Cherry Tree & Associates | September 2019 | Volume XIV, Issue 3
Chegg to Acquire Thinkful for $100 Million

Chegg, a leading provider of learning platforms that connect students and helps them learn more while spending less, has announced that they will acquire Thinkful. Thinkful was founded in 2012 and is an online learning platform that provides students with professional courses. The transaction is valued at $100 million, $80 million of which to be paid in cash at close, and the remaining $20 million paid based on performance .
Noodle Acquires Clark

Noodle, the provider of education search services to assist people with applying to programs that meet their unique needs, has announced that they have acquired Clark. Clark is a tutor management software platform that is expected to compliment Noodle’s higher education and K-12 school divisions.
Facilitron Acquires Login Logix 

Facilitron, a software provider that reserves facility space and track how spaces are utilized for school districts, community colleges, and universities, has acquired Login Logix. Login Logix provides school management services to businesses, education departments, and colleges.
PlayVS Raises $50 Million

PlayVS, a platform that allows high school students to compete on varsity esports through their school, raised $50 million in a series C round. The round was led by an existing investor, NEA, and included addition investors such as Battery Ventures, 01 Advisors, Sapphire Sport, Michael Zeisser, and IVP. PlayVS has raised $96 million over the last 13 months.
Classcraft Raises $7.5 Million

Classcraft, founded in 2013, is a learning company that improves student motivation in the K-12 education market using games that engage learners. The company raised $7.5 million in a series A funding round led by Investissement Québec, and included additional firms such as Whitecap Venture Partners, Brightspark Ventures, and MaRS Catalyst Fund.
KickUp Raises $1.75 Million 

KickUp, an online platform that helps school districts in the K-12 space manage budgeting and spending for teachers, has raised $1.75 million in a series A round. The round was led by SustainVC with follow-on investors; Impact Engine, and Spring Point Partners. This series funding brings the total capital raised by KickUp to $4.75 million.
Edlio to Acquire Online School Management System (“OSMS”)

Edlio has announced that they are acquiring OSMS, a provider of cloud-based solutions for payments and tracking receipts between school funds, parents, and students. This acquisition will strengthen Edlio’s existing offerings that focus on community engagement solutions for school districts in the K-12 space. Edlio is backed by the private equity firm LLR Partners .
Cprime Acquires the American Society of Professional Education (“ASPE”)

Cprime, a global consulting company and one of the largest trainers of Agile in the US, has acquired ASPE. ASPE provides custom learning solutions for organization to help them become more successful and efficient. The transaction is expected to enable Cprime to expand its offerings into new technical and business domains.
LINQ Acquires Registration Gateway of SRC Solutions, Inc.

LINQ, a provider of administration software solutions for over 26,000 K-12 schools and 2,700 districts, has announced that they have acquired Registration Gateway of SRC Solutions. SRC Solutions is an online registration suite for K-12 schools that is based in Pennsylvania. The acquisition is expected to allow LINQ’s solutions to provide a single automated resource that can consolidate the many needs of schools and districts.
Summer Raises $10 Million

Summer, a platform that helps students manage the repayment process of their loans through 120 different loan forgiveness programs, has announced that they have raised $10 million in a series A round led by QED. The company was founded in 2017 and reports having helped 10,000 borrows repay their student loans.
Amira Raises $5 Million

Amira, a developer of voice recognition software that boosts student literacy, has raised $5 million in funding. The series was led by Owl Ventures, with participation from GSV AcceleraTE, Rethink Education, and Houghton Mifflin Harcourt. This brings the total capital raised by Amira to $8 million.
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
This newsletter focuses on M&A and VC activity in the education markets, but we also like to point out trends and headlines that shareholders, investors, and industry executives should be aware of. Pearson’s announcement last week that sales are down 10% through the first nine months of the year, definitely makes the list.

The stated reason caught our eye: higher ed schools and students adopting digital technologies more rapidly than anticipated. The company mentioned other elements contributed, such as lower college enrollments and Open Educational Resources, but they said what was unexpected was an accelerating shift from print to digital. They noted that they expect to see the mix of digital/print sales increase from 55-45% to 65-35% this year. Although while they noted digital revenues were up, their admission that digital registrations were down doesn’t bode well from a market share standpoint.

In the college market, this move to digital resources is in line with other private companies we talk to. While in the broader consumer market e-books seem to have stabilized (and may even be declining), and K-12 seems unlikely to ever go 100% digital (due to costs, access, and many parents thinking kids stare at screens enough already), post-secondary is much more likely to eschew most forms of print instructional materials. Students are paying to be there (at least until Sanders or Warren wave a wand and make college “free”) so they typically have devices and the means to access digital content. Their generation has after all been called the “always on” generation. We’ll be watching other companies’ 2019 and 2020 sales results closely, and we’d bet a similar story will emerge. 

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 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.