e-Literate

Present is Prologue

Tag: Venture capital

  • Winter Is Here: EdTech investments and M&A dropped significantly in 2016

    Winter Is Here: EdTech investments and M&A dropped significantly in 2016

    With the long-term rise in Ed Tech investments – starting in roughly 2007 – many analysts have been predicting a fall for several years. Maybe not a bubble burst like we saw in 2001, but a real drop in activity and volume. Now we also find out that there is also a 70% drop in mergers and acquisition values for the education industry according to a new analysis by the investment bankers Berkery Noyes.

    Throughout 2016 we had plenty of signs that the change was finally here. I got into the act in response to a ludicrous TechCrunch article that concluded that Ed Tech was “2017’s big, untapped and safe investor opportunity”. By the end of the year, there were several reports that investment (venture capital, private equity) had definitely gone down in 2016. Audrey Watters reported “The total dollars invested in 2016 are off by about $2 billion from this time last year”. EdSurge reported a drop of 31%. CB Insights reported a drop of 32% (based on estimates for Q4). (more…)

  • The Massive Decline In Larger Education Company Market Caps

    After our coverage of Blackboard’s CEO change last week, we were both interviewed by the Washington Business Journal, with the following lede:

    Analysts and sources I spoke with Monday, both on and off the record, said the decision to bring on Bill Ballhaus as CEO was a combination of Bhatt failing to make progress building the company’s business and lacking the experience needed to successfully run a company of that scale. And that means at least several years before Providence Equity Partners, which owns a majority of the company after paying $1.64 billion for it in July 2011, begins actively marketing the company for sale, according to industry experts.

    Earlier this week I wrote about Apollo Education Group, parent of the University of Phoenix, putting itself up for sale due to its weakening financial position. I also noted that I doubt that McGraw-Hill Education is going to be able to go public in the near-term. Part of the reason for this latter observation is the dramatic fall of Pearson in the stock market, triggered by its warnings that it would miss earnings estimates. In Audrey’s excellent year-end post on the business of ed tech, she noted:

    Private equity firms sure love buying ed-tech companies. Perhaps because the stock market’s sorta “meh” about them.

    (more…)

  • Year-end Updates on e-Literate News Posts

    For my final 2014 post, I thought it would be interesting to provide year-end updates to some news posts on e-Literate over the past year. You’ll notice that there is somewhat of an emphasis on negative stories or implications. For most positive stories, companies and institutions are typically all too happy to send out press releases with the associated media paraphrasing, and we have little need here to cover as news. The following non-exhaustive list is in date order.

    D2L Growth Claims

    In December 2013 I described layoffs at Desire2Learn (now officially named D2L). The significance of this story is that it calls into question D2L’s growth claims and trumpeting of massive new investment of $85 million. Some updates:

    IPEDS Data on Online Learning

    (more…)

  • e-Literate Top 20 Posts For 2014

    I typically don’t write year-end reviews or top 10 (or 20) lists, but I need to work on our consulting company finances. At this point, any distraction seems more enjoyable than working in QuickBooks.

    We’ve had a fun year at e-Literate, and one recent change is that we are now more willing break stories when appropriate. We typically comment on ed tech stories a few days after the release, providing analysis and commentary, but there are several cases where we felt a story needed to go public. In such cases (e.g. Unizin creation, Cal State Online demise, management changes at Instructure and Blackboard) we tend to break the news objectively, providing mostly descriptions and explanations, allowing others to provide commentary.

    The following list is based on Jetpack stats on WordPress, which does not capture people who read posts through RSS feeds (we send out full articles through the feed). So the stats have a bias towards people who come to e-Literate for specific articles rather than our regular readers. We also tend to get longer-term readership of articles over many months, so this list also has a bias for articles posted a while ago.

    With that in mind, here are the top 20 most read articles on e-Literate in terms of page views for the past 12 months along with publication date.

    1. Can Pearson Solve the Rubric’s Cube? (Dec 2013) – This article proves that people are willing to read a 7,000 word post published on New Year’s Eve.
    2. A response to USA Today article on Flipped Classroom research (Oct 2013) – This article is our most steady one, consistently getting around 100 views per day.
    3. Unizin: Indiana University’s Secret New “Learning Ecosystem” Coalition (May 2014) – This is the article where we broke the story about Unizin, based largely on a presentation at Colorado State University.

      4. (more…)

  • Say What? Buzzfeed follows up on D2L story with solid reporting

    In a post last month I questioned the growth claims that D2L was pushing to the media based on their recent massive funding round. A key part of the article was pointing out the lack of real reporting from news media.

    It is worth noting that not a single media outlet listed by EDUKWEST or quoted above (WSJ, Reuters, Bloomberg, re/code, edSurge, TheStar) challenged or even questioned D2L’s bold claims. It would help if more media outlets didn’t view their job as paraphrasing press releases.

    I should give credit where it’s due: Education reporter Molly Hensley-Clancy at Buzzfeed has done some solid reporting with her article out today.

    In response to detailed questions from BuzzFeed News about figures to back up its claims of record growth in higher education and internationally, the company released a statement to BuzzFeed News, saying “As a private company, D2L does not publicly disclose these details. The past year has been one of record growth for D2L, culminating in the recent $85 million round of financing.” A representative declined to make the company’s CEO, or any other executive, available for an interview related to the company’s growth.

    The stonewalling didn’t come as a surprise to former employees with whom BuzzFeed News spoke.

    “The picture they’re painting of growth is not accurate,” said one former employee, who left the company within the last year and asked to remain anonymous, citing his confidentiality agreement with the company. “If you look at actual metrics, they tell a different story. They’re very likely not seeing growth in higher education.”

    (more…)

  • D2L raises $85 million but growth claims defy logic

    Yesterday D2L announced a second round of investment, this time raising $85 million (a mix of debt and equity) to go with their $80 million round two years ago (see EDUKWEST for a useful roundup of news and article links). While raising $165 million is an impressive feat, does this funding give us new information on the LMS market?

    First, here are the claims by D2L as part of this round of financing, from EdSurge:

    The deal comes on the heels of what the company calls “a year of record growth in the higher education, K-12 and corporate markets.” John Baker, founder and CEO, says the company currently serves 1,100 institutions and 15 million learners–up from 850 and 10 million, respectively, at this time last year. The company also recently opened offices in Latin America, Asia Pacific and Europe.

    That’s a 29% growth in the number of institutions and a 50% growth in the number of learners in just one year. Quite impressive if accurate.

    Yet the company went through a significant round of layoffs in late 2013 that let go more than 7% of its workforce, and according to both LinkedIn data and company statements they have had no significant growth in number of employees over the past year.  (more…)

  • Six Months After Layoffs: No signs of growth at Desire2Learn

    Late last year I wrote a post about Desire2Learn’s laying off more than 7% of the workforce, speculating that something had changed at the company. In particular, I didn’t buy the company line about continued growth.

    In the end, I have trouble believing that these recent cuts are solely based on improving Desire2Learn’s growth without needing to correct for slower-than-expected growth. The arguments made by our sources that these are significant cuts driven by not hitting growth targets are compelling. However, there is no smoking gun that I have found to back up these claims definitively.

    What I do feel confident in saying regarding employee numbers is that there’s more to the story here than just ‘churn’ alongside aggressive hiring. Since the end of the Blackboard patent lawsuit, Desire2Learn has grown at an average of 13 employees per month (140 in Nov 09, 560 in Sep 12, 750 in Nov 13). Yet the numbers might have actually gone down since July 2013.

    After that post, Desire2Learn (through an interview with a local media outlet) further explained the company line about growth with challenges. [emphasis added]

    The past year has included hirings and staff reductions as the developer of online learning software prepares for growth and expansion, says Dennis Kavelman, the Kitchener-based company’s chief operating officer.

    Kavelman stresses that the company is growing, not shrinking, and restructuring to handle the growth resulted in some layoffs.

    (more…)