Mumbai-based Emeritus, an edtech company that works with universities to create online upskilling courses for employed folks, just spent a big chunk of cash to break into K-12.
Emeritus, which is part of the Eruditus group, announced today that it plans to acquire iD Tech, a STEM education service for children. The acquisition, which has not yet closed, is estimated to be around $200 million and leaves iD Tech operating as an independent brand for now.
In August, Eruditus raised a $113 million Series D from investors including Chan Zuckerberg Initiative, Sequoia India and Leeds Illuminate. Today, the startup has more than 200 programs, from bootcamps to online degree programs, that are offered to career folks in partnership with more than 50 of the world’s top universities, including MIT, Harvard and Columbia. ID Tech brings a whole different set of customers to its umbrella: The startup offers courses for elementary through high-school students across the globe taught by college students in the U.S.
The acquisition will allow Emeritus, which has been on a hiring and fundraising tear as of late, to grow beyond adult learning and well into the world of lifelong learning. It’s a trend we spotted back in a January edtech investor survey: Investors then mentioned how remote education needs to extend beyond school hours as learners become more multilayered. Edtech companies would soon have to find ways to create value for students throughout their educational experience, starting from early childhood into post-employment.
Breaking into lifelong learning sounds great, but it’s a complex goal, given that a freshman in high school learns differently than a full-time employed professional with six years of experience. Emeritus CEO and co-founder Ashwin Damera spoke to TechCrunch to explain why it makes sense from a product and revenue perspective.
“Last year we started seeing a lot of K-12 teaching moving online,” Damera said. “Then we opened our eyes and said, we used to think that this audience is not ready to learn online, but maybe we should relook at that assumption.”
The universe of universities
In order to execute on lifelong learning, a company needs to be able to seamlessly transition its audiences — from high school to college to post-employment — between products. In Emeritus’ case, Damera explained how the two companies already overlap in the middle of that chain: higher ed.
As of today, 97% of iD Tech students attend a four-year college, and nine out of 10 of those students study STEM in college, the company claims. While iD Tech has college as an end goal, Emeritus has college as its middle node: it collaborates with universities to create courses for professionals. The blending here feels natural: iD Tech’s curated community of ambitious students can get a pipeline into Emeritus’ partner colleges, keeping these customers in the system until employment where they can, again, become a student.
Damera thinks the biggest opportunity is in leveraging university partners.
“We have a nine-month program [with MIT] if you want to become a coder,” he said. “And the greatest opportunity is creating a version of that exact program but for a 15-year-old who is maybe thinking about a coding career in the future.” He added that both programs could be offered in-person in 2022 or completely virtual sooner than that.
The co-founder did take a second to note that one challenge will be preserving iD Tech’s product-focused eye on K-12, with new goals around higher-ed and lifelong learning.
“We should not, at Emeritus, put in our logic of how we create courses for us, and say this is how you should do it,” he said.
The key tension ahead
I’d argue that this is where the key tension lives in the rise of lifelong learning: How do you keep two products siloed in what makes them great, but blended so that they are more useful to a universe of customers?
Damera explained how at Emeritus currently, a user is doing a course to get career progression. The user is usually a professional with a 40- to 60-hour workweek, so the courses are designed to be short and easily squeezed on a weekend or after a shift.
“Honestly, it’s a challenge to just get time away, so you have to design while keeping in mind the adult population,” he said. The good news, Damera said, is that they are ready to take a course during any time of the year — unlike students.
Students largely turn to supplemental learning classes in the summer or during a few breaks during the school year, so courses are designed around those windows as intensive sprints.
The shaping of the courses between the two user bases also looks different. While Emeritus might focus on speaking the language of an employed professional looking for a new promotion, iD Tech’s work with younger audiences can focus more on inspiration and fun, rather than job placement.
Let’s end by digging into Emeritus’ revenue, and why its co-founder might see the opportunity in blending the two as outweighing the potential product headaches that come with it.
But, profits!!!
Damera estimates that Eruditus will do about $185 million in bookings revenue for the fiscal year ending in June. The number predominantly expresses its work in the higher-ed world, since the acquisition isn’t yet fully closed.
Here’s where it gets wild: He estimates that Eruditus, with iD Tech, will get to $500 million in bookings revenue for fiscal year 2022, with 80% of revenues coming from higher ed, and 20% of revenues coming from the K-12 segment. The confidence all boils back to the university partnerships.
“The main reason for growth is because what has happened to us is because of the pandemic,” he said. “A lot of our university partners have doubled down and said we have to have an online strategy, we can’t have a classroom-only strategy. And so the number of courses that we’re creating, the number of partners we’ve worked with, you’re going to see that growth coming from all of that.”
The takeaway with this entire deal is that Emeritus is a company ambitious to make half a billion in bookings revenue next year, and it thinks going earlier in the study lifecycle is the best way to do so. In the meantime, it’s clear that lifelong learning is a side effect of the consolidation happening in edtech right now, but it’s more difficult to pull off than a scoop and assimilate. The “what happens next” in education will depend largely on how content gets rewritten to take into account all types of students, instead of preconceived buckets from pre-pandemic times.
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