The EdSheet Vol. 16

This newsletter covers the business side of the education industry - venture funding, M&A, other financial transactions. Whiteboard Advisors also publishes a daily newsletter - What We’re Reading - of curated, industry-focused news clips and a weekly newsletter - and  Whiteboard Notes - which covers policy, industry trends, and insights from W/A CEO Ben Wallerstein.

Hello!

Policy, politics, and funding shifts are the topic of the month (year?). Fortunately, the W/A team is here to help!

W/A Chief Advocacy Officer, Anna Edwards, and Sr. Advisor, Dr. Marguerite Roza, are hosting a webinar next Wednesday (7/31) at 3pm ET to discuss the state of play in EdTech Funding and Policy. 

We’d love to have you join! Feel free to send questions in advance too.

In the meantime, a few of the key topics for you to chew on from this newsletter:

• Harvest Partners acquires the Learning Experience, from Golden Gate Capital.The market for scaled early-childhood providers/franchises has been robust over the past 3 years, with no less than $50M in growth equity capital deployed and 7 private equity buyouts.

• School choice navigators on the rise? Picking the “right” K12 school for your child is getting increasingly complicated, as new, more transferable funding streams become the norm at both the federal and state level. Will new business models emerge to meet the need?

• Reshaping federal funding for universities: Changing federal funding streams is also a hot topic in higher ed, though the changes at hand are mostly reigning in spending rather than expanding it.

With that, onto the news!

Funding / M&A

Whiteboard Advisors not only provides policy and market-related diligence and advisory services, we track every financial transaction that happens in education — and keep a record of all deals that are publicly announced.

The following transactions caught our eye over the past few weeks. If you have a deal to announce, or would like access to the full transactions database, please reach out.

Venture Funding

• Yuno raises €7M / Germany, Content Provider / Blast Club, New Renaissance Ventures, IBB Ventures, Fairway Partners, Fair VC

• EduFund raises $6M / India, Student Financing / Cercano Management, MassMutual Ventures

• UWeb raises $3M / Hong Kong, Credentialing / Avenir Group, Ronin & Quinn Capital, Singchain Capital, First Merit

M&A

• Torch acquires Praxis Labs / US, Coaching (Simulations)

• Curriculum Associates acquires Stile Education / US (Australia), Content Provider (Science)

• TopHat acquires OpenClass / Canada, Content Provider (Assessments) 

• Alpha School acquires many of the Higher Ground Education assets / US, K12 Schools

• CEA CAPA Education Abroad acquires CIS / US, Student Recruitment

• NIIT Learning Systems acquires MST Group for €22M / Germany, Corporate Training

• Geniebook acquires AfterSkool and Best Physics Tuition / Singapore, Test Prep

Buyouts

• Harvest Partners acquires The Learning Experience / US, Early Childhood Education Provider

• THI Investments acquires Empowering Learning Group / UK, K12 Staffing Services

What’s on your Whiteboard? Navigating Booms and Busts

• Imagine Learning Chief Strategy Officer Sari Factor EdTech booms and busts and how Imagine thinks about integrating AI into its products

News of Note

This section is intended to be more exploratory, a reflection of stories I think are important and ideas/trends I’m contemplating. It is free today, but will be going behind a paywall soon.

K12

• We are entering the mainstream school choice era of US K12 education. In this era, there are broad-based state and federal subsidies available to student(‘s parents) to deploy as they see fit for their K12 education. The normalization of choice is driving investment in new platforms like ClassWallet and Primer as well as front doors. The organizations who best enable parents to make good choices for their kids have a huge opportunity in front of them, as Red Ventures found with similar circumstances in higher ed.  

  • Why now? Well, public school enrollment continues to fall as kids vote with their feet. The status quo public option is not good enough.

  • However, the debate is not settled as to how these subsidies will work. The first implementation of the federal tax credit scholarship will be relatively small and Democrats have not yet decided whether and how they will respond to/embrace what has been a largely Republican issue to date. 

  • That has not stopped others from considering the knock-on effects of a more liquid system for K12 students, including the need for common data structures and more portable student records (historically, a huge drag on the economic value of higher ed subsidies)

• Private Equity continues to eye youth sports as market size grows to $40B. Just-swallowed-a-bug-face. Two ways one could look at this: 1) if AI eats all the knowledge economy jobs, the market size for recreational activities is going to grow like crazy or 2) as professional sports franchise values continue to grow and college sports resets, this market will bifurcate into future professionals and amateurs by age ~10, as it exists in Europe, wiping out the “my child might go pro” premium a huge cohort of US parents pay to be a part of expensive development programs.

Higher Ed

• Over 1,000 colleges could lose access to federal student aid. I am normally pretty quick to say “tax status does not drive outcomes, incentives do” in defense of for-profit universities, but the trendline in the headline chart here is both obvious and bad.

  • Related, how higher education failed America’s poor. Scroll through that list of 1,000+ at-risk colleges and you might see some patterns emerge.

• Speaking of federal student aid, timeline set for implementing Workforce Pell expansion.

• Also, Universities pitch their proposal for how government funding for research should work. The stakes are high for this as even deep-pocketed schools like USC face budget gaps as large as $200M due to research funding shortfall

  • Related, this research funding coalition might want to consider hiring whoever these guys hired. Small, wealthy colleges came out of OBBB sitting pretty, skirting the newly onerous endowment tax by dint of a “3,000 students or less” exception.

• Not saving the day for research universities? New online degree programs. After a brief hiatus during COVID, online degree enrollments are back to concentrating among the “mega” onlines.

  • However, a regulatory-driven shakeup may be coming, as the OBBB capped Parent and Grad+ loans. In other words, not the best day for Master’s degrees and the universities that rely on them for financial stability.

  • Plus loans may be on their way out, but employer-pay options are expanding rapidly, particularly in the healthcare space (where ROI for both employer and employee is often clearly-defined).

Workforce

• AI groups replacing low-cost data labellers with highly-paid experts. To be clear, these are not 1-for-1 swaps, but still interesting.

  • In need of some superintelligence-powered AI models after being asked to do more work with fewer people? The Education Department, which had a 40% reduction in force confirmed by the Supreme Court. 

  • In need of some higher quality data labellers? The Department of Homeland Security, which undercounted the number of international students in the US last year by 200,000 (1.1M counted vs. 1.3M actual)

Looking for your next opportunity in education? Check out our W/A Jobs, which features 3,294 career opportunities from 304 organizations across the education industry. A few roles that we’re excited about from the past week:

• Clever is hiring an SF-based or remote Sales and Solutions Engineer to support technical aspects of the team’s go-to-market efforts

• Imagine Learning is hiring a remote Vice President of Government Affairs to lead the company’s state legislative and regulatory advocacy strategy

• Transfr is hiring a New York-based People Business Partner to provide human resources support for the company’s go-to-market function

Whiteboard Advisors is the leading policy-related diligence partner for education investors, advising on most major private equity transactions in education over the past 15 years. Our specialty is translating complex policy dynamics into insights that inform decision-making. Reply to this email to learn more.