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The EdTech Episode #10

Dear readers,

A few interesting themes emerged in last month's news. 

  • Several high-profile companies announced new products. Coursera announced the offer of its course library to universities. Meanwhile, General Assembly entered the bootcamp/university partnership market via a collaboration with Noodle Partners and the University of Virginia.
  • Two European companies, Jobteaser (France) and Amboss (Germany), raised significant funding rounds - notable as the continent has lagged China and the US in terms of EdTech funding.
  • Another data point suggests Chinese EdTech investment is cooling - while Beijing-based VIPKid is reportedly in discussions to raise a new round of investment, it looks set to be significantly smaller than the previous round.  It wouldn't be surprising if full-year 2019 data eventually records a decline in Chinese EdTech funding from the level reached in 2018.
  • Elsewhere in Asia, the EdTech story looks like one to watch in coming years. Taking India as an example, while Byju's has raised mega-rounds for some time, in the last few months several other companies have raised rounds in the US$10M-US$50M range. More recently, Kaizen Private Equity - one of the few Asia-based specialist investors in education - reached final close on its second fund, while a Korean private equity fund paid almost US$140M for a blended English language lessons provider.
- Peter Sahui
Market News
Strada and Gallup have surveyed US adults to investigate their attitudes about education. Key findings relate to adults without a degree - this group is most likely to enrol in courses or training offered by employers. Their main considerations are employment outcomes, flexibility, and cost.

has released its Global Learner Survey, highlighting strong interest in STEM, soft skills, and lifelong learning. Attitudes vary between countries, with respondents in China generally much more bullish on traditional higher education than their counterparts in countries such as the US, UK, Canada, and Australia.

WCET has
hosted a free webinar (approx 1 hr) on the online program management (OPM) market. Key themes from the webinar include: (1) the increasing competitiveness of the OPM market, both for companies and for institutions; (2) the market is not moving from one model to another so much as it is expanding in variety; and (3) fee-for-service and revenue share models are not all-or-nothing - hybrids exist.
Company/Institution News
General Assembly, Noodle Partners, and the University of Virginia are partnering to launch coding bootcamps. The first courses will be offered on a 24-week, part-time basis.

Coursera has
announced a new product for institutions - Coursera for Campus, which offers access to a library of 3,600 courses, course authoring tools, and LMS integration. 

Swinburne University of Technology and Lululemon
have partnered (paywall) to offer an online diploma of business to Lululemon managers. Costs are fully covered by the company.

Youdao, the education arm of Chinese tech company Netease, has filed for an IPO in the US.

Reports suggest VIPKid is still in discussions with Tencent for its on-and-off-again latest round of funding. The size of the upcoming round  - US$150M - is a significant reduction from the US$500M that the company originally targeted.

Jobteaser, a French provider of university careers software,
has raised 50M. Highland Europe led.

Amboss, the Berlin-based developer of a tool for medical education,
has raised a 30M Series B round. Partech led.

Interviewbit Academy, an Indian online coding education provider, is
reportedly raising a US$20M round. The article names Tiger Global Management, Sequoia Capital India, and Singapore's Economic Development Board as taking part.

Galvanize, a bootcamp provider, has raised US$13.4M out of a target US$15.4M round,
according to an SEC filing.

Whitehat Jr, an Indian online coding education provider for children (no relation to Whitehat, the UK apprenticeships startup), has
raised a US$10M Series A round. Nexus Venture Partners and the Omidyar Network led.

ClassCraft, a class gamification platform for K-12,
has raised a US$7.5M Series A round. Investissement Quebec led.

Zen Educate, a UK-based staffing platform for K-12 teachers,
has raised a £5.6M round. Brighteye Ventures led.

RippleMatch, the developer of a graduate recruitment platform,
has raised a US$6M Series A round.

3rdflix, an India-based developer of K-12 AR/VR content,
has raised a US$5M pre-Series A round. 

VIG Partners, a Korean private equity firm, has agreed to acquire a majority of D.Share, a blended provider of English-language lessons, for US$137.6M. 

Chegg has
agreed to acquire Thinkful, an online coding bootcamp provider, for up to US$100M (US$80M cash plus an earn-out of up to US$20M in cash or stock). This compares to 2018 revenue of US$14M.

Noodle Pros 
has acquired Clark, a provider of software for tutoring businesses.
New Funds

Kaizen Private Equity, an India / Southeast Asia-based investor specialising in education, has reportedly reached final close on its second fund (approx. US$90M).
Final Thoughts

What are the takeaways from the implosion of WeWork's attempted IPO?

As recently as January this year, WeWork raised funding at a US$47B valuation, yet its IPO took l
ess than two months to fall apart. Significant ink has been spilled about the company's business model, valuation, and governance, and whether this signifies a turning point in investors' willingness to back unprofitable businesses. I'd like to add one more - momentum works, until it doesn't

Our sector isn't immune from mis-steps - we all probably have our own examples of over-hype. How do we avoid this?

The key is to think critically and not lose sight of fundamentals. For an investor, this boils down to a consideration of price versus value: what I pay versus what I get. Educators, policymakers, and administrators will have their own criteria. At the end of the day, it's up to us to remain disciplined, keep a cool head, and weigh excitement against the evidence.
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