Education & Training

Funding for EdTech Companies Hits a 10-year Low in Q1 2024

Funding for EdTech companies is down 90% from the 2021 high and is down 50% from this time last year, according to a study published by HolonIQ.

In addition, Q1 2024 saw a significant decline in demand in the core and ‘nice to have’ EdTech categories.

Overall, EdTech startups are cutting their headcount (shrinking), and global VC funding continues to wane, driven in part by high interest rates and cost of capital, as well as a lack of confidence in growth projections over the next 3-5 years.

The EdTech sector is in a holding pattern as investors try to understand the impact that AI will have on their product and service offerings.  At the same time, many leading established EdTech companies are experiencing strong organic growth in international education, education finance, ‘brick and mortar’ schools, and K12 market segments.   This makes it much more difficult for a startup to compete and gain market share.

Financial investors and strategic buyers look at VC funding rates as a leading indicator of trends in M&A valuations.  As a result, we expect that the valuation multiples for EdTech companies will decline over the next 12 months.

Update: In June 2024, investment giant Prosus wrote off its $2.1 billion investment in Byju, saying that it thinks it is currently worthless, though officials also say they hope the value of Byju can be restored.

About the Author and Jackim Woods & Co

Rich Jackim is an attorney, investment banker, and entrepreneur. For the last 25 years, Rich has been providing boutique investment banking services to small and middle-market companies in over 30 industries.

In addition to running a successful M&A advisory firm, Rich founded a successful training and certification company called the Exit Planning Institute, which he sold to a private family office in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.  It became an Amazon best-seller in the business consulting category the year it was published.

If you own an education or EdTech business and are interested in exploring your options, I would welcome an opportunity to speak with you. There is no cost or obligation to you and all discussions are completely confidential.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Acquisitions in the Education and Edtech Sectors in 2024

The following is a summary of mergers and acquisitions transactions in the education and edtech sectors in 2024.  We will update this post every two weeks as we work with more clients and learn of other deals in the sector.

The education and edtech sectors have been off to a slow start in 2024.  This is following a significant drop in valuations in 2022 and 2023 as edtech companies no longer benefited from the COVID boost in 2022, and many were no longer profitable in 2023.

For many in the industry, 2023 was a tumultuous year. Numerous deals were close to closing but fell apart during due diligence. Interest rates continued to rise, inducing anxiety around the cost of borrowing and requiring buyers to require a higher overall return on their investment, which depressed valuations.

At the same time, investors had to rethink their investment criteria due to a rash of bad decisions they made during the frenzy of the COVID pandemic.  Since then, most Edtech investors opted to take a much more cautious and conservative approach after making investments at inflated valuations in 2020 and 2021 that might have made sense during COVID, but now appear ridiculous in hindsight. Post-COVID, entire segments of the education sector have been shaken up – from the increased regulation on for-profit Title IV colleges and regulations that effectively put OPM providers “on life support” to concerns about the implications surrounding the expiration of ESSER funds and the effect that will have on preK-12 education.

As a result, valuations for small, medium, and large edtech companies are back to their pre-COVID levels and are still significantly higher than valuations for traditional businesses. The average small and medium-sized edtech company is valued at 2x to 3x trailing twelve-month annual recurring revenue.

Acquisitions in the Education and Edtech Sectors in 2024

Below is a summary of the mergers and acquisition transactions in the education and edtech sectors so far in 2024.  This is by no means an exhaustive list as many smaller transactions are never announced.  This list only represents the deals we have learned about through our network or that we have been directly involved in.  I’ll do my best to update the list every two weeks.

In September,

Novakid, a provider of online English language lessons for K-12 students, acquired Lingumi, a U.K.-based English learning app.

Savvas Learning acquired online career and technical education company Pointful Education to build out its college- and career- readiness offerings.

The online university, Western Governors University, acquired Craft Education, an education technology company that specializes in apprenticeship programs.

Savvas Learning Company, K-12 learning solutions provider, acquired Pointful Education, a provider of online career and technical education courses.

A Swiss media-centric investment firm, CosmoBlue Media, acquired Macademia, a gamified education provider for children.

TouchMath, a US-based K12 math education provider, has acquired Classworks, a K12 math EdTech firm, to expand its product offerings.

In August,

Roper Technologies agreed to acquire Transact Campus, a higher ed payment and ID company, for $1.5 billion.

IT company Climb Global Solutions acquired Douglas Stewart Software & Services, an SaaS solutions company focused on education, for $20.3 million.

In July,

Neuberger Berman, a U.S. asset manager, is close to acquiring a minority stake in Nord Anglia Education, an international network of schools. Insiders report that the Neuberger Berman will invest $15 billion in the deal.  That would be the largest K-12 deal in years.

IXL Learning, the company that owns Rosetta Stone and Dictionary.com, acquired Carson Dellosa Education, a teaching supplies publisher. The amount was not disclosed.

Instructure, the public company that makes the Canvas learning management system that is used by many schools and colleges, will be taken private by the large private equity group, KKR in a transaction worth $4.8 billion. That’s the single largest edtech deal in years.  At the same time, Instructure acquired student records management platform Scribbles.

School safety software company Raptor Technologies acquired payments and ticketing provider PayK12.

Intelvio, a healthcare education company backed by Eden Capital, acquired the Professional Crisis Management Association (PCMA). PCMA is a crisis management training and certification company based in Sunrise, Florida. The acquisition enhances Intelvio’s existing behavioral health offerings and expands the Company’s overall healthcare training platform.

Edwin Group, the UK’s largest provider of supply teachers, what we in the U.S. call “substitute teachers” was acquired by Quad Partners, a U.S.  based private equity firm, highlighting the potential growth of solutions to address global teacher shortages.

The animation studio Hobbes was acquired by Duolingo, the very popular language learning app.  No terms were disclosed.

The Indian edtech giant Byju filed for bankruptcy protection.  The company will likely sell off its operating divisions and edtech products.  This flood of deals on the market is likely to depress valuation of edtech companies for the next 12 months.

EdPower, a LMS provider in the U.S. was acquired by Prometric, a US-based testing and assessment provider.  The terms were not disclosed.

Genius Teacher, an Indian EdTech that provides content for primary school teachers was acquired by Schoolnet, a US K12 management system.

In June,

The College of Court Reporting, an Indiana-based nationally accredited, degree-granting court reporting college was acquired by a strategic buyer that owns and operates several other vocational colleges.  Jackim Woods represented the seller and arranged the transaction.

Instructure, (NYSE: INST) a Utah-based learning management software company, acquired Scribbles Software, a North Carolina-based company that provides software solutions for K-12 school districts, to bolster it’s K12 offering. The terms of the transaction were not disclosed.

TicTac Group, a Swedish company providing e-learning solutions, acquired Skillhabit, a Swedish AI-driven learning platform.

PepTalkHer, a New York-based coaching platform, acquired Mettacool, a Wisconsin-based E-learning and coaching platform.  The terms of the transaction were not disclosed.

Raptor Technologies, a Texas-based provider of school safety software, acquired PAYK12, an Indiana-based cloud-based education finance management company.

Children’s publisher Scholastic acquired 9 Story Media Group, which produces children’s content for $182 million.

Digital curriculum company Imagine Learning has acquired CueThink, a platform that uses artificial intelligence tools to improve students’ critical thinking in math instruction.

While not an acquisition, there is an interesting update on Byju.  Investment giant Prosus says that wrote off its $2.1 billion investment in Byju’s stating they now believe its 9.6% investment in the company is worthless.  This will certainly have a chilling effect on valuations in the edtech sector.

ClearCompany, a provider of human capital management software, owned by Gemspring Capital, acquired Brainier Solutions Inc. (“Brainier”), a leading provider of innovative learning management software for corporate clients. The terms of the deal were not disclosed.

In May,

PowerSchool, a K-12 software company, announced that it may go private in a $6 billion deal with Bain Capital, according to press reports. The deal is pending.  We will update the details once the deal is finalized. This is likely to be the largest edtech deal to date.

Follett School Solutions acquired MasterLibrary, maker of a facility management platform. The terms were not disclosed. MasterLibrary allows districts to manage facility scheduling, work orders, fees, rentals, and reservations, as well as access, edit, and customize floor plan drawings.

Class Over, a K-12 online course provider, is being merged with Battery Future Acquisition in a $135 million deal.

Domoscio, a French adaptive learning platform, was acquired by Rise Up, a French active learning platform, to expand its offerings in the space.

Tustawi, a digital education platform in Kenya, was purchased by Castnet Learning, an online education platform. This acquisition will allow Castnet to expand its service offerings to Kenya.

95 Percent Group, a literacy curriculum provider in the US, acquired Sortegories, a language learning app for K12 students. This acquisition will expand 95 Percent Group’s digital offerings for language learning.

In April,

Basis Vectors Capital, a private equity firm focused on vertical SaaS, acquired Cadient Talent, a talent acquisition solutions provider in the hourly hiring sector , to expand their portfolio of SaaS solutions and to expand Cadient’s growth. The terms were not disclosed.

Follet School Solutions acquired MasterLibrary, a K-12 solutions provider. The amount was not disclosed.

Wonderschool acquired ChildcareMatters, a substitute teacher staffing platform. The amount was not disclosed.

LEORON Institute, a corporate training EdTech company, acquired UAE-based XpertLearning, the leading professional training and development provider in the Middle East, to expand their market expansion in the region.

The tech training and development solutions provider, GenSpark, acquired ProGrad, an Indian end-to-end sourcing, screening, and training solutions provider, to broaden their service offerings in the APAC and Indian markets.

Kangarootime, a childcare management software provider for early education centers, acquired Clay, an AI-powered lesson planner. The terms were not disclosed.

Keystone Partners, a career transition and outplacement services provider, acquired CEC, which offers certification and training for coaching careers. The amount wasn’t disclosed.

Viking Mergers & Acquisitions, a business brokerage firm, acquired Sea School, a maritime licensing and education provider.

CareerArc, a hiring and recruiting company, acquired Lumina, a leading SaaS platform for generating visual job postings at scale. The amount wasn’t disclosed.

The content curation platform, Wakelet, acquired Bulb, a digital portfolio provider used primarily by teachers and job applicants, for an undisclosed amount.

IXL Learning, creator of adaptive online learning systems, as well as the owner of Rosetta Stone, acquired Dictionary.com for an undisclosed amount.

Wonderschool, a startup that provides software and support to help individuals and local governments spin up childcare businesses, has acquired EarlyDay, which operates an early childhood educator marketplace. The terms of the transaction were not disclosed.

In March,

the children’s publisher Scholastic acquired 9 Story Media, a children’s content producer and distributor, for a reported $186 million.

StraighterLine, an online course provider, acquired ProSolutions Training, an early childhood education training provider, for an undisclosed amount.

The online learning platform Skillshare completed its acquisition of Superpeer. The acquisition will expand Skillshare’s on-demand course offerings. The terms of the deal were not disclosed.

Accenture acquired Udacity, one of the pioneers of large-scale online courses. The terms of the deal were not disclosed, but it was announced at the same time Accenture announced a $1 billion investment to create a new learning platform focused on AI, called LearnVantage.  Accenture reportedly paid only $80 million for Udacity, which back in 2012 had raised over $300 million in venture capital investments.

Leeds Equity Partners acquired TouchMath, a K-8 math curriculum provider.

The U.S.-based language learning solutions provider, Wayside Publishing, , acquired Nualang, which develops tools for world language classrooms. The transaction details were not disclosed.

Kido International, an international daycare and preschool design, technology and learning company, acquired Amelio Early Education, a preschool and daycare operator. The amount was not disclosed, but is estimated to be north of $7.5 million.

Ellucian acquired EduNav, an academic planning and student success tool platform, for an undisclosed amount.

HMH acquired Writable, which provides a K-12 writing assessment and practice solution.

In February,

Communications and attendance software provider SchoolStatus acquired SchoolNow, a 25-year-old company that offers K-12 districts a website, app, and social media management platform.

Cognia, a forward thinking nonprofit organization laser-focused on improving educational opportunities for all learners, has agreed to purchase CenterPoint Education Solutions, a nonprofit organization that specializes in building cohesive education systems consisting of high-quality curriculum, aligned assessments, and expert professional learning.

CentralReach, publisher of autism software for special education teachers and caregivers, purchased New Jersey-based social and emotional learning software provider SILAS.

Podium Education, a career accelerator platform that partners with colleges to offer for-credit learning experiences to help students gain in-demand skills and work experience as part of their degree, acquired Untapped, a career opportunities software company, for an undisclosed amount.

Savvas, a K-12 solutions company, acquired Outlier.org, which offers online dual credit courses. The amount was not disclosed.

The National Association for Community College Entrepreneurship acquired SkillPointe, a skill-based career platform, for an undisclosed amount.

Avenue Growth Partners acquired a minority stake in BridgeCare, an infrastructure platform for early childhood education, for $10 million.

Google acquired Edlyft, an AI tutoring platform, for an undisclosed amount.

In January,

Oliver Solutions, a digital training platform, acquired Spiffy for an undisclosed amount.

Instructure Holdings, Inc. (Instructure) (NYSE: INST), the leading learning ecosystem and maker of Canvas, announced today it has completed the acquisition of Parchment, the world’s largest credential management platform and network.

Avathon Capital acquired Magical Beginnings, a network of early childhood learning centers in Massachusetts, for an undisclosed amount.

Google acquired Edlyft AI Tutor, an AI-powered STEM upskilling platform that seeks to make computer science education more accessible, especially for Black students.

Quantum5, an automotive training platform acquired Trivie, an AI-powered provider of a workforce engagement platform that personalizes learning content.

Avathon Capital, a private equity firm, acquired Magical Beginnings Learning Centers, a Massachusetts-based network of early childhood education centers.

ETS, the language testing company that runs TOEFL, acquired PSI, a U.S.-based language testing company. The amount was not disclosed.

Follet School Solutions, a K-12 edtech company, acquired Livingtree, a platform for fundraising management, for an undisclosed amount.

PowerSchool acquired Allovue, a K-12 financial planning, budgeting and analytics software provider, for an undisclosed amount.

Intelvio, a healthcare education company backed by Eden Capital, acquired Classward, an online provider of continuing education for aspiring and current EMS professionals. Classward’s EMS content complements Intelvio’s growing platform focused on solving healthcare employee shortages across the US.

Upgrad Education announced that it is in negotiations to acquire Udacity.  It also stated that it intends to raise $100 million, a large part of which will be used to finance the purchase, according to media reports.

We will update this post every two weeks as we learn about other transactions and close more deals in the education sector.

Read our previous article for information about mergers and acquisitions deals in the education sector in 2003 or our previous article about mergers and acquisitions deals in the education and edtech sectors that closed in 2002.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, education industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Acquisitions in the Education and EdTech Sector in 2023

The following is a summary of mergers and acquisitions transactions in the education and edtech sectors in 2023.  We try to update this post every week as we close more deals and learn of other deals that have closed in the sector.

The education and edtech sectors have seen a marked slowdown in activity so far in 2023.  This is following a significant drop in valuations in 2022 as edtech companies no longer benefited from the COVID boost.  That said, valuations for small, medium, and large edtech companies are back to their normal pre-COVID levels and are still significantly higher than valuations for traditional businesses, with the average small and medium-sized edtech companies being valued at approximately 3X trailing twelve-months revenue.

Acquisitions in the education and edtech sectors in 2023 so far

Below is a summary of the mergers and acquisition transactions in the education and edtech sectors so far in 2023.  This list is updated every two weeks.

In December, Curriculum Associates, which sells research-based print and online instructional materials, assessments, and data management tools, acquired SoapBox Labs, an AI speech recognition company.

Carnegie, a New Heritage Capital backed company that provides innovative marketing and enrollment solutions in higher education, acquired Fire Engine Red, a student search service for college and university admissions offices.

ACI Learning acquired Infosec Learning, a company that provides colleges, universities, businesses, and governments with high-speed, intuitive virtual labs and cyber ranges for hands-on, personalized learning and skill assessment. The amount was undisclosed.

ParentSquare, which makes a tool to engage school families and communities, acquired Remind, which runs a secure communication platform for schools.

Allen Career Institute acquired Doubtnut, which makes a learning app that helps students solve math and science problems by taking photos of them, for $10 million. Doubtnut, which had raised over $52 million, was at one point valued at close to $150 million.

In November, Byju announced that it is in talks to sell Epic, its digital reading platform based in the U.S., for $400 million. The potential buyer was not disclosed.

Academic Partnerships has agreed to acquire Wiley’s online program management (OPM) division for approximately $110 million.

DaySmart, a business management company, acquired Sawyer, a business management company focused on the K-12 extracurricular activities market. The amount was not disclosed.

Flywire, a Boston-based software and payments company, acquired StudyLink, a student admissions company in Australia, for an undisclosed amount.

GMB Architecture and Engineering acquired Up and Up, a marketing firm focused on higher ed, for an undisclosed amount.

Enrollify, which offers professional development programs for higher ed marketing professionals, was acquired by Element451, a higher ed student engagement platform.

DaySmart, a business management software company, acquired Sawyer, which provides scheduling and payment solutions for K-12 extracurricular activities. The purchase price was not disclosed.

In October, Instructure,  the edtech company that developed Canvas, a web-based learning management system, and MasteryConnect, an assessment management system, agreed to acquire Parchment, a digital credential company, for $835 million.

Rise In, a Web3 education platform, acquired the Web3 edtech company BlockBeam.

BibliU, a London, UK-based EdTech company, acquired Texas Book Company, a Texas-based industry leader in delivering learning materials to higher education institutions across the U.S.

Accelerate Learning, which produces STEM curriculum, acquired Kide Science, an online library of play and story-based lesson plans and professional development materials for kindergarten through 3rd grade teachers.

Discovery Education, a K-12 digital curriculum and learning services provider backed by Clearlake Capital, acquired DreamBox Learning, a provider of online software for math and reading education, for an undisclosed amount.

The Malvern School, a chain of early childhood education centers, was acquired by Busy Bees, an international early childcare provider that’s expanding in North America.

Ellucian, a leading provider of school management solutions, announced that it will acquire Tribal Group plc, a UK-based services and software provider.

In September, Meazure Learning, a test developer, acquired Examity, a leading online exam proctoring service,  for an undisclosed amount.

A Chicago-based private equity firm, Golden Vision Capital Americas, acquired the educational software company Hawkes Learning for an undisclosed amount. Hawkes created the first adaptive learning educational software with embedded expert systems – the precursor to AI. Their comprehensive suite of innovative course materials encompasses a wide range of subjects, including Mathematics, English, Science, Statistics, Business, and Humanities.

Babbel, a language learning platform, acquired the browser extension Toucan to further expand its learning ecosystem with a browser extension. The amount was not disclosed.

FullBloom, a provider of special education instruction and interventions, acquired a counseling support company, EmpowerU, for an undisclosed amount.

QuantaSing, the Beijing-based learning and development provider, acquired Kelly’s Education, a Hong Kong-based online learning platform. The amount wasn’t disclosed.

In August, Presence, a K-12 teletherapy company, acquired RemoteHQ’s software platform for an undisclosed amount.

Clearlake Capital-backed Discovery Education, a K-12 digital curriculum and learning services provider, agreed to purchase Dreambox Learning, an edtech provider of online software for math and reading education.

SchoolStatus, a K-12 communications company, acquired the school engagement platform ClassTag. The amount wasn’t disclosed.

Noodle, a higher ed enrollment and infrastructure growth company, acquired Meteor, a higher ed-focused upskilling company, for an undisclosed amount.

Ascent, an outcomes-based leading and student success company, acquired the professional development platform Ampersand for an undisclosed amount.

Sallie Mae, the student lender, acquired “key assets” of Scholly, a scholarship search app, for an undisclosed amount.

Student data validation software provider Level Data acquired GlimpseK12, a curriculum measurement tool. The purchase price was not disclosed.

Kahoot, the publicly traded company that developed the popular online quiz tool was acquired by Goldman Sachs’ Private Equity for $1.2 billion in an all-cash deal.

In July, Edtech giant PowerSchool announced that it plans to acquire SchoolMessenger, which offers a range of voice, text, and online tools to help K-12 schools notify parents and students, for approximately $300 million.

Newsela, a K-12 content platform, acquired the instruction and assessment platform Formative for an undisclosed amount.

In June, Axcel Learning, an education acquisition business with financial backing from Alpine Investors, acquired ExitCertified, an online training company focused on upskilling and reskilling individuals, teams, and organizations.

In May, Learning technology company HMH acquired research and educational services organization NWEA. The combined organization will harness the collective power of instruction and research-based insights to support educators in their efforts to drive better outcomes for students.

Learneo, the company that owns CliffNotes, Course Hero, and Quillbot, acquired Barnes & Noble Digital Student Solutions for $20 million.

The learning management system, Go1 acquired the book summarizing subscription service Blinkist.

The University of Idaho announced last week that it intends to acquire the giant for-profit University of Phoenix, with 85,000 students, for $550 million.

Specialized Education Services, a K-12 services provider, acquired Illinois-based special education school NewHope Academy for an undisclosed amount.

Five Arrows, the alternative assets arm of Rothschild & Co., purchased  n2y, a provider of comprehensive, technology-powered solutions for students with unique learning challenges, from The Riverside Company, a private investor.

In April, Raptor Technologies, a K-12 school safety software provider, acquired SchoolPass, a cloud-based solutions provider. The amount was not disclosed.

In March, Renaissance, a preK–12 education technology provider, acquired GL Education, a provider of formative assessments for schools.

Class Technologies Inc., a virtual software provider, acquired CoSo Cloud, a digital learning company, for an undisclosed amount.

Five Arrows, the alternative assets arm of Rothschild & Co, has acquired n2y, a provider of education technology solutions for students with learning challenges.

Docebo, a corporate training and learning platform with AI capabilities, has acquired PeerBoard, a knowledge-sharing platform.

Brightwheel, an all-in-one early education platform, has acquired Experience Early Learning, a research-based early education curriculum provider.

Excolere Equity Partners acquired a controlling interest in EPS School Specialty, a leading developer of curriculum products and services that enhance literacy and math skills for K-12th grade students, particularly those who are two-plus years behind grade level.

Parchment, based in the US, acquired the higher-ed platform Quottly for an undisclosed amount.

Voxy, based in Great Britain, acquired language-learning startup Fluentify for an undisclosed amount.

Carnegie, a leading provider of innovative marketing and enrollment solutions in higher education, has completed two acquisitions. In January of this year, Carnegie acquired the National Small College Enrollment Conference (NSCEC), the leading conference dedicated to serving the needs of small colleges. And secondly, in March, Carnegie acquired CLARUS Corporation, a leading provider of digital marketing solutions for community and technical colleges.

Teaching Channel, a provider of online teacher education, has merged with Learners Edge and Insight ADVANCE. The terms were not disclosed.

Highlights for Children, publisher of a magazine for kids and other media, acquired Tinkergarten, which provides play-based outdoor learning experiences to children six months to 8 years old.

UWorld, which provides learning tools to help students prepare for high-stakes tests, has acquired Wiley’s Efficient Learning test prep portfolio.

Vasil Jaiani, a data management company executive, has acquired two interactive educational websites, Visual Fractions and Worksheet Genius.

XL Learning, a provider of a learning resources platform for K-12 students, acquired Teachers Pay Teachers, a marketplace for teachers to sell lesson materials to each other.

Savvas Learning Company acquired Whooo’s Reading, a gamified reading platform driven by AI, for an undisclosed amount.

In March 2023, Lindenwood Education System, the non-profit parent entity of Lindenwood University, completed its acquisition of Dorsey College, a nationally accredited institution that provides career-focused education in the healthcare, skilled trades, culinary arts, emergency medical services, and beauty and wellness fields.

Atairos, an investment company, agreed to acquire LifeLabs Learning, an edtech platform that provides upskilling programs for managers.

Bain Capital Double Impact, LP acquired Meteor Education, LLC, from Saw Mill Capital Partners. Meteor is the leading provider for the design, delivery, and implementation of modern environments for K-12 schools, operating at the intersection of learning environments and learning experiences.

TPG’s Rise Fund picked up a controlling stake in the Malaysia-based Asia Pacific University of Technology and Innovation in a deal worth $300 million.

Perdoceo, which owns Colorado Technical University and American InterContinental University System, acquired the software engineering bootcamp Coding Dojo for $53 million.

Tutoring provider Paper acquired the college-readiness tool MajorClarity. The terms of the deal were not announced.

The Riverside Company, a global private investor focused on the smaller end of the middle market, has invested in Eduthings, a software solutions provider for Career and Technical Education (CTE) administrators, teachers, and students to track outcomes and monitor overall program effectiveness. Eduthings is an add-on investment to Riverside’s platform, iCEV, a leading developer of SaaS-based digital curriculum, instructional materials, and industry certifications for the CTE market.

Riverside Company acquired Human Element Solutions, LLC (Element H), a provider of live events, video, creative, and digital content solutions that optimize audience engagement within the pharmaceutical, biotech, and medical device/diagnostic industries.

U.S. News & World Report acquired CollegeAdvisor.com, a college admissions platform, from NCSA College Recruiting. The amount was not disclosed.

Study.com, an online learning platform, acquired the tutoring company Enhanced Prep for an undisclosed amount.

Accelerate Learning, a K-12 STEM curriculum provider was acquired by Providence Equity Partners. The terms were not disclosed.

Imagine Learning, one of the largest digital curriculum providers acquired Winsor Learning, whose staff will join Imagine Learning. The acquisition was announced as part of a new push into special education. The amount was not disclosed.

MSB School Services, a K-12 special education software provider, was acquired by Craftsman Capital, a private equity firm, for an undisclosed amount.

Thesis, a cloud-based administration software system for higher ed, was acquired by the private equity firm SilverTree. The amount wasn’t disclosed.

The student engagement platform Learning Explorer acquired Mosaic, the assessment system from ACT. The amount wasn’t disclosed.

ParentSquare, a K-12 engagement platform developer, acquired Gabbart Communications, a school communications tool. The amount wasn’t disclosed.

Online program management company Noodle acquired the South African-based Hubble Studios, a digital content developer, for an undisclosed amount.

Edustaff, a K-12 staffing company, announced it received a non-controlling investment from the private equity firm Public Pension Capital.

We will update this post every two weeks as we close more deals in the education and edtech sectors and learn about other transactions.

Read our previous article for information about mergers and acquisitions deals in the education and edtech sectors that closed in 2002.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Innovative Edu Lead Gen Program for Career Colleges

Increase Enrollment with Qualified Student Leads and Scholarships

Rich Jackim and Jackim Woods & Co are proud to partner with Educapital Foundation to create opportunities for underserved students to pursue career-focused higher education opportunities.  We do this by providing them with innovative scholarships and introducing them to schools and colleges that can help them break the poverty cycle by training them for high-paying, in-demand careers.

Overview of the Educapital Lead Generation Program

Who is Educapital Foundation?

Educapital Foundation is an innovative 501(c)3 nonprofit foundation(www.edu-capital.org). Educapital is the only national foundation to focus its efforts on trade school education for the country’s most underserved, impoverished students.

What Does Educapital Do?

Educapital Foundation partners with leading social media influencers nationwide to create scholarships for students and campaigns to promote career-focused higher education. In 2022, Educapital awarded 3,700 scholarships and grants to students who completed or were enrolled in Educapital’s partner school programs.

Why Does Educapital Do It?

Educapital’s mission is to eliminate poverty through education and access to capital.

How Does Educapital Generate Leads?

Educapital runs marketing campaigns with leading social media influencers that reach over 20 million social media followers each month.

Where Does Educapital Source its Leads?

Educapital sources its leads using innovative social media campaigns on Tiktok and Instagram, targeting low-income and underserved students ages 18-24.

Who Does Educapital Serve?

• Students seeking to improve their lives by:

– Increasing their awareness of and access to good-paying careers
– Providing them with scholarships to attend a career college
– Introducing them to colleges that fit their needs

• For-profit career and technical schools that:

– Provide on-ground, hybrid, and online programs
– Offer certificate or degree programs
– Provide students with access to other types of financial aid, including Title IV financial aid programs and state & county grant programs

The Innovative Educapital Lead Generation Program

Tailored Approach: Educapital tailors its influencer marketing campaigns to fit the enrollment needs of its partner schools, including the program, target demographics, and geographical area.

Huge Reach: Some of Educapital’s previous social media campaigns have generated over 20,000 verified leads.

Low Pricing: Educapital provides qualified leads to our partner schools at $40-$50 per lead.

Low Minimum Order: Start with a low minimum order of 500 leads.

Volume Pricing: The pricing per lead goes down as volume goes up.

Performance-based Scholarships: Educapital tracks each student’s performance and provides performance-based scholarships to students provided the student meets agreed-upon academic standards.  Learn more about performance-based scholarships here.

Educapital’s Unique Win-Win-Win Business Model

Educapital’s innovative business model is a unique example of creating a win-win-win scenario for everyone involved, from students to influencers and donors to career schools and colleges.

Students benefit from having a non-profit entity that is focused on helping them break the poverty cycle through a combination of scholarships, grants, mentoring, and introductions to careers colleges that fit their needs. All of the proceeds from selling leads are re-invested in Educapital’s student scholarship fund. Each student, on average, receives over $1,000 in scholarships from Educapital.

Influencers benefit by promoting a non-profit public-service message about the value and benefits of career education and being able to write off their typical fee as a donation to Educapital’s 501C3 foundation.

Corporate donors and employers benefit by promoting career education and funding scholarships for students in fields that directly benefit these donors.

Career colleges and schools benefit by getting a steady stream of qualified leads for their programs.  As an added benefit, when a lead generated by Educapital becomes a student and enrolls, they receive an Educapital-funded performance-based scholarship that helps the school or college’s 90/10 ratio.

Click Here to Read about Educapital Foundation in the News

To learn more and become a Partner School or Donor, contact

Rich Jackim
Jackim Woods & Co. rjackim@jackimwoods.com
Cell: 847-682-4997

Coding Bootcamp Acquisitions: 2014 to 2022

This article provides an overview of the publicly announced tech and coding bootcamp acquisitions since 2014.

This article includes the following sections

• Introduction
• Understanding the Bootcamp Market
• Valuing Coding & Cybersecurity Bootcamps
• 2022 Bootcamp Acquisitions
• 2021 Bootcamp Acquisitions
• 2020 Bootcamp Acquisitions
• Summary of Tech Bootcamp Acquisitions
• Notable Coding & Cybersecurity Bootcamp Acquisitions

Introduction

Since the first coding bootcamp acquisition in June 2014, we’ve seen dozens of coding bootcamps get acquired by a wide range of companies, from for-profit education companies (like Capella Education) to co-working companies (like WeWork) and other coding bootcamps (like Thinkful + Bloc)!

With rapid market growth in the bootcamp industry, other types of for-profit education companies are taking note, including traditional vocational schools and 4-year colleges and universities.

Many of these coding bootcamp acquisitions should come as no surprise. Some have been very successful, with the programs going on to significantly increase the number of physical locations and online course offerings.

In addition, as coding bootcamps mature, we are beginning to see bootcamps get acquired by well-known companies for increasingly large sums.  For example, General Assembly was acquired for $413 million, and Trilogy Education for $750 million!

As education industry specialists, Jackim Woods & Co maintains a list of bootcamps acquisitions to track who’s buying whom and how bootcamps and how edtech companies are valued.  As we were compiling the 2022 transactions, it occurred to us that others might be interested in this information as well, so we thought we’d share it with you.  We plan to update this list each year with publicly announced deals involving coding and cybersecurity bootcamps.

Understanding the Coding Bootcamp Market

If you are interested in learning more about the $2.3 billion tech bootcamp sector, please see our article Understanding the Tech Bootcamp Market.

Valuing Tech & Coding Bootcamps

If you’re interested in understanding how bootcamps are valued, please see our article How to Value a Bootcamp – Example and Multiples.

You might also enjoy reading our related article, How to Value an EdTech Company – Multiples & Example.

2022 Coding Bootcamp Acquisitions

2022 was a big year for tech boot camp dealmaking.

• 2022 started off with a bang when Skillsoft, an online course provider, acquired Codecademy in January for $525M.
• Then, in February, Centage Group acquired InfoSec, the leading provider of tech-related certification prep courses, for $190 million.
• The year also ended with two notable transactions when Digital Intelligence Systems acquired Grand Circus for an undisclosed amount, and Simplilearn (a Blackstone Group-backed company) acquired Fullstack Academy.  Fullstack Academy was estimated to be valued at $55 million.

2021 Coding Bootcamp Acquisitions

• ThriveDX (HackerU) acquired Cybint for a reported $50 million.
• Brainstation acquired Wyncode in January 2021
• SNHU acquired Kenzie Academy in March 2021.

2020 Coding Bootcamp Acquisitions 

• K12, the publicly traded online K-12 school and education management provider, paid $165 million in cash to buy Denver-based coding bootcamp Galvanize. For K12, the deal means adding more coding curricula for students in its Destinations Career Academies, which offers high school and career training program hybrids. For Galvanize—which is also Hack Reactor—the deal provides additional funding to grow its corporate learning business, add more physical locations, and increase its services to the military.
• K-12 acquired Tech Elevator for $24M
• Carrick Partners acquired Flatiron School from WeWork for an undisclosed amount.

Summary of Coding Bootcamp Acquisitions

The following is a summary of the publicly announced acquisitions of tech-related bootcamps since 2014.  Keep in mind that only large transactions are typically announced to the public.  We estimate that 75% of the bootcamp transactions each year are small and are not announced to the public.

 Notable Coding Bootcamp Acquisitions

The first reported acquisition of a coding bootcamp was Kaplan Test Prep’s purchase of Dev Bootcamp in June 2014. Although this was the first acquisition in the coding bootcamp industry, it wasn’t Kaplan’s first foray into coding bootcamps.  Kaplan launched its data science bootcamp Metis in early 2014. In 2017 Kaplan integrated Dev Bootcamp into Metis and retired the Dev Bootcamp brand.

Galvanize acquired Zipfian Academy in November 2014. Zipfian Academy was one of the first coding and networking bootcamps in the US. After one year of success, it was acquired by the Denver-based education & coworking powerhouse Galvanize.

ReactorCore acquired MakerSquare in January 2015. After ReactorCore was acquired by MakerSquare, ReactorCore’s first major move was to acquire Chicago-based mobile bootcamp Mobile Makers in September 2015.

The Iron Yard acquired Apollo Education as a “strategic investor” in July 2015. As of October 13, 2017, The Iron Yard is no longer operating.

Strategic Education, Inc. (SEI), the publicly traded holding company for Strayer Education, Inc., acquired New York Code & Design Academy in January 2016. New York Code & Design Academy is no longer operated as a separate brand.

Capella Education acquired Hackbright Academy in April 2016 and shortly afterward acquired DevMountain. Capella Education was later acquired by SEI.

WeWork acquired Flatiron School in October 2017, then in May 2018, WeWork also acquired MissionU.

A few months later, Flatiron School (now a part of WeWork) acquired the UX design bootcamp, Designation, and the cybersecurity bootcamp, SecureSet Academy.

After growing too quickly and facing financial challenges, WeWork sold off most of its assets, including selling Flatiron School to Carrick Partners in June 2020.

In a classic roll-up strategy, Thinkful began acquiring several of its smaller competitors to boost its value.  Starting in 2017, Thinkful acquired Viking Code School and The Odin Project. Then, in April 2018, they acquired Bloc.  When Thinkful reached its desired valuation, it sold to Chegg for $100 million.

Adecco, the large tech staffing company, acquired General Assembly in April 2018 for $413 million. According to Axios, General Assembly had been valued at $440 million. Between 2011-2015, General Assembly raised approximately $120 million in VC funding and earned $100 million in revenue in 2017.  That was the largest bootcamp deal at that time.

However, two years later, 2U acquired Trilogy Education in April 2019 for a record-breaking $750 million!

In early 2022, Centage Group acquired InfoSec, the leading provider of tech-related certification prep courses, for $179 million.

Toward the end of 2022, IT staffing provider Digital Intelligence Systems LLC (Disys) acquired Grand Circus, a virtual coding bootcamp provider that also connects talent to employers.

Outlook for Coding Bootcamp Acquisitions

Many industry analysts are pessimistic about the future of coding bootcamps because of the rapid advances in artificial intelligence and the ability of AI to write relatively sophisticated code.  We do not share that pessimism.  AI will still need talented coders to break projects down into the components that an AI can handle, then direct and instruct the AI about the project parameters, and finally review the AI’s work product and make necessary tweaks and adjustments.  So rather than reducing the demand for programmers, we expect the nature of the course to change and evolve as the technology sector changes and evolves.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging in value from less than one million to more than eighty million dollars.

If you own a tech boot camp or another education-related business and would like to explore your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Mergers and Acquisitions in the Education Industry in 2022

This post provides an overview of mergers and acquisitions activity in the education and edtech sectors in 2022

The education sector took some significant twists and turns when the COVID-19 pandemic changed the world. We saw a surge of new users, and new tools, around online learning; but we also saw people and organizations in 2020 and 2021 rethinking how to get the best out of learning environments overall. Now that COVID is largely behind us, 2022 is a year to take stock of how different education related companies evolved and grown.

McGraw Hill acquired Boards & Beyond, a provider of on-demand video libraries and comprehensive online resources for medical students, for an undisclosed amount.

Global University Systems acquired FutureLearn for an undisclosed amount.

GoStudent acquired Studienkreis for an undisclosed amount. This is GoStudent’s 4th acquisition.

The Riverside Company, a private equity group, acquired Applied Educational Systems (AES), a provider of digital career and technical education content for K-12 schools and career centers. AES is an add-on to Riverside’s iCEV platform, a leading developer of SaaS-based digital curriculum, instructional materials and industry certifications.

Universal Technical Institute, a provider of vocational education and  skilled trades programs, acquired healthcare-related higher ed provider, Concorde Career Colleges, Inc., for $50 million.  Concorde Career Colleges has 16 brick and mortar campuses and roughly 11,200 enrolled students in its allied-healthcare programs.

Solutions provider Follett School Solutions acquired the library management system Access-It Software Ltd.

Apogee, a company that offers technology services for higher ed, acquired Cumulus Technology Services, a cloud services consultancy.

The education communications and analytics provider SchoolStatus acquired Smore, a Tel Aviv-based K-12 email newsletter provider that’s widely used in the U.S.

Publisher McGraw Hill acquired the on-demand video library for medical students, Ryan Medical Education, LLC d/b/a Boards and Beyond. The amount was not disclosed.

As mentioned above, London-based FutureLearn was acquired by Global University Systems, a global for-profit higher ed provider based in the Netherlands.

California-based Mattel, one of the biggest toy sellers in the world, acquired Caribu, a digital reading app for families, for an undisclosed amount.

Higher education solutions provider Top Hat acquired STEM learning platform Aktiv Learning.

University Headquarters acquired Discover Early Childhood EDU, an informational guide about degree offerings.

BiC, one of the world’s biggest pen sellers, acquired Advanced Magnetic Interaction, a company that’s focused on “augmented” human-computer interaction.

Learnsoft, a learning management system provider, raised $16.7 million in Series A funding led by Elsewhere Partners.

Discovery Education, a digital edtech platform provider, acquired Pivot Interactive, which has a library of interactive educational science videos. Discovery has private equity backing from Clearlake Capital, and it also acquired DoodleLearning earlier in the month.

EarlyDay, an early childcare education career marketplace, raised $3.25 million.

The children’s publisher Scholastic acquired Learning Ovations, which runs a literary assessment and instructional system.

Edlio, a K-12 communications technology company, acquired SchoolInfo, a mobile app creator for schools.

LumiQ, a Canada-based company that runs a podcast for training chartered professional accountants, raised $5 million for expansion in the U.S.

Roper Technologies, Inc., announced it has reached an agreement to acquire the school administration software provider Frontline Education in a transaction valued at $3.725 billion.

Akili Interactive, which is developing a video game treatment for pediatric ADHD, raised $163 million in a merger with the special purpose acquisition company (SPAC) Social Capital Suvretta Holdings Corp.

Upkid, an on-demand marketplace for childcare centers and teachers, raised $1.7 million in a pre-seed round.

Outcome Group, Inc., an education financing company, announced it has received new debt facility from Variant Investments, LLC, to expand its education portfolio.

Alchemy, a Web3 developer, acquired ChainShot, a coding bootcamp company, for an undisclosed amount.

Renaissance Learning, an educational software services company, acquired Illuminate Education for an undisclosed amount, according to an email sent to Illuminate customers.

Discovery Education, a digital learning platform, acquired the UK-based math and language arts product provider DoodleLearning for an undisclosed amount.

Vsauce’s Curiosity Box subscription service was acquired by science subscription provider MEL Science. It reportedly closed for $12 million.

The future-of-learning private equity firm Achieve Partners acquired Helios Consulting, a certified Workday advisory partner, to build out its apprenticeship programs.

Cybrary, a cybersecurity and IT career development company, raised $25 million in Series B funding.

Territorium, a skill acquisition edtech company, closed $4.4 million in seed funding.

Creative Galileo, an early learning platform, raised $7.5 million in Series A funding.

Pearl, leading research backed, all-in-one tutor management platform, announced its seed fundraising has passed $4 million.

Arist, a microlearning platform, raised $12 million in Series A funding.

APDS, a public-benefit corporation whose advanced career readiness platform offers career training to incarcerated people, raised $7 million in Series C funding.

Class Technologies announced it has closed its acquisition of Blackboard Collaborate.

Kangarootime, an early childhood education software management company based in Buffalo, NY, closed $26 million in Series B funding.

Coding Dojo, a coding boot camp company, raised $10 million. The Bellevue, Washington-based organization trains software engineers both in-person and online and has experienced more than 100% year-over-year growth over the last two years.

upGrad, a Mumbai-based “unicorn” and test-prep company, doubled its valuation after a $225 million funding round. It’s now valued around $2.25 billion. The nonprofit Educational Testing Service was involved in the funding round.

Elevate K-12, the leading provider of high-quality live-streaming instruction for US K-12 classrooms, raised a Series C $40M round of funding led by venture capital firm General Catalyst.

Velocity Career Labs, a startup that wants to create a blockchain-based platform to manage employee’s credentials, raised $6.5 million in funding.

Multiverse, an apprenticeship facilitator, founded in London and now co-headquartered also in New York — has closed a Series D of $220 million, with its post-money valuation coming in at $1.7 billion. StepStone Group (not to be confused with recruiting platform StepStone) and previous backers Lightspeed Venture Partners and General Catalyst all co-led this round, with Founders Circle Capital and past backers Audacious Ventures, BOND, D1 Capital Partners, GV and Index Ventures also participating.

Cambly, a language learning app, raised $60 million in Series B funding, which is encouraging because language learning apps are a rarity in the VC-backed consumer tech space because they have struggled to make money.

Prenda, a K-8 micro-school company, announced a $20 million Series B funding round. The Series B is being led by Seven Seven Six (776), Alexis Ohanian’s firm, with strong participation from edtech-focused VC Learn Capital, Modern Venture Partners, Peak State Ventures, and the companies original angel investors also participating.

Achieve Partners acquired a majority stake in Boclips, a company that curates educational videos.  Boclips works with publishers and education providers worldwide to enrich learning with the world’s best educational videos and podcasts. Boclips is the trusted destination for rich media that are vetted for quality, sourced from leading creators, and curated specifically for education.  Achieve Partners is engineering the future of learning and earning by investing in cutting edge technologies and novel business models to bolster skill development and secure the future of work for millions of Americans.

IXL Learning, a learning platform company, acquired Curiosity Media, which develops language learning services.

BibliU, a learning platform, announced it has raised $15 million in funding. All existing institutional Series A investors – Stonehage Fleming, Oxford Science Enterprises, Guinness Ventures, and Nesta Impact Investments – participated in the round.

Beable Education, an online literacy recovery platform, acquired Readorium, a leading provider of educational software that teaches reading comprehension skills through science text differentiated to students’ reading levels.

Go1, a hub of on-demand corporate training resources, announced that it raised more than $100 million in a new round of funding, bringing its total market valuation to over $2 billion.  The funding was co-led by AirTree Ventures and Five Sigma, with SoftBank Vision Fund 2, Salesforce Ventures, Blue Cloud Ventures, Larsen Ventures, Scott Shleifer and John Curtius from Tiger Global, TEN13, M12 (Microsoft’s venture fund), Madrona Venture Group, SEEK and Y Combinator also participating.

Riverside Insights, a leading developer of research-based assessments and analytics, today announced its acquisition of Aperture Education, the leading provider of research-based social and emotional learning (SEL) assessments for K-12 schools. With more than 65 years of combined research and SEL experience, Aperture sets the standard for research-based SEL assessment solutions.

Elsevier, a global leader in research publishing and information analytics and part of RELX, has closed the acquisition of Interfolio, a provider of advanced faculty information solutions for higher education, headquartered in Washington DC, US. For over 20 years, Interfolio has supported academics, researchers, higher education institutions and funders. Interfolio’s portfolio includes Faculty Information System (FIS), Dossier, and Researchfish.

India-based startup PW, or PhysicsWallah, has raised $100 million in its Series A funding, the profitable startup said Tuesday. Westbridge and GSV Ventures financed the startup’s first institutional round, which values the two-year-old firm at $1.1 billion (post-money). The company offers low-cost education classes. According to the company’s CEO, “The firm has been profitable since inception with positive cash flow and reserves.”

Guild Education, which provides and manages education-as-a-benefit programs for employers, raised $175 million in a Series F funding round. The round was led by Wellington Management, with participation from Oprah Winfrey, Bon Secours Mercy Health, Citi Impact Fund, and existing investors. The latest funding brings the Denver-based company’s total valuation to $4.4 billion.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

How to Value an EdTech Company: Multiples & Example

One of the hardest things to do when building an EdTech business is determining its value. Whether you are seeking growth capital or looking to exit, you need to have a basic idea of what your business is worth.  If you value your business too high, investors won’t be willing to speak with you.  If you value it too low, you leave money on the table or end up giving away too much equity to raise the growth capital you need. So, how do you calculate a reasonable value for your EdTech company?

Well, the valuation methodology outlined below applies to all EdTech companies, regardless of when you are pre-revenue, established, or looking to exit.

How to Value an Edtech Company: Multiples & Example

The global Edtech industry is expected to reach a market value of over $340 billion by 2025. Because of strong underlying market trends, the Edtech sector has received some of the highest tech valuations, with publicly traded EdTech companies trading at 5.0x to 18x  next twelve months’ revenue (NTM)!  These valuations dropped significantly in late 2021 and early 2022, but are expected to rebound.  See our article on EdTech multiples.

If you are the founder of an EdTech company and are thinking of raising a round of growth capital, you’re at the right place. In this article, I’ll provide a step-by-step guide on valuing any Edtech company.

First and foremost, it’s important to understand that EdTech companies are not valued like traditional businesses. Valuations of conventional businesses are based on the company’s free cash flow. With EdTech companies, the most common valuation method is what’s referred to as the Venture Capital approach, which values companies based on a multiple of revenues.

In this article, we’ll use publicly-traded companies in the Edtech industry for comps so you can follow along and use them to value your EdTech business.

Note: If you need help preparing a pitch book for investors, contact us to learn how we can help you prepare a solid Edtech pitch book that will significantly increase the odds of a successful capital raise.

Venture Capital Edtech Valuation Method

There are several startup and early-stage valuation methodologies. While none of them is perfect, they all try to estimate a valuation for a business based on several qualitative and quantitative factors. The Venture Capital Valuation Method is the most common method investors use to value Edtech companies.

The VC method considers business fundaments, market demand, and investor return on investment factors.

Why Do Investors Use the Venture Capital Method to Value an EdTech Company?

The VC method is a relatively simple and straightforward way to value an early-stage EdTech company because it is driven by several factors that can be grouped into 4 categories.

1. Market Demand

Your EdTech company will be more valuable if you demonstrate that it is part of a large, highly fragmented market that is growing at double or triple digits.

2. Market Fit & Adoption

Your EdTech company will be more valuable to investors if you prove that the business has early adopters or users (market-fit) and that people are willing to pay for your service (adoption.)

3. Management Team & Track Record

Your Edtech company will be more valuable to investors if you demonstrate that your management team has relevant sector experience and a successful track record of growing similar businesses.

4. Investor’s Expectations & Founder’s Negotiating Power

Last but not least, keep in mind that investors are willing to back EdTech startups and early-stage companies because they can earn a substantial return on their investment. If a startup is deemed too expensive, it reduces an investor’s return on investment, and they won’t invest.

At the same time, the more investors you can pitch to and the more term sheets you receive, the better your negotiating position and the higher the valuation.

The Three Value Drivers When Valuing an EdTech Company

The VC method allows founders and investors to estimate an EdTech company’s value by inputting three main variables:

1. Projected Revenues

Projected revenues are usually based on an integrated financial model that includes projected revenue for the next five years. Keep in mind that unless your financial model, and the assumptions that drive it, are supported by facts and hard data, investors will take them with a grain of salt. So it’s important to work with an independent, objective financial advisor who can help you develop a rock-solid set of projections.

2. Comparable Industry Valuation Multiples

Investors rely heavily on valuation multiples from comparable companies within the same industry and sector. The most common multiple used is EV/Revenue, which stands for Enterprise Value as a multiple of Revenue. See below for 2022 public Edtech company valuation multiples.

These multiples change daily and are sensitive to many variables, including interest rates, stock market performance, IPO results, M&A activity, market demand, etc.

3. Investors’ Required IRR

The other important variable is the rate of return investors are looking for. An investor’s required IRR (“Internal Rate of Return”) depends on the type of investor, the EdTech company’s stage, and the investment’s perceived risk. The higher the perceived risk, the higher the required IRR. For example, an investor would need a higher IRR for a seed money investment in an EdTech startup than for an investment in an early-stage EdTech company looking for a Series A or Series B round of financing.

Edtech Valuation Example

Now that we’ve covered how the Venture Capital valuation method works let’s see how to use it to value an early-stage Edtech company looking to do a Series A capital raise.

Prove Market Fit & Adoption

The first thing to do is create a detailed, integrated financial model that includes historical financial data and operating metrics. This is important because your historical performance will prove market fit & adoption and support the assumptions you use to create your projections.

Expected Revenues

The next step is to create detailed revenue and expense projections for five years. While the valuation is based on a multiple of revenues, it’s also important to know your operating and growth assumptions to determine how much capital you need to raise to hit your revenue targets.

Need help building an integrated financial model and projections? Contact us for a free, no-obligation consultation.

So, for this example, let’s assume your EdTech company is in the K12 reading sector. You’ve been in business for three years and have been funded by personal funds and friends and family investors. Your business now has 450 subscribers and is generating $250,000 in revenue, and your subscriber base grew by 100% last year. You built an integrated financial model with historical results and projected revenue for the next 5 years. The projections show that next year you expect revenues to be $625K and grow to $4.1 million in Year 5.

Below is a very basic example of projected revenues for the next five years.

Public EdTech Valuation Multiples

The next step is determining the right multiple to use to value your business.

Investors track over a dozen publicly traded Edtech companies to gauge the market’s appetite for EdTech investments.

While the multiples vary a lot from company to company, each is based on investors’ assessments of the company’s market demand, business model, management team, growth rate, and profitability.

Below is a sample of some of the public EdTech companies we track.  Be sure to read this excellent article from the venture capital group, GSV Ventures regarding the valuation of publicly traded EdTech companies.

In our example of the VC valuation method, we will use the Sector Average EV/Revenue multiple of 4.0.

Keep in mind that when preparing a valuation of your EdTech company, it’s important to select the comparable companies that are the most like the company you are trying to value. That won’t always be possible, but to support your valuation, you’ll need to explain to investors why you selected the comparable companies you picked rather than others.

Adjusting the Multiple for a Private EdTech Company

Because we started with valuation multiples from public companies, we need to adjust that multiple to reflect that your EdTech company is privately owned. Privately owned companies are less valuable than publicly traded companies because they are much more difficult, time-consuming, and expensive to sell. As a result, investors apply an Illiquidity Discount, also referred to as a Discount for Lack of Marketability, of between 20% and 30%.

Let’s use a 25% discount, which results in an adjusted EV/Revenue multiple of 3.0x.

Determining Your Exit Value

The next step in the VC Method is to calculate your EdTech company’s value when your investors exit. In this example, we assumed the exit would be after five years. This is called the Exit Value.

Exit Value = EV/Revenue x Revenue at exit (Year 5)

Year 5 Revenue = $4.1 million

EV/Revenue Multiple = 3.0x

Exit Value = 3.0x x $4.1 million

Exit Value = $12.3 million

Investors’ Required Rate of Return (IRR)

The next step is determining the return on investment your investors will seek. The internal rate of return (IRR) required by investors will vary depending on the investor, the stage of the EdTech company they’re investing in (early-stage deals require higher returns than later-stage deals), and the industry trends.

Based on our experience, VCs typically look for a 40-60% IRR on the companies they invest in. Over the last few years, venture capital firms, on average, have generated a 19.8% IRR. Keep in mind that this is an average, so it includes their failed deals (the ones that went wrong) as well as their success stories. They look for a 40%-60% IRR because providing venture capital is a high-risk business, and an estimated 80% of the deals they invest in are unsuccessful or don’t live up to expectations.

In this example, I’ll use 40%IRR as a low-end and 60% IRR at the high-end expected rate of return.

Keep in mind that as your EdTech venture becomes more proven and successful, the perceived risk of the investment goes down, so investors will be willing to accept a lower IRR.

Calculating Your Post-Money Valuation

The next step is to calculate your Post-Money value. Let’s assume you are looking to do a Series A capital raise, so we will also assume investors will require a 40-60% IRR over the next five years.

Using these IRR assumptions, we discount the Exit Value back to its present-day value to estimate the post-money valuation of your business. The post-money valuation is your EdTech company’s value after receiving the infusion of capital. In contrast, a pre-money valuation is the value of your EdTech company as it is today, without the injection of capital.

Post-money valuation = Exit Value / (1 + IRR)^5

Post-Money Value = $12.3 million/(1 + 40%)^5 = $2,287,865

This is the high end of the post-money valuation range, based on the lowest expected rate of return.

To calculate the low end of the post-money valuation range, use the highest expected rate of return.

Post-Money Value = $12.3 million/(1 + 60%)^5 = $1,173,466

This means the post money value of your early-stage EdTech company is between $2.3 million to $1.2 million.

It’s interesting to note that while we calculated the Exit Value using a 4.6x multiple (from the publicly traded EdTech companies), the EV/Revenue multiple for your early-stage EdTech company is much higher and between 4.7 and 9.2 times your current revenues of $250,000.

Getting the Best Terms

Finally, remember that the post-money valuation arrived at above is for 100% of your business. When doing a capital raise, it’s important to raise as much capital as possible while giving up as little equity as possible in exchange.

To get the best terms from potential investors without giving up all your equity, your integrated financial model must include an accurate estimate of your operating expenses so you can figure out exactly how much capital you need.

If your projections show that you need $1 million in growth capital, you may be able to raise the capital you need and only give up 44% of the equity in your company ($1M/$2.3M=44%) in exchange.

The other important this you can do to limit the amount of equity you give to investors is to work with an experienced investment banker. An investment banker who knows the education space can help you build a compelling investment deck, create an integrated financial model backed by solid assumptions, and introduce you to more investors. The more investors you speak with and the more term sheets you receive, the better terms you’ll get.

 About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker and educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

5 Ways to Maximize the Value of Your Vocational School

If you own a vocational school, it’s important to understand the ways you can maximize the value of your school when you sell.

Over the last 12 months, there has been a lot of mergers & acquisitions (M&A) activity in the education sector.  COVID forced schools to adopt distance learning, which has completely changed the operating model for well-run schools.  Schools are now able to deliver high-quality educational outcomes without geographic restrictions or needing to invest in expensive brick and motor classrooms.  This has allowed vocational schools to increase revenues while decreasing costs.

Strategic buyers dominated education sector M&A activity in 2020 and early 2021, but private equity groups and sophisticated investors are now seeing vocational schools with distance learning platforms as a new technology-enabled service platform, like EdTech.

If you own a vocational school and are thinking of selling, now may be a good time to explore your options.  Unfortunately, many owners miss out on maximizing the value of their schools because they are unfamiliar with what buyers look for.  Here are five things you can do to help you ensure you receive top dollar for your vocational school when you decide to sell.

Understand Who the Most Likely Buyers Are for Your School

Buyers of businesses with revenues of $1 million or less tend to be individuals who live within a 50-mile radius of the company they are interested in. However, as the size of your school increases, strategic buyers become more interested —and these buyers are typically not local. For vocational schools with revenues of $5 million and up, financial buyers, like private equity groups, as well as strategic buyers become interested.

What does this mean for you? If you own a vocational school with $1 million or less in revenues, your buyers—besides being local—will likely be first-time business owners, who are essentially looking to buy a job. As a result, your marketing materials and sales pitch should address the concerns these buyers have.

However, owners of larger businesses should be prepared to address the concerns of more sophisticated, financially-driven buyers. That means to maximize your sales price for your school, you will need to develop an offering package, including a pitch book, a financial model, and set up a virtual data room, complete with detailed historical financial statements and other information these buyers will ask for.

Understand the Value of Your Vocational School from a Buyer’s Perspective

Did you know that 80% of privately-owned companies that are listed for sale, don’t sell? The number one reason most schools don’t sell is that the seller has an unrealistic expectation of value.

As a result, one of the most important things you can do before starting the sales process is talk with an M&A advisor who has extensive experience selling vocational schools.  They can provide you with an objective, third-party opinion of value using the same methodologies that buyers use.  An M&A advisor who is active in the education sector can also give you advice and guidance on pricing trends in the industry and value drivers.

The more educated you are about the M&A market and vocational school valuation principles, the more likely you are to be successful when you sell your vocational school.

Set Personal and Financial Goals

An essential step in ensuring a successful exit is to have a clear idea about how much money you need to meet your financial goals. While this number is not related to the value of your school, it will help you evaluate opportunities and make the right decision.

For example, if you know you need $3 million, after-tax, to retire, and your school is valued at $2 million, it may not make sense to sell now.  It may make more sense to spend the next 2-3 years preparing your school for sale so you can increase its value and meet your financial goals.  Have an honest conversation with your financial advisor or wealth manager and do some retirement planning to figure out what you need to retire before you decide to sell your school.

Use the Right Process to Maximize the Value of Your School

The best process to use to sell your school depends on its size and market appeal.  If your school has less than $2 million in revenue, the best process is the traditional business brokerage approach that includes listing the company on multiple M&A websites and responding to buyers when they request additional information.

However, for companies with over $2 million in revenues, it may make sense to run a controlled auction process.  In this case, your M&A advisor will put together a targeted list of financial and strategic buyers that may have an interest in your company.

He will contact them directly and send them with a teaser that provides an overview of your school, but without disclosing its name or other identifying information.  If buyers are interested, the broker will have them sign a nondisclosure agreement and send them a formal offering package.

A typical marketing program for a vocational school might involve contacting 100-200 potential buyers simultaneously.  The goal here is to get as many buyers as possible looking at your company at the same time and to make them aware they are in a competitive process.

This has several advantages.  First, it speeds up the transaction timeline, ensuring a faster and more efficient closing.  Second, it ensures buyers put their best offers on the table first because they know other buyers are also bidding.  Last, it provides you with negotiating leverage because you will most likely have multiple offers to choose from at the end of the process.

Don’t Take Your Eye Off the Ball, Get Help

Regardless of the size of your vocational school, the most important thing you can do is work with an M&A advisor to run the sales process.  Running a sell-side process is time-consuming and you don’t want anything to distract you from the day-to-day operation of your school because a dip in revenues or net income during the sales process can have a big impact on the value of your business.

Selling a vocational school may be the single most important decision in your lifetime, so make sure you work with someone who is an expert in the process and can coach you along the way.

By Rich Jackim, Managing Partner at Jackim Woods & Co.

Jackim Woods & Co. is a leading mergers & acquisitions advisor focused on providing senior-level attention and flawless execution to clients in the education sector nationwide.

Rich Jackim is an experienced mergers and acquisitions advisor and a retired mergers and acquisitions attorney.  He has over 20 years of experience advising owners of middle-market companies and their boards of directors on mergers, acquisitions, and divestitures.  During his career, Rich has been involved in over 70 mergers or acquisitions of middle-market companies worth over $2 billion.  Rich is also the author of the critically acclaimed book, The $10 Trillion Opportunity: Designing Successful Exit Strategies for Middle Market Business Owners.

To arrange a free, confidential conversation about your options, please contact Rich Jackim at (224) 513-5142 or rjackim@jackimwoods.com.