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The EdTech Episode #9

Dear readers,

Career education, and particularly digital and technical skills, were in the spotlight again over the last month:

  • Coursera announced a new feature allowing in-browser projects such as programming assignments (and made an acquisition in this space); 
  • Coding education and hiring startups were prominent in Y Combinator's most recent batch;
  • Course Report estimated strong growth in the North American coding bootcamp market;
  • There was the usual batch of fundraising announcements in this space, both from digital/code-focused companies, and also from L&D providers in other verticals (sales and call-centre staff).

At the same time, we also saw a reminder that even in sectors with strong demand, there are bumps in the road. The announcement of Udacity's new CEO came against the backdrop of previous restructuring, while the market punished 2U with a share price sell-off after it flagged a slowdown in growth.

Incidentally, I found it refreshing to see two fundraising rounds from EdTech companies in the humanities - one delivering music education, the other focused on calligraphy and poetry. It's a reminder that, like education, EdTech is a broad tent encompassing many kinds of knowledge.

- Peter Sahui

Market News
Emerge Education has released a tool to identify investors active in European EdTech. The five most active investors are Emerge itself, Nesta Impact Investments, Northstar Ventures, Downing Ventures, and Balderton Capital.

reported US$962M (+28% YoY) of venture funding spread across 65 deals (+5% YoY) for the US EdTech sector in 1H19.

Course Report has released its latest estimate of the US and Canadian coding bootcamp market. The estimates are for 23K bootcamp graduates in 2019 (17.5K in-person and 5.5K online), up 49% YoY, plus another 22.5K corporate training graduates, up 34% YoY. 
Company/Institution News
2U, which partners with universities to launch online degrees (and which recently acquired Trilogy Education), saw its share price fall sharply after a disappointing quarterly earnings announcement. Competition is rising and 2U management expects a slowdown in growth.

Separately, 2U
announced its first online bachelor's degree (in data science & business analytics, with the London School of Economics). The degree lasts 36 months and involves both synchronous and asynchronous learning.

Udacity has appointed Gabriel Delporto, the former CFO of LendingTree, as its new CEO.  The company is cashflow-positive after recent restructuring, layoffs, and a de-facto price hike.

Coursera has announced Coursera Labs, which allows course providers to create browser-based projects that incorporate third-party applications (e.g. for programming assignments).

Y Combinator, the startup accelerator, has announced 166 companies that took part in its latest batch (you can read more in two parts). There are several EdTech and education-related businesses  - Blair, ScholarMe, and GradJoy (student finance), Juno College and Microverse (coding education), Prenda (K-12 "microschools"), Hatchways (interview prep for the tech industry), and GitStart (outsourcing / pathway to work for coders).

Huowa, a Chinese K-12 online education platform offering live-streamed maths & science courses, has raised a US$85M Series D round (paywall). GGV and KKR led.

Vedantu, an Indian online tutoring platform,
has raised a US$42M Series C round. Tiger Global and WestBridge Capital led.

MindTickle, a L&D platform for sales reps, has raised a US$40M Series C round. Norwest Venture Partners led.

Hexiaoxiang, a Chinese K-12 online education platform focused on calligraphy, poetry, reading, and writing, has raised a RMB 200 million (approx US$28M - paywall) Series B round. Bertelsmann Asia Investment led.

Joytunes, an Israeli developer of music education apps, has raised a US$25M funding round. Qumra Capital led.

Pathstream, which works with HEIs and tech companies to create digital skills certificates,
has raised a US$12M Series A round. TDM Partners, Hereditas Capital Management, Bisk Ventures, New Ground Ventures, and Rethink Education took part.

YOLA, a Vietnam-based provider of K-12 blended English language learning,
has raised US$10M from Kaizen Private Equity.

VoiceOps, the developer of a L&D solution for call centre staff, has raised a US$9M Series A round. Bain Capital Ventures led.

CoachHub, a Berlin-based company that provides an employee coaching platform, has raised a €6M round. HV Holtzbrinck Ventures, Partech, and Speedinvest x took part.

The Canadian Government is granting C$8M (approx. US$6M) to Kids Code Jeunesse, a non-profit that provides K-12 digital skills education.

CodeCombat, the developer of educational games for learning how to code, has raised a US$6M Series A round. Hone Capital led.

Amira Learning, the developer of a K-3 reading assistant, has raised US$5.1M out of a target US$5.2M round, according to an SEC filing.

Crimson Education has raised US$5M, valuing it at US$245M, in a strategic round from Solborn Investment.

Unibuddy, a platform to connect current and prospective HE students,
raised a US$5M Series A round. Stride VC led.

CourseKey, a compliance, assessment, and student success solution for post-secondary institutions, has raised a US$5M Series A round. Builders VC led.

Sense Education, the developer of an assessment tool that groups similar submissions, has raised US$5M out of a target US$6.5M round,
according to an SEC filing.

WithYouWithMe, an Australian career skills platform originally targeted at veterans,
has raised an A$5M Series A round. Perennial Value and Alium Capital led.

Coursera has acquired Rhyme Softworks, which offers in-browser labs for learning technical skills. This is part of the Coursera Labs announcement (see above). 

Edmentum has acquired Calvert Education Services, which provides services for blended and virtual K-12 schools.

The Apex Digital Fund has
agreed to acquire MetaMetrics, the developer of the Lexile score for reading, from Pamlico Capital.

Sphero, which makes educational toy robots,
has acquired littleBits.

Cambium Learning. a K-12 EdTech company owned by Veritas Capital,
has agreed to acquire AIR Assessment.
New Funds

Jobs for the Future (JFF), a US non-profit, has acquired the Employment Technology Fund. The fund has invested in 7 companies so far.
Final Thoughts

Is Netflix a media company or a tech company?

Ben Evans, from the venture capital firm Andreesen Horowitz, argues that it is a media company. While the underlying technology has to work, success will be determined by considerations such as the availability and price of content - in other words, TV industry questions.

I think this is a useful framework for the EdTech sector, where many important considerations (such as pedagogy and distribution) will be familiar to other education businesses. What are the critical questions for your organisation's success?
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