K-12 Dealmaking: Newsela Raises $100 Million Series D Round, Reaches Unicorn Status
Newsela has raised $100 million in a Series D funding round, which notches the company a $1 billion valuation and makes it a unicorn with a billion-dollar valuation.
The company, which provides curated digital news stories tiered to support students at different reading levels, has seen aggressive uptake during the pandemic, growing from 29 million registered users at the end of 2019, to 37 million registered users at the end of 2020. The new round of fundraising signals the company’s intentions to broaden its ambitions significantly and displace the traditional print products that still dominate much of the school market, Newsela CEO Matthew Gross said in an interview.
“Before, it was just about scaling our existing efforts and taking this product into more schools and honing it and expanding our content types and so on,” Gross said.
“But now, we’re really putting a stake in the ground, and saying we’re committing $100 million to replacing the textbook. By the end of the time that we use that [money], that is the outcome that I expect to occur.”
Newsela plans to use the funding—the round was led was led by new investor Franklin Templeton and existing investor TCV, with participation by Owl Ventures, Tao Capital Partners, the Chan-Zuckerberg Initiative, and Waycross Ventures—to invest in its software-as-a-service instructional materials platform, according to a press release.
The company says it provides 14,000 standards-aligned texts across more than 20 genres. The texts are reproduced at several reading levels, along with instructional supports such as assessments, lesson ideas, and professional development, and all content is mapped to learning standards by subject and grade.
Teachers access the materials through Newsela’s platform, and can use them to build lessons.
Newsela is also considering potential future acquisitions, Gross said.
“What we’re not necessarily looking to do is break into an entirely new market through an acquisition or just tack on revenues, and that’s been an acquisition strategy of some other companies,” he said. “What we really want to do is just make our own product even stronger by adding on new capabilities.”
Gross is convinced that ed-tech companies that focus on providing solutions to real-life teacher problems and drive student engagement will be the ones that win in the future, especially at a time when student engagement is sagging.
“Many teachers want to get out of the industry, because they’re so burnt out after this year,” he said. “They wouldn’t feel anywhere near as burnt out if they felt like their kids were really loving school, because that’s what teachers live for.”
ETS Strategic Capital Announces Two Deals. ETS Strategic Capital, the venture capital arm of the longstanding assessment organization, announced a pair of deals. In the first, ETS is acquiring a China-based company that helps college admissions officers evaluate applicants. In the other deal, ETS is investing in a company that focuses on financial lending for the international and DACA student communities that the organizations say are underserved by conventional banks, according to a press release.
ETS Strategic Capital’s acquisition of Beijing-based admissions company Vericant means the company will operate as a subsidiary of ETS. Vericant aims to help admissions officers in evaluation of their candidates through one-to-one video interviews.
ETS has previously used Vericant as part of its Test of English as a Foreign Language Institutional Testing Program Plus for China solution, to support Chinese students while in-person testing was suspended because of COVID-19.
“Our broader vision is to have a video interview with every application to the institutions,” Vericant CEO Guy Sivan said in a statement. “We have spent years focused on developing and delivering the tools, systems and expertise of our interviews-as-a-service solution to institutions and students worldwide and I can’t think of a better way to continue to expand our impact than by joining ETS.”
In the second transaction, ETS Strategic Capital made a minority investment in Washington, D.C.-based fintech lender MPOWER Financing.
Through the investment, ETS Strategic Capital plans to leverage MPOWER’s international connections to student borrowers in Asia-Pacific regions, primarily India and China, according to the press release. The connection will aim to “increase synergies” between student borrowers around the world and ETS’s Graduate Record Examination and TOEFL programs, ETS said.
“MPOWER is delighted to be working with ETS and exploring ways to support the millions of students who test with them globally every year,” MPOWER Financing CEO and co-founder Manu Smadja said in a statement. “As impact-oriented firms with a global outlook, our teams instantly connected and are excited to help students attain the best possible educational outcomes.”
MPOWER said in a press release that ETS Strategic Capital’s investment was $5 million, which followed a $25 million investment round led by Tilden Park Capital, largely made to further automate MPOWER’s digital loan platform and serve thousands of additional international and DACA students.
Global Language Tutoring Platform Raises $35 Million. Brookline, Mass.-based Preply has announced a $35 million Series B funding round.
The company says it offers 40,000 tutors teaching 50 languages to hundreds of thousands of learners in 180 countries, matching students and tutors using a machine-learning algorithm.
Owl Ventures and Full In Partners led the round, which also saw participation from previous investors Point Nine Capital, Hoxton Ventures, EduCapital, All Iron, Diligent Capital, and Evli Growth Partners.
Preply saw 400 percent growth in 2020, and aims to double its workforce and grow business-to-business offerings in 2021, according to a press release.
“This new funding will help us tackle a variety of strategic priorities, as we plan to double our workforce across all divisions and locations,” Preply CEO Kirill Bigai said in a statement. “We’ll add more value for both students and tutors by improving support systems and amplifying the classroom and curriculum experience which has proved so valuable already.”
Summer Experience Provider Acquires Academic Summer Program Provider. Roslyn, N.Y.-based Summer Discovery, which has provided pre-college summer experiences for over 55 years, has acquired Stamford, Conn.-based Summer Institute for the Gifted, Summer Discovery announced.
The recent acquisition by Summer Discovery, which has exclusively worked with high- and middle-school-aged students until now, will allow the company to expand offerings, university partnerships, and educational programs to support academic needs and growth of elementary school students.
Summer Institute for the Gifted has branches in over 20 locations nationwide, and for over 35 years has provided overnight and day activity options for students ages 9-17, and 11 more day programs for commuting students ages 5-12.
“This acquisition allows us to serve a whole new demographic of students as young as age five who are gifted, academically talented, and creative students looking to connect and grow with like-minded peers and a supportive community,” Summer Discovery CEO Adriane Thorpe said in a statement.
Post-acquisition, the companies plan to offer residential, commuter, and online programs for summer 2021. Summer Institute for the Gifted will retain its name.
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