Education

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Garry Kasparov launches a community-first chess platform

Four years ago, MasterClass, a platform that sells celebrity-taught classes, invited chess legend Garry Kasparov to teach a class. He said yes, but soon realized that creating a message that could satisfy a majority of players was a “struggle throughout the process.”

While the class did pretty well, Kasparov found it “a little bit annoying” that he had to downplay concepts and stick to a specific structure. So, now, Kasparov is launching a platform he says has been several years in the making: Kasparovchess.

Kasparovchess will be a platform in which legendary chess players will have free reign to share tips and tricks with players from various levels. Financed by private investors, and media conglomerate Vivendi, the company declined to disclose its total capital raised to date.

The platform, produced by Vivendi, includes documentaries, podcasts, articles and interviews between experts and known players in the chess community. Moe than 1,000 videos have been recorded to date, Kasparov said. Beyond content, Kasparovchess will have an exclusive Discord server attached to it and playing zones.

In many ways, it’s a vertical-specific version of the chess MasterClass he did years ago, with a big focus on community and variety. MasterClass, which is reportedly raising funding that would value it at $2.5 billion, has been a leader in the “edutainment” space, which monetizes off of documentary-style entertainment. One of the unicorn’s biggest characteristics, as Kasparov alluded to earlier, is that it has to appeal to a wide audience so subscribers can hop from one class to another. Within the same month, a user could go from a Kasparovchess class to general pontifications from RuPaul on self expression. The more classes that MasterClass can get you to take, the longer you’ll keep your subscription.

Image Credits: Kasparovchess

MasterClass might consider its broad view as a differentiator, but it’s clear that Kasparov views it as an opportunity.

Kasparovchess has a monthly or yearly subscription of $13.99 or $119.99, respectively. The majority of lessons from experts and retrospective analysis on games you’ve played sit behind the paywall. The premium product also grants users access to a database of 50,000 manually created puzzles that allows players to train certain skills. The product will be available to the public by the end of month.

A popular competitor already exists: Chess.com. It’s a chess server, forum and networking site that launched in 2005, with premium subscription that ranges between $5 a month or $29 a year. Kasparovchess is significantly more expensive.

Kasparov says his biggest differentiator will be a focus on community. The long-term goal of Kasparovchess is to connect global chess communities with each other, unearth prodigies that might not have access otherwise and give others access to his experiences. He thinks that remote education during the pandemic has shown the need to have more interactive solutions, beyond buzzy promises.

“It’s time to actually switch from what we’re teaching to how students can apply it,” he said. “And that helps us indirectly because chess has been recognized for centuries as a nexus for intelligence and creativity.”

Kasparov became the youngest world chess champion in 1985. He retired from public chess in 2005, and has since launched a foundation to help children have access to chess worldwide. Most recently, he helped advise for “Queen’s Gambit,” a show about a chess prodigy that became Netflix’s most-watched scripted limited series to date on the platform. The show was so ubiquitously popular that sales for chess boards soon skyrocketed.

“I was so happy because it was the first time where we could see chess as a positive factor,” he said. “We had so many years with chess being seen as potential destruction and something that could push kids to the dark area of psychological instability.”

The freshness of this message mixed with an uptick in remote education has given Kasparov confidence that his years-long project is finally ready to launch.

“It’s not just about teaching the game, or playing the game, or debating the game,” he said. Instead, he hopes people who come to the platform focus on the culture of chess, its survival and its seemingly timeless power.

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Amira Learning raises $11M to put its AI-powered literacy tutor in post-COVID classrooms

School closures due to the pandemic have interrupted the learning processes of millions of kids, and without individual attention from teachers, reading skills in particular are taking a hit. Amira Learning aims to address this with an app that reads along with students, intelligently correcting errors in real time. Promising pilots and research mean the company is poised to go big as education changes, and it has raised $11 million to scale up with a new app and growing customer base.

In classrooms, a common exercise is to have students read aloud from a storybook or worksheet. The teacher listens carefully, stopping and correcting students on difficult words. This “guided reading” process is fundamental for both instruction and assessment: It not only helps the kids learn, but the teacher can break the class up into groups with similar reading levels so she can offer tailored lessons.

“Guided reading is needs-based, differentiated instruction and in COVID we couldn’t do it,” said Andrea Burkiett, director of Elementary Curriculum and Instruction at the Savannah-Chatham County Public School System. Breakout sessions are technically possible, “but when you’re talking about a kindergarten student who doesn’t even know how to use a mouse or touchpad, COVID basically made small groups nonexistent.”

Amira replicates the guided reading process by analyzing the child’s speech as they read through a story and identifying things like mispronunciations, skipped words and other common stumbles. It’s based on research going back 20 years that has tested whether learners using such an automated system actually see any gains (and they did, though generally in a lab setting).

In fact I was speaking to Burkiett out of skepticism — “AI” products are thick on the ground and while it does little harm if one recommends you a recipe you don’t like, it’s a serious matter if a kid’s education is impacted. I wanted to be sure this wasn’t a random app hawking old research to lend itself credibility, and after talking with Burkiett and CEO Mark Angel I feel it’s quite the opposite and could actually be a valuable tool for educators. But it needed to convince educators first.

Not a replacement but a force multiplier

“You have to start by truly identifying the reason for wanting to employ a tech tool,” said Burkiett. “There are a lot of tech tools out there that are exciting, fun for kids, etc., but we could use all of them and not impact growth or learning at all because we didn’t stop and say, this tool helps me with this need.”

Amira was decided on as one that addresses the particular need in the K-5 range of steadily improving reading level through constant practice and feedback.

“When COVID hit, every tech tool came out of the woodwork and was made free and available,” Burkiett recalled. “With Amira you’re looking at a 1:1 tutor at their specific level. She’s not a replacement for a teacher — though it has been that way in COVID — but beyond COVID she could become a force multiplier,” said Burkiett.

You can see the old version of Amira in action below, though it’s been updated since:

Testing Amira with her own district’s students, Burkiett replicated the results that have been obtained in more controlled settings: As much as twice or three times as much progress in reading level based on standard assessment tools, some of which are built into the teacher-side Amira app.

Naturally it isn’t possible to simply attribute all this improvement to Amira — there are other variables in play. But it appears to help and doesn’t hinder, and the effect correlates with frequency of use. The exact mechanism isn’t as important as the fact that kids learn faster when they use the app versus when they don’t, and furthermore this allows teachers to better allocate resources and time. A kid who can’t use it as often because their family shares a single computer is at a disadvantage that has nothing to do with their aptitude — but this problem can be detected and accounted for by the teacher, unlike a simple “read at home” assignment.

“Outside COVID we would always have students struggling with reading, and we would have parents with the money and knowledge to support their student,” Burkiett explained. “But now we can take this tool and offer it to students regardless of mom and dad’s time, mom and dad’s ability to pay. We can now give that tutor session to every single student.”

“Radically suboptimal conditions”

This is familiar territory for CEO Mark Angel, though the AI aspect, he admits, is new.

“A lot of the Amira team came from Renaissance Learning. bringing fairly conventional edtech software into elementary school classrooms at scale. The actual tech we used was very simple compared to Amira — the big challenge was trying to figure out how to make applications work with the teacher workflow, or make them friendly and resilient when 6-year-olds are your users,” he told me.

“Not to make it trite, but what we’ve learned is really just listen to teachers — they’re the superusers,” Angel continued. “And to design for radically sub-optimal conditions, like background noise, kids playing with the microphone, the myriad things that happen in real-life circumstances.”

Once they were confident in the ability of the app to reliably decode words, the system was given three fundamental tasks that fall under the broader umbrella of machine learning.

The first is telling the difference between a sentence being read correctly and incorrectly. This can be difficult due to the many normal differences between speakers. Singling out errors that matter, versus simply deviation from an imaginary norm (in speech recognition that is often, effectively, American English as spoken by white people) lets readers go at their own pace and in their own voice, with only actual issues like saying a silent k noted by the app.

On that note, considering the prevalence of English language learners with accents, I asked about the company’s performance and approach there. Angel said they and their research partners went to great lengths to make sure they had a representative dataset, and that the model only flags pronunciations that indicate a word was not read or understood correctly.

The second is knowing what action to take to correct an error. In the case of a silent k, it matters whether this is a first grader who is still learning spelling or a fourth grader who is proficient. And is this the first time they’ve made that mistake, or the tenth? Do they need an explanation of why the word is this way, or several examples of similar words? “It’s about helping a student at a moment in time,” Angel said, both in the moment of reading that word, and in the context of their current state as a learner.

Screenshot of a reading assessment in the app Amira.

Image Credits: Amira Learning

Third is a data-based triage system that warns students and parents if a kid may potentially have a language learning disorder like dyslexia. The patterns are there in how they read — and while a system like Amira can’t actually diagnose, it can flag kids who may be high risk to receive a more thorough screening. (A note on privacy: Angel assured me that all information is totally private and by default is considered to belong to the district. “You’d have to be insane to take advantage of it. We’d be out of business in a nanosecond.”)

The $11 million in funding comes at what could be a hockey-stick moment for Amira’s adoption. The round was led by Authentic Ventures II, LP, with participation from Vertical Ventures, Owl Ventures and Rethink Education.

“COVID was a gigantic spotlight on the problem that Amira was created to solve,” Angel said. “We’ve always struggled in this country to help our children become fluent readers. The data is quite scary — more than two-thirds of our fourth graders aren’t proficient readers, and those two-thirds aren’t equally distributed by income or race. It’s a decades-long struggle.”

Having basically given the product away for a year, the company is now looking at how to convert those users into customers. It seems like, just like the rest of society, “going back to normal” doesn’t necessarily mean going back to 2019 entirely. The lessons of the pandemic era are sticking.

“They don’t have the intention to just go back to the old ways,” Angel explained. “They’re searching for a new synthesis — how to incorporate tech, but do it in a classroom with kids elbow to elbow and interacting with teachers. So we’re focused on making Amira the norm in a post-COVID classroom.”

Part of that is making sure the app works with language learners at more levels and grades, so the team is working to expand its capabilities upward to include middle-school students as well as elementary. Another is building out the management side so that success at the classroom and district levels can be more easily understood.

Cartoon illustration of an adventurous looking woman in front of a jungle and zeppelin.

Amira’s appearance got an update in the new app as well. Image Credits: Amira Learning

The company is also launching a new app aimed at parents rather than teachers. “A year ago 100% of our usage was in the classroom, then three weeks later 100% of our usage was at home. We had to learn a lot about how to adapt. Out of that learning we’re shipping Amira and the Story Craft that helps parents work with their children.”

Hundreds of districts are on board provisionally — aided by a distribution partnership with Houghton Mifflin Harcourt, also an investor — but decisions are still being kicked down the road as they deal with outbreaks, frustrated parents and every other chaotic aspect of getting back to “normal.”

Perhaps a bit of celebrity juice may help tip the balance in their favor. A new partnership with Miami Dolphins (former Houston Texans) linebacker Brennan Scarlett has the NFL player advising the board and covering the cost of 100 students at a Portland, OR school through his education charity, the Big Yard Foundation — and more to come. It may be a drop in the bucket in the scheme of things, with a year of schooling disrupted, but teachers know that every drop counts.

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Nonobvious acquisitions are on my 2021 bingo board

At the end of 2020, I argued that edtech needs to think bigger in order to stay relevant after the pandemic. I urged founders to think less about how to bundle and unbundle lecture experience, and more about how to replace outdated systems and methods with new, tech-powered solutions. In other words, don’t simply put engaging content on a screen, but innovate on what that screen looks like, tracks and offers.

A few months into 2021, the exit environment in edtech…feels like it’s doing exactly that. The same startups that hit billion and multi-billion valuations during the pandemic are scooping up new talent to broaden their service offerings.

Ruben Harris, the founder of Career Karma, a platform that matches aspiring coding professionals to bootcamps, put together a massive report recently with his team to talk about the pandemic’s impact on the bootcamp market.

James Gallagher, the author of the report, tells me:

It is important to note that the full potential of bootcamps has not yet been realised. We are now seeing more exploration of niches like technology sales which provide gateways into new careers in tech for people who otherwise may not have been able to acquire training. To scale such models, new businesses will need venture capital.

He went on to explain how a notable acquisition from 2020 was K12 scooping up Galvanize, “which would give K12 exposure into corporate training and the coding bootcamp space, a market outside of K12’s focus at the moment.”

To me this report signal two things: the financial interest in boot camps isn’t simply stemming from other bootcamps (although that is happening), but it’s surprising partnerships. Leaving this subsector, we see creative acquisitions such as a Roblox for edtech buying a language learning tool, and a startup known for flashcards scooping up a tech tutoring service.

Readers should know by this point that I love a nonobvious acquisition (except when this almost happened), so if you have any more tips on coming deals in edtech, please Signal me or direct message me on Twitter.

I’ll end with this: Successful startup founders are innately ambitious, finding opportunity in moonshots and convincing others that the odds are in their favor. However, the ceiling for what defines ambition heightens almost everyday. What used to be a win is now a nonnegotiable, and a feat is only a feat until your competitor hits the exact same milestone.

Acquisitions are one way to scoop up competition and synergistic talent, but it’s what happens next that matters the most.

In the rest of this newsletter, we will talk about Clubhouse competitors, how a homegrown experiment became one of the fastest growing companies in fitness tech and a cool-down in public markets (?!). As always, you can get this newsletter in your inbox each Saturday morning, so subscribe here to join the cool kids.

Clubhouse might create billions in value, but could capture none of it

Remember when everyone was buzzing around about building Stories? That’s so pre-pandemic. A number of companies recently announced plans to build their own versions of Clubhouse, after the buzzy app unearthed the consumer love for audio.

Here’s what to know: It might be easier to start guessing who isn’t building a Clubhouse clone at this point. Our predictions are already starting, but jokes aside, the rise in clones could mean that Clubhouse might have to make a run for its pre-monetized money (cough, cough, Twitter spaces). It doesn’t matter if a startup is first in unlocking a key insight, all that matters is who executes that key insight the best.

Image Credits: Getty Images

A strong unicorn, literally

Tonal, a fitness tech startup, became a unicorn this week after raising a new tranche of capital.

Here’s what to know: The new status underscores market growth for at-home fitness solutions. And while we don’t have a Tonal S-1 yet, we do have a Tonal EC-1. EC-1’s are TechCrunch’s riff on an S-1, and are essentially a deep dive into a company.

Reporter JP Mangalindan wrote thousands and thousands of words about Tonal, from its origin story to business model, its focus on communities and its biggest hurdles ahead.

Image Credits: Nigel Sussman

Initial public o….no

You’ve probably had a better week than Compass, Deliveroo and Kaltura. The three companies all had different events that illustrate a potential damper on the part that has been the public markets.

Here’s what to know: Compass cut its shares and lowered pricing of said shares, Deliveroo had a rough debut as a delivery company on the public markets, and Kaltura postponed its IPO after valuation demand didn’t hit expectations.

In other news, though:

Photo Taken In Arizona, United States. Image Credits: Jure Batagelj / 500px / Getty Images

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Holberton raises $20M as it pivots to become an edtech SaaS company

Holberton, the education startup that started out as a coding school in San Francisco and today works with partners to run schools in the U.S., Europe, LatAm and Europe, today announced that it has raised a $20 million Series B funding round led by Redpoint eventures. Existing investors DaphniImaginable FuturesPearson VenturesReach Capital and Trinity Ventures also participated in this round, which brings Holberton’s total funding to $33 million.

Today’s announcement comes after a messy 2020 for Holberton, and not only because the pandemic put a stop to in-person learning.

The original promise of Holberton was that it provided students — which it selects through a blind admissions process — with a well-rounded software development education akin to a college education for free. In return, students provide a set amount of their salary for the next few years to the school as part of a deferred tuition agreement, up to a maximum of $85,000.

But early last year, California’s Bureau for Private Postsecondary Education (BPPE) directed the school to immediately cease operation, in part because the agency found that Holberton had started offering a new, unapproved program. This program, a nine-month training program augmented by six months of employment, required students to pay the full $85,000 cost of its approved programs. After a hearing, the BPPE allowed Holberton to continue to operate its other programs. A number of students also accused the school of not giving them the education it had promised.

Throughout this period, Holberton continued expanding, though. It opened campuses in Mexico and Peru, for example. Indeed, it doubled the number of schools in its system from nine to 18 in 2020.

But on December 17, 2020, Holberton voluntarily surrendered its operating license in California. The day before, Holberton announced that it would not re-open its campus in San Francisco, which had been shut down since March because of the pandemic. Holberton co-founder Sylvain Kalache argued that the school would be best positioned to achieve its mission by “working with amazing local partners who operate the campuses and deeply understand their markets’ unique needs” and not by operating its own campuses.

It now thinks of itself more as an “OS of Education” that offers franchised campuses and education tools.

In January, California’s attorney general struck down the fraud allegations against the school. “California was the only market in which Holberton faced any regulatory challenges,” Kalache wrote in the company’s first public acknowledgment of the lawsuits. “With this now behind us, we are excited to move forward with our original mission of providing affordable and accessible education to prospective software engineers around the world.”

Clearly, that’s how Holberton’s funders feel about this, too.

“They’ve proven successful in breaking down barriers of cost and access while delivering a world-class curriculum,” said Manoel Lemos, managing partner at Redpoint eventures. “With the concept of ‘OS of Education’ as a service, they provide customers with all the tools they need for success. Customers can be nonprofit impact investors who want to improve local economies, education institutions who want to fill gaps in how they teach in a post-COVID learning environment, or corporations who want to provide the best training possible as education providers themselves or as employee development programs.”

Holberton founder and CEO Julien Barbier tells me that, today, “for the first time since our creation, we have started working with universities to help them create a better experience and add hands-on education on top of their traditional methodology. Everyone’s happy: the school, the students, and the teachers — because they prefer to focus on teaching and not spend huge amounts of time correcting projects.”

He expects to see 5,000 students join this year, up from 500 in 2019, and see the network expand with new schools in the U.S., Europe, LatAm and Africa. He also noted that the company already has customers for its “OS of Education” tools for auto-grading projects and its online programs. Just this week, Holberton Tulsa announced plans to more than double its physical campus in the city.

“Raising funds is helping us support and accelerate our vision of creating this ‘OS of education.’ Many educational entities need help and tools to better support their students and their staff. It is now that they need our help. Again, COVID has accelerated the digital transformation, and clearly, there are a lot of gaps that need to be filled,” he said. “[…] We are now a SaaS company which charges other businesses, universities or non-profits to use our tools and/or contents so that they can run their education/training programs at scale, with a better experience, while increasing the quality of education.”

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Argentina’s Digital House raises over $50M to help solve LatAm’s tech talent shortage

Digital House, a Buenos Aires-based edtech focused on developing tech talent through immersive remote courses, announced today it has raised more than $50 million in new funding.

Notably, two of the main investors are not venture capital firms but instead are two large tech companies: Latin American e-commerce giant Mercado Libre and San Francisco-based software developer Globant. Riverwood Capital, a Menlo Park-based private equity firm, and existing backer early-stage Latin American venture firm Kaszek also participated in the financing.

The raise brings Digital House’s total funding raised to more than $80 million since its 2016 inception. The Rise Fund led a $20 million Series B for Digital House in December 2017, marking the San Francisco-based firm’s investment in Latin America.

Nelson Duboscq, CEO and co-founder of Digital House, said that accelerating demand for tech talent in Latin America has fueled demand for the startup’s online courses. Since it first launched its classes in March 2016, the company has seen a 118% CAGR in revenues and a 145% CAGR in students. The 350-person company expects “and is on track” to be profitable this year, according to Duboscq.

Digital House CEO and co-founder Nelson Duboscq. Image Credits: Digital House

In 2020, 28,000 students across Latin America used its platform. The company projects that more than 43,000 will take courses via its platform in 2021. Fifty percent of its business comes out of Brazil, 30% from Argentina and the remaining 20% in the rest of Latin America.

Specifically, Digital House offers courses aimed at teaching “the most in-demand digital skills” to people who either want to work in the digital industry or for companies that need to train their employees on digital skills. Emphasizing practice, Digital House offers courses — that range from six months to two years — teaching skills such as web and mobile development, data analytics, user experience design, digital marketing and product development.

The courses are fully accessible online and combine live online classes led by in-house professors, with content delivered through Digital House’s platform via videos, quizzes and exercises “that can be consumed at any time.” 

Digital House also links its graduates to company jobs, claiming an employability rate of over 95%.

Looking ahead, Digital House says it will use its new capital toward continuing to evolve its digital training platforms, as well as launching a two-year tech training program — dubbed the the “Certified Tech Developer” initiative — jointly designed with Mercado Libre and Globant. The program aims to train thousands of students through full-time two-year courses and connect them with tech companies globally. 

Specifically, the company says it will also continue to expand its portfolio of careers beyond software development and include specialization in e-commerce, digital marketing, data science and cybersecurity. Digital House also plans to expand its partnerships with technology employers and companies in Brazil and the rest of Latin America. It also is planning some “strategic M&A,” according to Duboscq.

Francisco Alvarez-Demalde, co-founder & co-managing partner of Riverwood Capital, noted that his firm has observed an accelerating digitization of the economy across all sectors in Latin America, which naturally creates demand for tech-savvy talent. (Riverwood has an office in São Paulo).

For example, in addition to web developers, there’s been increased demand for data scientists, digital marketing and cybersecurity specialists.

“In Brazil alone, over 70,000 new IT professionals are needed each year and only about 45,000 are trained annually,” Alvarez-Demalde said. “As a result of such a talent crunch, salaries for IT professionals in the region increased 20% to 30% last year. In this context, Digital House has a large opportunity ahead of them and is positioned strategically as the gatekeeper of new digital talent in Latin America, preparing workers for the jobs of the future.”

André Chaves, senior VP of Strategy at Mercado Libre, said the company saw in Digital House a track record of “understanding closely” what Mercado Libre and other tech companies need.

“They move as fast as we do and adapt quickly to what the job market needs,” he said. “A very important asset for us is their presence and understanding of Latin America, its risks and entrepreneurial environment. Global players have succeeded for many years in our region. But things are shifting gradually, and local knowledge of risks and opportunities can make a great difference.”

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Y Combinator widens its bet in edtech in latest batch

Y Combinator is slowly growing its stake in education companies, as the sector balloons with newfound demand from remote learners. In its latest batch, the famed accelerator had its highest number of edtech startups yet: 14 companies from around the world, working on everything from teacher monetization to homework apps to ways to train software engineers in an affordable fashion.

While Y Combinator isn’t the definitive source on what success in early-stage startups looks like — it quite literally has a post-mortem dinner after Demo Day to celebrate failure — it does serve well in providing an illustrative glance of how entrepreneurs are thinking about certain sectors in a given moment in time. Managing director Michael Seibel said that the number of startups in each sector isn’t a Y Combinator choice, but is in line with the concentration of applicants in each sector. In other words, YC is backing more edtech companies because more edtech companies are applying to the accelerator.

One dynamic worth pointing out here is that, of the 14 edtech startups in this batch, only two have a woman founder, UPchieve and Degrees of Freedom. Y Combinator provided aggregate batch diversity, stating that 19% of companies in W21 include a woman founder, and 10% of founders in the entire batch are women. It’s a slight uptick from the last batch, but not an immense jump.

With this context, I will use the current edtech cohort within the batch to sketch out one version of the future of education in the eyes of this specific demographic of early-stage founders.

Internationalization is a factor

The current YC batch has 50% of its startups based outside of the United States, a first for the accelerator. The growing internationalization of Y Combinator might help partially explain the uptick in edtech companies. The growth of companies like India’s Byju’s, one of the most valuable edtech companies in the world, shows how consumer spending in education companies internationally is impressive, and it’s clear that early-stage edtech startups are taking note.

Only two of Y Combinator’s 14 edtech investments are from the United States, with the highest concentrations in South America and India.

  • Manara: A marketplace to connect Middle East talent to tech jobs.
  • Prendea: Peru-based startup that offers live, online after-school classes for Spanish-speaking kids.
  • Avion School: The education startup teaches Filipino students to be remote software engineers around the world.
  • Poliglota: A language school for Latin America.

The future is consumer over B2B

The vast majority of startups in the current edtech batch charge consumers, instead of institutions or enterprises, for services. In some ways, edtech startups going for consumers instead of institutions isn’t new: it’s always been easier to convince a parent instead of a public school to pay for a service simply due to red tape. Consumers are an easier way to reach a venture-demanded scale, and that’s always been a truth of edtech.

  • Kidato: Targeting the middle class of Africa, Kidato is an online school for K-12 students. The startup has a focus on quality and affordability.
  • Codingal: An afterschool program for Indian kids to learn coding.

Still, it’s noteworthy that we’re not seeing too much experimentation in business model here, despite the pandemic and that some schools have begun to invest more in edtech services.

A potential hurdle that these companies might face is access. If it costs to use your service, you can only educate so many people from specific income groups. As a result, income share agreements, or ISAs, were especially present in this batch, a set-up that allows a student to hold off on paying for an education until they are employed. Upon employment, said student has to give a percentage of their income to the company until their debt is paid. While the model is controversial, it was popularized by YC graduate Lambda School and continues to be one way to make the upfront cost of school more popular.

  • Pragmatic Leaders: The startup wants to build a more cost-effective MBA, which is free until the student is hired post-grad.
  • Awari: The São Paulo-based startup uses income share agreements to help students in Brazil afford a tech education. Courses range from data analytics to product UX and growth marketing.

Acadpal, mentioned later, is an outlier here selling to schools in India. Before I move on to our next section, I do want to shout out two startups that I think embody the most ambitious bets in business model:

Zoom University lives on

Despite the struggles of “Zoom University,” this batch of edtech founders clearly believe that the future of instruction is through online courses. This was perhaps the most overwhelming thread tying together all the companies in the sector: a bet on one of these companies is a bet that remote education will become status quo.

As previous sections show, a number of startups are offering online coding platforms for specific demographics. Now, I always have my inbox filled with different “Lambda School for X” startups, so seeing a variety of these startups pop up yet again isn’t exactly exciting. However, the pandemic did show how much community and network enhances a school experience. If these online schools can pull off strong partnerships with employers and alumni, I think there’s a huge opportunity here.

  • Turing College: The Lithuania-based online data science school uses income-share agreements to bring affordability to education.
  • Coderhouse: An Argentina-based startup that wants to build a live, online tech education for the Spanish-speaking populations of the world.

That said, where there’s big opportunity there’s always a lot of competition. These startups will have to find a way to differentiate themselves, like the one below:

  • Unschool: The startup wants to tie higher education to employment outcomes, so it’s building a platform to increase completion rates in India with a guarantee of internships.

There were bets on the infrastructure of how courses get done online, from course creation to completion.

  • Pensil: A platform that helps YouTube teachers in India monetize their courses.
  • Acadpal: A learning app for teachers in India to create and share homework, and for students to complete and discuss assignments.
  • CreatorOS – Questbook: This company wants to make it easier for teachers to teach online courses. It gives professionals the tools they need to launch a course within minutes, with a focus on a bite-sized end-product.

In conclusion

To end, the edtech startups in the current YC batch are more complementary to each other than competitive. For a homework platform like Acadpal to succeed, it would be good news for a company like Codingal, which helps bring afterschool learning online, to get funding as well. For Unschool, which ties higher-ed to employment, a company like Degrees of Freedom could be a key partner or integration for students from a low-income background.

Edtech is growing — and fast — so the fragmentation of different plays is somewhat expected. And while this batch’s hard work starts now, it’s illuminating to understand where the earliest entrepreneurs out there are seeing promise.

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Coursera set to roughly double its private valuation in impending IPO

In a new S-1/A filing, Coursera set an initial IPO price range between $30 and $33 a share, signaling the market views its edtech business warmly ahead of its impending public offering.

Coursera will have 130,271,466 shares outstanding after its IPO, or 132,630,966 including its underwriters’ option. At $30 per share, the low end of the company’s IPO range and a share count inclusive of 2,359,500 shares reserved for its underwriting banks, the firm would be worth $3.98 billion. That number rises to $4.38 billion at $33 per share.

Coursera is being valued as a software company, likely a breathe-easy moment for still-private edtech companies, since the debut could be an industry bellwether.

This is a solid increase from Coursera’s last private-market valuation, which was around $2.4 billion when it raised a Series F round in October 2020.

For the bulls in the room, there’s a bigger valuation if you tinker with the numbers. In a fully diluted accounting, including in our calculation, shares that are issuable upon vested options and RSUs, Coursera’s share count rises to 166,006,474, or 168,365,974 if we count its underwriters’ option. At its most generous share count and highest projected price, Coursera’s valuation could reach $5.56 billion.

However, IPO-watching group Renaissance Capital comes to a smaller $5.1 billion figure for a midpoint-range, fully diluted valuation. That result excludes shares reserved for underwriters and equity currently present in vested RSUs.

Using the more modest $5.1 billion midpoint figure, Coursera would be worth around 17.5 times its 2020 revenue of $293.5 million. Using a run-rate figure calculated from the company’s Q4 2020 results, its multiple falls to just over 15x.

Coursera is therefore being valued as a software company, likely a breathe-easy moment for still-private edtech companies, since the debut could be an industry bellwether.

The valuation is also a vote of confidence that Coursera’s rising deficits are not even a valuation risk, let alone an existential threat to its business. In the four quarters of 2020, the edtech giant lost $14.3 million, $13.9 million, $11.9 million and $26.7 million, the final Q4 net loss being the largest among the time interval for which we have data.

From all appearances, investors are valuing Coursera on its growth, not its profitability — or lack thereof.

Helping push its losses higher are rising sales and marketing costs, something TechCrunch has written about in the past. In Q4 2019, for example, the company spent $16.7 million on sales and marketing activities. That figure rose to $35 million in Q4 2020.

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Google’s Family Link updates reflect the pandemic’s impact on how parents view screen time

Google is making changes to its parental control system, Family Link, that aims to better reflect parents’ changing views on children’s screen time. In the pre-pandemic world, parents were more likely to see screen time as something in need of restriction — they’d rather their kids get offline or go outside to play with friends, perhaps. But the challenges of a locked-down world and the push toward virtual learning have impacted parents’ views. Google says today’s parents are more concerned about how kids are spending time on their devices, not how much time is being spent.

It’s a concession to a world where devices have become a savior of sorts to families who’ve stayed at home to avoid COVID — where they’ve been restricted from seeing extended family and friends, and where schools are closed and playdates and parties were cancelled. Parents came to realize that screen time in and of itself isn’t necessarily something to be avoided; they just wanted more control over how it’s used.

With the Family Link update, parents can now choose to make remote learning apps “always allowed,” so they don’t count toward overall screen time daily limits. This could include not only those apps that are used to attend school or communicate with teachers, but others that have popped up to help kids learn and be entertained, like the supplemental resources the school suggests — or the apps parents allow during break times from virtual class.

Parents will also now have access to more detailed daily, weekly and monthly activity reports that provide both an overview of how the child is spending their time in apps, as well as how screen time usage has changed over a week or month, and what portion of time was spent in the “always allowed” apps. This gives parents a better idea of what screen time was used for education versus play.

On Android, Family Link users will also be able to browse through a selection of teacher-recommended apps from the Google Play catalog for kids under 13 in the U.S. And parents can also now set screen time limits directly from the child’s device on Android.

Image Credits: Google

Though these updates will remain useful in a post-pandemic world where parents hold a more nuanced view of screen time, it’s unfortunate that Google waited until so late in the pandemic to roll out these changes. As more people in the U.S. are being vaccinated, restrictions are lifting — including the re-opening of schools in many places. That means parents’ stress over kids’ increased screen time usage will soon become a moot point. The devices will be replaced with in-person learning, and screen time may become villainized yet again.

Related to today’s news, Google has launched a new website for families whose kids are beginning to use technology (families.google). The company also launched a new content series with meditation app Headspace that will help families with kids practice mindfulness together. Again, that’s a resource that was desperately needed in 2020 during the pandemic’s heights, more so than it is today as the world begins reopening.

Still, the pandemic has forced families to think more about screen time and what sort of on-device experiences they want their children to have. As a result of this increased scrutiny, social apps like TikTok and Instagramthe latter just today, in fact — have rolled out more family-friendly safety features, aimed at encouraging parents to see their apps in a better light, rather than being the first to go when screen time gets locked down. It has also encouraged new hybrid learning and education startups to launch, hoping to build out a new category of edutainment apps that can avoid screen-time lockdowns.

It’s worth noting, too, that the update to Family Link follows the addition of an App Store privacy label on iOS, which confirms the data Google collects on users. The app, until recently, had been one of the many Google iOS apps that had seen updates stalled due to the lack of labeling.


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Coursera is planning to file to go public tomorrow

Coursera, an online education platform that has seen its business grow amid the coronavirus pandemic, is planning to file paperwork tomorrow for its initial public offering, sources familiar with the matter say. The company has been talking to underwriters since last year, but tomorrow could mark its first legal step in the process to IPO.

The Mountain View-based business, founded in 2012, was last valued at $2.4 billion in the private markets, during a Series F fundraising event in July 2020. Bloomberg pegs Coursera’s latest valuation at $5 billion.

The latest financing event brought its cash balance to $300 million, right around the money that Chegg had before it went public. Coursera CEO Jeff Maggioncalda did confirm then that the company is eyeing an eventual IPO.

Coursera has had a busy pandemic. Similar to Udemy, another massive open online course provider planning to go public, Coursera added an enterprise arm to its business. It launched Coursera for Campus to help colleges bring on online courses (credit optional) with built-in exams; more than 3,700 schools across the world are using the software. It is unclear how much money this operation has brought in, but we know that Udemy for Business is nearing $200 million in annual recurring revenue. In February, the company announced that it has received B Corp. certification, which means that it hits high standards for social and environmental performance. It also converted to a public benefit corporation.

GSV, a venture capital firm that exclusively backs edtech companies, had its largest position of its first fund in Coursera. GSV announced a $180 million Fund II yesterday. 

It makes sense that edtech companies want to go public while the markets remain hot and remote education continues to be a central way that instruction is delivered. Other companies from the sector that have gone public in recent weeks include Nerdy and Skillsoft, two companies that used a SPAC to make their public debuts. Once – and if – Coursera does go public, it will join these newbies as well as the long-time edtech public companies including 2U, Chegg, and K12 Inc, and Zovio Solutions.

Coursera declined to comment.

Update: The previous version of this story stated that Skillshare has gone public. This is incorrect. Skillsoft has gone public. An update to reflect this change has been made.

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After 200% ARR growth in 2020, CourseKey raises $9M to digitize trade schools

When the COVID-19 pandemic hit and forced educational institutions to go virtual, many were scrambling to develop online or blended curriculums.

That struggle was particularly challenging for trade schools, many of which were not designed to teach online and were mostly paper-driven. 

CourseKey, a San Diego-based trade school management SaaS startup, was in a unique position. Demand surged and its ARR grew by 200% in 2020. And now, the company has raised $9 million in a Series B led by SignalFire, with participation from existing backer Builders VC to help it continue its momentum. 

Founded in 2015 by Luke Sophinos and Fadee Kannah, CourseKey’s B2B platform is designed to work with organizations that teach some of our most essential workers — from automotive mechanics to electricians to plumbers to nurses, phlebotomists and dental assistants.

CourseKey founders Luke Sophinos (left) and Faddee Kannah (right)

CourseKey founders Luke Sophinos (left) and Fadee Kannah (right). Image Credits: Luke Sophinos/Fadee Kannah

The goal is to help those organizations boost revenue by improving student retention and graduation rates, helping them maintain regulatory compliance and generally streamline processes. 

“Things really took off last year when the coronavirus hit,” Sophinos said. “So many schools had to adopt a digital arsenal. We saw a massive acceleration trend that was already going to happen. Every industry had been eaten. We just found a space that wasn’t yet.”

CourseKey currently works with more than 200 career colleges, including the Paul Mitchell School and the Institute for Business & Technology, among others. More than 100,000 students use its software.

For Sophinos and Kannah, founding CourseKey was more than just a business opportunity. Kannah, who had fled Iraq as a refugee, saw family members going through trade schools that were lacking technology infrastructure and modern software tools. He architected the CourseKey platform. 

Sophinos, frustrated by his own college experience, applied for The Thiel Fellowship — a program that supports students in company building instead of university attending. However, he recognized that not everyone who doesn’t want to go to traditional college has that option.

“While looking at alternatives, our early team began recognizing a market that we felt no one was paying attention to. It was occupied by our friends and by our family members,” Sophinos said. “It was a space that, for some odd reason, was largely being left out of the education conversation.”

In 2017, the founding team (Sophinos, Kannah, Ryan Vanshur, Marc Barron, Michael Woo, Fadi George and Luan Nguyen) partnered with a large vocational education provider to build and launch what Sophinos describes as “the world’s first trade school management system.”

“We focused on automating daily classroom procedures like attendance and grading, enhancing the student experience through communication tools, helping to identify at-risk students, and simplifying compliance,” he said. “We also visualized data for retention purposes.”

CourseKey also does things like track skill attainment, run evaluations and exams and integrate third-party tools.

Image Credits: CourseKey

The startup’s goal with its new capital is to scale the platform to serve “every trade school in the country” with the mission of changing the narrative that four-year college is the “only option.” It also plans to add new features and capabilities, largely based on customer requests. CourseKey also plans to nearly double its current headcount of just over 50 employees to nearly 100 over the next two years.

“This is a massive market and massive business opportunity,” Sophinos said.

CourseKey has an impressive list of supporters beyond SignalFire and Builders. Steve Altman, former vice chairman and president of Qualcomm, led its $3.5 million seed round, which also included participation from Larry Rosenberger, former FICO CEO. Dennis Yang, former CEO of edtech giant Udemy, and Altman now serve on its board.

SignalFire Managing Director Wayne Hu, who also took a seat on the startup’s board with the new round, said his firm recognized that vocational schools and their administrators, instructors and students “suffer from a lack of purpose-built software.”

“Student Information Systems and Learning Management Systems are optimized for traditional K-12 schools and university workflow, but vocational schools are stuck relying on pen and paper or trying to shoe-horn in solutions that aren’t built for them,” Hu wrote in a blog post.

CourseKey, in SignalFire’s view, is reimagining a new education operating system built specifically for experiential, hands-on learning models, which continues to evolve with hybrid/distance learning.  

Hu also pointed out that since many of the jobs that vocational schools are preparing people for “have life or death consequences,” they are highly regulated.

“Not only does CourseKey improve trade school business KPIs, it serves as insurance against this existential risk,” he added.


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