Over the past few days three big ed tech entities made major financial moves. I was struck by that coincidence and wanted to explore what the combination might means.
ITEM: To start with, major online program manager (OPM) 2U purchased much of online class provider edX for $800 million. As part of the deal Harvard and MIT will launch a new and so far unnamed education nonprofit.
For more information, here are the official announcements from 2U, MIT, Harvard, and what seems to be the nonprofit’s placeholder, “Transforming Digital Education.” There is also some good, early commentary and analysis from EdSurge and Trace Urdan.
ITEM: Language learning app Duolingo, founded by Luis von Ahn, filed an IPO. As TechCrunch and others have noted, the market values Duolingo above $2 billion. Its user base and earnings are rising.
ITEM: major learning management system/virtual learning environment provider Instructure, maker of Canvas, also filed for an IPO. They tried this before, so now it’s a second attempt. Instructure is, unlike Duolingo, losing money.
So what does this big money trifecta tell us?
It may be a huge boost for 2U. They now have access to tens of millions of potentially new students. According to a slidestack for investors, 2U stands to gain:
Increases TAM through combined 50M+ global learner base, 1,200+ Enterprise clients, 230+ university and corporate partners, and comprehensive suite of 3,500+ offerings ranging from free-to-degree
Combined entity will have massive global audience and strong consumer brand, top five education website with traffic of 120M+
They can also trade on the elite reputation of campuses associated with edX, namely MIT and Harvard.
Eddie Maloney and Joshua Kim go further, seeing the 2U+edX combination as a challenger to the much larger Coursera. What we see now are OPMs on steroids. As Paul Fain put it, “MOOCs have become OPMs.”
Well-placed source on 2U’s acquisition of edX for $800M — “It simply formalizes what we knew: MOOCs have become OPMs.” https://t.co/bLMQC7Au0z
— Paul Fain (@paulfain) June 29, 2021
I’m not sure what to make of the new MIT-Harvard nonprofit since there’s so little information available. I do like Goldie Blumenstyk’s comments:
It’s hard to even fathom the potential impact of an $800-million nonprofit devoted to the future of online learning and eliminating educational disparities around the world. Add to that the academic muscle undergirding the nonprofit, overseen by edX’s founders, Harvard University and the Massachusetts Institute of Technology, and the societal, technological, and pedagogical potential here feels enormous. But what actually will be realized? Harvard and MIT promise that the new nonprofit’s mission, name, research, and other activities will be developed more fully in the coming months. [emphases in original]
Even more from Phil Hill here.
Duolingo: much depends on how the sale goes and what happens to its value over the next few months, but a successful infusion of cash could drive the owl into expanding or adding offerings. New languages are a clear development, but what about adding conversations with native speakers, or even branching out into new curricula beyond language?
Note that criticisms of Duolingo – for not being good on spoken languages, for not doing much on culture and language – don’t seem to have dimmed its prospects so far.
Instructure: Phil Hill does good work in showing the complexity of the offering, based on the structure of Instructure and its holding. I don’t have a good sense of its odds for a successful IPO.
Overall, these three stories remind us that serious money is interested in ed tech. COVID-19 may have increased investments as so much of higher ed moved online. Perhaps that’s a long-lasting change… unless people flee the pandemic’s online experience and rush to embrace in-person life, in which case June 2021 might represent a peak before a financial fall.
What do you think about these three ed tech financial stories?
