![]() How Can EdTech Founders and Boards Best Capitalize on the Current Market? While the current K-12 EdTech M&A market forecasts to be one of the best on record, spreads on exit valuations continue to widen. The leading tech buyout and growth equity funds noted above are not seeing any signs of SaaS valuations abating within the other vertical markets in which they invest (both in terms of exits and add-ons), leaving edtech valuations seeming quite reasonable. Founder fatigue in the wake of Silicon Valley's retrenchment from K-12 venture investing after the massive funding wave of 2012-2015 is steering a drive to dock (or framed a bit more positively, some of these start-ups have finally grown into their Series B valuations).ģ. Eight years into the edtech boom, learning and data technology applications and budgets are fairly well established, driving the critical scale and predictability of revenue required for Private Equity driven consolidation.Ģ. Frenetic deal making in the broader technology deal-making is often chalked up to massive global liquidity and the ubiquity of smart phones, but there are additional specific trends driving the K-12 edtech market.ġ. You would have to look back at the 1990s of publishing and day care consolidation to find this many roll-ups in K-12. The K-12 edtech market counts several 15+ year old platforms valued at or near $1 billion by aggressive private equity funds, including Power School (Vista), Frontline Education (Thoma Bravo), Renaissance Learning (Francisco), Imagine Learning and Edgenuity (SilverLake, but led by financial sponsor Weld North) and BrightBytes and Illuminate (IVP).Īnd beyond these billion dollar platforms (lets please not call a 20 year company a "unicorn"), there is another layer of acquisitive, $100 - $300 million valued private equity backed companies. Smart investors have observed to me that we may finally be at an inflection point in edtech, at least in terms of consolidation. What is Driving K-12 EdTech Consolidation Right Now? ![]() More specific to the literacy market in which Actively Learn operates, the last 12 months have been more challenging with opportunistic asset deals for start-ups like LightSail or rational cash flow multiple deals for older bootstrapped companies like Mondo Publishing (acquired by Carnegie Learning). ![]() But the intervening years have been less frothy, with healthy exits generally averaging 2-3x revenue. More recently, the edtech cluster of Minneapolis has seen two richly valued, nine figure K-12 exits with myON representing as much as 5x revenue and Flipgrid an infinite multiple of revenue (at least on a post-deal basis, as Microsoft planned to make their platform free). To be sure, we have seen robust SaaS multiples in K-12 edtech before, most notably the 2010-11 era of notable exits Schoolnet, Global Scholar, Wireless Generation, Synaptic Mash and Education City (all valued from 6-19x revenue). Upon reading of my client Actively Learn's "healthy price" in their sale to Insight Venture Partners' portfolio company Achieve 3000 last week, I have been asked by several investors and founders for key lessons learned.
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