Cherry Tree & Associates | May 2021 | Volume XV, Issue 11
Kahoot! to Acquire Clever  

Kahoot!, the game-based learning platform, will acquire Clever, a single-sign-on platform widely used in K-12. The transaction values Clever between $435 million and $500 million. Together, Clever will integrate Kahoot!’s suite of learning apps onto its platform. Clever expects to reach $33 million in billed revenues for 2021 from its U.S. ecosystem partners, after a compounded annual growth rate of ~25% in the last three years.
OMERS to Acquire Minority Stake in ISP

OMERS Private Equity, investing on behalf of Ontario, Canada pension funds, will acquire a 25% stake in International Schools Partnership (“ISP”) from Partners Group. ISP operates a group of 50 international schools spanning 15 countries and repots serving over 45,000 students globally. The transaction values ISP at approximately EUR 1.9 billion.
eDynamic Learning Acquired Knowledge Matters

eDynamic Learning, a digital curriculum provider for electives and career and technical education (CTE) courses for grades 6-12, acquired Knowledge Matters, a provider of career-based simulations for the K12 and college market. Knowledge Matters simulation-based exercises will now be weaved into eDynamic Learning’s over 200 courses.
Education Advanced Receives Investment from Serent Capital

Education Advanced, Inc. (“EAI”), a provider of operations management and workflow solutions for K-12 school districts, announced it has received a significant investment from Serent Capital, a growth-focused firm with an emphasis on technology and tech-enabled service companies. The capital will be used toward product investment and entry into adjacent markets.
BEGiN to Acquire codeSpark

BEGiN, the company behind the early learning program, HOMER, intends to acquire codeSpark, a learn-to-code app for children with a global community of young creators. The acquisition of codeSpark allows HOMER to expand its offering from ages 0-6 to a more comprehensive program, serving ages 0-10. Since 2013, HOMER has achieved 70% compounded annual growth.
Vemo Education Acquires Edmit

Vemo Education, a provider of pay-for-success programs that helps align college costs with job outcomes, acquired Edmit, a supplier of college planning tools used by more than 1.5 million families to make informed financial decision about higher education. Vemo Education is best known for its design and development of more than a hundred income share agreement (ISA) programs at more than 70 institutions across the country.
Leif Raises $60 Million 

Leif, a technology company focused on access to affordable education, raised $60 million from LL Funds and Insita Group. Leif has developed a platform enabling the design, origination and program management of income share agreements and other outcome-based tuition finance programs.
Infinedi Invests in CAPA

Infinedi Partners LP, a private equity firm, has completed its second investment in the study abroad market under the formation of a cooperative partnership between CAPA and CEA Study Abroad. CEA and CAPA help U.S. universities to provide educational and internship programs in Europe, Central and South America, and Asia.
Engageli Raises $33 Million

Engageli, an online teaching platform that provides built-in-house video technology, raised $33 million in a Series A funding round co-led by Maveron and another unnamed investor. The startup is currently focused on picking up university customers across the U.S., in the U.K., and Israel.
Teachmint Raises $16.5 Million

Teachmint, the startup that enables teachers to run classes online, raised $16.5 million in a Series A financing round. The round was led by Learn Capital, a venture capital firm that focuses on edtech firms and has backed online learning startups Coursera, Udemy, Nerdy, Minvera, and Brainly.
Backer Raises $8.4 Million 

CollegeBacker, a savings platform that enables 529 plan funding, has rebranded as Backer and raised $8.4 million in Venture capital. The round was led by Crosslink Capital with participation from Rally Ventures, Correlation Ventures, and Expansion Ventures. Backer has helped its clients save over $20 million for college, with 40% of the money coming from family and friends.
McGraw Hill Acquires Triad Interactive

McGraw Hill acquired Triad Interactive, Inc., a software developer of the widely used SIMnet product for undergraduate computer and information technology courses. Over hundreds of thousands of students rely on SIMnet to learn how to use Microsoft office. The acquisition comes after a 20-year partnership in which McGraw Hill marketed and sold Triad’s solutions.
Emeritus to Acquire iD Tech  

Emeritus, an edtech company that helps universities create online upskilling courses, announced its intention to acquire iD Tech, a STEM education service for children. The acquisition is estimated to be around $200 million. Eruditus, the parent group to Emeritus, has more than 200 programs, from boot camps to online degree programs with more than 50 of the world’s top universities including MIT, Harvard, and Columbia.
Leeds Equity Partners Invests in engage2learn

Leeds Equity Partners, a New York-based private equity firm with an education focus, has invested in engage2learn, a provider of professional development coaching and technology tools that serves districts in the public K-12 market. engage2learn serves over 225 districts and 2 million students with the focus of increasing return on existing technology and curriculum investments.
Fiveable Acquires Hours

Fiveable, a social learning community for high school students, acquired Hours, a virtual studying platform. Hours was created by sixteen-year-old Calix Huang in 2020 and seeks to help students increase productivity by connecting them through virtual study rooms. In just one week, over 400,000 Fiveable students studied together for upcoming exams through its virtual community space.
MasterClass Raises $225 Million 

MasterClass, a streaming education platform, raised $225 million in a Series F funding, led by Fidelity Management & Research Company and with participation from multiple other investors. The latest funding round brings the total amount of capital raised to $475 million.
Educate 360 Acquires Pierian Data

Educate 360, a professional training company backed by Morgan Stanley Capital Partners, acquired Pierian Data, a provider of technology training with a focus on Python programming languages, data science courses and machine learning courses. Today, Educate 360 reportedly services over 10,000 professionals across hundreds of companies each year.
StuDocu Raises $50 Million 

StuDocu, a platform to help source and share the best student-created class notes, announced $50 million in Series B funding coming from Partech, a French Venture Capital Firm. The startup recently reached 15 million users across 2,000 universities in 60 countries.
Carnegie Dartlet Merges with Underscore

Carnegie, a provider of strategic marketing solutions for the higher education market, merged with Underscore, a CRM development provider. The merger combines Carnegie’s enrollment marketing and strategy services with Underscore’s Slate CRM development, optimization, and student search business for a full enrollment strategy solution.
StudySmarter Raises $15 Million  

StudySmarter, the Germany-based study app, raised $15 million in a Series A round led by Owl Ventures. The platform claims to have more than 1.5 million learners about half of which are K-12 and the other half higher education.
Educative Raises $12 Million

Educative, an interactive hand-on skill development platform, raised in a $12 million Series A fundraising round. Matrix Partners led the round with participation from new and returning investors. Educative has more than 550,000 developers who use the platform and 1.5 million learners monthly that utilize its free database.
Blair Raises $6.3 Million 

Blair, an operating system for income shared agreements (ISAs), raised $6.3 million in funding led by Tiger Global with participation from Rainfall and 468 Capital, along with several angel investors. The capital will be used toward growing its San Francisco-based team.
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
As you can see, the education space continues to be active. When I started at Cherry Tree at the beginning of 2020, our updates were about half the size they’ve been this year. I don’t think they’re going to get smaller anytime soon. It’s hard to escape the impression that the disruption caused by a global pandemic has given birth to a burst of entrepreneurial energy that will shape new models and new solutions in the near future. The education space is an exciting place to be right now.

I spent much of my early career in the federal policy space and I still find myself paying a lot of attention to the opportunities there. Old habits die hard. The Biden Administration and Congress are in an interesting place as it relates to education policy. The focus on student debt forgiveness, tuition-free community college initiatives and the massive amounts of K-12 resources heading to states this year are, understandably, dominating media attention and dialogue. At the same time, I think there are some non-obvious places where there is a huge opportunity. 

Here are three spaces we’re watching:

Short-Term Pell Grants — As the labor market stumbles into a post-pandemic reality, it is deeply rational that there should be federal incentives to engage citizens in short-term programs that can efficiently deliver and assess the competencies required for employment in the modern economy. Creating a short-term Pell program which prevents waste and abuse is no easy job; but America would be better served trying to solve the problem of how to enact an effective short-term Pell program than failing to try and create federal incentives for programs with shorter durations and less cost. 

Credit Recovery and Credit Transfer — This issue is like the kid at recess who gets picked last for kickball and then crushes the ball off the playground. Credit recovery and credit transfer is an enormously complicated issue that has tremendous potential to lower the cost of degrees and increase attainment. I’m not a big believer that there is much the federal government does well, but institutions and accreditors have proven they are incapable of easing pathways for transfer credits on their own. A 2017 Government Accountability Office study showed the impact of student’s inability to transfer credits. This is especially important when discussing “free” community college. The benefit of community college is minimized if those credits won’t transfer to other institutions. The federal government holds the purse strings and has enormous capacity to create incentives to smooth pathways for credit recovery and transfer. 

Data — The inability to track student outcomes in a unified and organized way is a blindfold on all efforts to improve education policy. It is a sad statement on the beleaguered dysfunction of policymakers that an idea like a student unit data record system, which enjoys broad bipartisan support, cannot be passed into law. If this had been done ten years ago, there would be dramatically more actionable data upon which to make policy decisions. This is the kind of policy a modern education system and economy require. 

None of these issues are headline-grabbers, but they each have significant potential to move the American education system to higher ground. There are huge bipartisan wins waiting for the Biden Administration and Congress on each of these issues if they’ll engage and prioritize them. It’s time for the energy in the policy space to catch up to the energy in the capital markets.
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.