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The EdTech Episode #6

Greetings this week from EduTech, the annual education expo held in Sydney. This year Navitas Ventures supported the inaugural Innovation Precinct organised by Edugrowth (Australia's peak body for EdTech), that saw the best Australian EdTech companies showcase their products and services to the sector.

The quality of the companies and presentations was very high, while it is also encouraging to see that the majority of the Australian EdTech companies on show have a global mindset from day one. Well attended, quality EdTech events are an important signal that an ecosystem is thriving, and the success of the innovation precinct hints at the growing maturity of the Australian EdTech sector.

Supporting international education also represents a high-growth, attractive market for EdTech investment, with a number of EdTech companies that help international students apply to study overseas raising recent rounds. Although the majority of these rounds have been at a Seed and Series A level, the 
C$55M (approx US$41M) Series B round by ApplyBoard shows an increased appetite by investors to make larger bets in this space. We anticipate that this represents only the start of a sustained period of investment in this part of the education landscape.

Lastly, an apology for the week delay in this newsletter. Australia is experiencing an early and virulent flu season this year, and our team has not been immune!

Tim Praill
Head of Navitas Ventures

Market News
 
Jan Lynn-Matern of Emerge Education has posted the next video in his series on how EdTech companies can successfully raise funding - this video addresses key questions that founders should consider about their business model.
Company/Institution News
 
Hujiang, a Chinese online EdTech unicorn, has reportedly postponed plans for its Hong Kong IPO.
Fundraising

While not an EdTech deal per se, China East Education, a vocational training provider, has raised US$625M in the world's largest education IPO.

GSX Techedu, a Chinese online tutoring company, has raised US$208M in a US IPO.

Knowbox, a Chinese K-12 EdTech company, has raised a US$150M Series D round. Alibaba led.

ApplyBoard, an international student application platform for HE, has raised a C$55M (approx US$41M) Series B round. Anthos Capital led.

OpenSesame, an online corporate learning marketplace, has raised a US$28M Series C round. FTV Capital led.

Sanjieke, a Chinese online EdTech provider for IT professionals, has raised a RMB130M (approx US$19M) Series C round. Wu Capital led.

AcadSoc, a Chinese online English education company, has raised a RMB100M (approx US$15M) Series C2 round (registration wall) led by GF Xinde Investment.

Degreed has raised US$13.9M out of a target US$35M round, according to an SEC filing.

Sawyer, a children's activity booking site, has raised a US$11M Series A-1 round. Advance Venture Partners led.

Osmosis, which provides resources for medical education, has raised a US$9M funding round.

ReUp Education has raised a US$8.1M funding round, according to an SEC filing.

Mightier, which provides a solution for children to strengthen their self-regulation, has raised a US$6.6M Series A round. Foxkiser led.

CozyKin, a Montessori-trained nanny service, has raised a US$6M Series A round. Bessemer Venture Partners, NextView Ventures, and Primary Venture Partners took part.

Pillar, a student loan management tool, has raised a US$5.5M seed round. Kleiner Perkins led.

Interplay, which offers online VR and 3D simulation training for tradespeople, has raised a US$5.5M Series A round. S3 Ventures led.

Reading Plus has raised investment on undisclosed terms from Sterling Partners' Education Opportunity Fund.
 
M&A

Kahoot has acquired Poio for US$6.5M in cash and shares.

Abl, a provider of school scheduling software, has acquired School by Design. Financial terms were not disclosed.

Goal Structured Solutions has acquired Skills Fund, a student lender for skills training. Financial terms were not disclosed.
New Funds

No new EdTech funds have been raised since our last newsletter.
Final Thoughts

Corporate Venturing continues to increase in popularity with more CVCs investing in 2018 than ever before. (In Education for example we have seen the launch of EdTech focused vehicles in Strada and Pearson in the past six months, while SEEK has also been active).

On paper, it seems like a win-win situation: the corporate brings the strong balance sheet, established reputation, and extensive customer network, while the startup brings new products and a fresh mindset. In practice, corporate venture capital is a hard model to get right, with differences in organisational culture, processes, and the speed of decision-making posing challenges. 

There is a fair amount of literature on this topic with the recent Partech Ventures 
white paper providing one of the most balanced evaluations of the different corporate venturing models being deployed by companies around the world.

When organisations do get it right, the rewards can be significant. One EdTech startup that appears to be benefiting from this model is the mobile micro-learning provider 
Gnowbe, which is due to raise Series A and enter the US market later this year through a partnership with SAP (through its SAP.iO Foundries incubation model).

Find Navitas Ventures online at navitasventures.com.
Copyright © 2019 Navitas, All rights reserved.


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