tutor Doctor has more than 700 territories across 15 countries.
Axonify Acquires MLevel

Axonify, a leader in frontline employee training, acquired MLevel, a data-driven digital learning program. Axonify focuses on frontline training that delivers personalized, bite-sized bursts of learning right in the flow of work. Jordan Fladell, CEO and CO-Founder of MLevel said, “By joining a company with significant scale, we will create unrivaled access for organizations seeking a continuous approach to empower their employees.”
Section4 Raises $30 Million 

Scott Galloway, the New York University professor, author and tech entrepreneur, raised $30 million in a Series A round for his newest company, Section4. The Company provides affordable courses by prominent professors from top schools. The Company believes that millions of workers need the education to stay competitive and employable, yet not all have access to, or interest in, costly graduate school programs. The round was led by General Catalyst, with participation from Learn Capital and GSV Ventures.
Quizizz Raises $12.5 Million 

Quizizz, the India-based startup empowering teachers to quickly create gamified quizzes, raised $12.5 million in a Series A round led by Eight Road Ventures. The platform reportedly supports over 60 million people per month and is used in over 65% of US schools and more than 100 countries.
CourseKey Raises $9 Million  

CourseKey, a software platform purpose built for trade schools, raised $9 million in a Series B round led by SignalFire. The Company reports that its ARR grew by 200% in 2020, mostly driven by the need for stronger digital solutions during the COVID-19 pandemic. CourseKey reports working with over 200 career colleges.
101edu Raises $4.6 Million 

101edu, creators of a mobile-first STEM platform, raised $4.6 million in a Series A round led by Recurring Capital Partners. Chem101, its first product, has reportedly been adopted by over 400 colleges and universities. To date, 101edu has raised $7.8 million.
For-profit education comprises more than 5% of the roughly $1.5 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
The excitement of March Madness extended from the basketball court to the education deal space this year. If the Q1 education market was a basketball team, it would shoot a lot of 3-pointers, fast-break, press and commit its share of turnovers. It’s certainly an exciting time to be in the space and one of the best parts of this job is the opportunity to engage everyday with people who are creating positive change in education. 

One recurring theme that comes from these conversations with investors, strategic buyers, policy-makers and higher education officials is the growing long-term opportunity around short-term credentials. It’s an issue that extends beyond the much discussed Google Career Certificates portfolio. According to a recent market research report, the global alternative credential market for higher education was estimated to be worth $1.35 Billion in 2020 and is projected to grow to $2.53 Billion by 2024 at a CAGR of over 17%. This is driven by the following tailwinds:

  • The persistent lack of a relationship between cost and value in a college degree;
  • Talent shortages faced by employers and a desire on the part of employers for better signals about candidate competency;
  • The desire of policymakers to find less costly and more timely educational solutions; and
  • The changing nature of work in a digital/knowledge economy.

Two smart pieces came out in the last week that lay out the opportunities and risks associated with the momentum gathering around the alternative credential market. The first from Paul Fain (for our money, Paul is one of our favorite chroniclers of movements in the higher education space) lays out the policy and political state-of-play regarding alternative credentials. The second is a column by Sean Gallagher and Holly Zaneville in EdSurge that makes the case for urgently needed research to better understand the evolution of credentialing.

We note four observations about the alternative credential markets going forward:

  1. The smartest conversations we have about alternative credentials doesn’t deal with “employers” as a general category, but segments specific employers by size and market, and understands the problem that alternative credentials can solve for them. 
  2. We find the depth and breadth of potential applications for alternative credentials remarkable. In separate conversations, we’ve had people mention the opportunity for better credential signals around such diverse areas as: 5G technician, funeral services director, make-up artist, wind turbine technician, and electrical line installation and repair.
  3. The current challenges to the business models of post-secondary institutions create the conditions for significant innovation around alternative credential offerings.
  4. Two common challenges faced by the alternative credential models we’ve looked at are the cost of acquisition and the stickiness of the learning. The successful innovators in this space will be those who figure out a model for enrolling people who can succeed in their program at a reasonable cost, and can credibly demonstrate to employers the enduring competencies of those who complete their programs. 

While caution about the unintended consequences that will come from the rapid development of this alternative credential market is warranted and necessary, there is tremendous public good that can come from less expensive credentials that send better signals to employers in ways that meet the needs of the modern economy.   

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 prospects, 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.