There Are A Million Education Startups And No One To Acquire Them

CoursekitBetter get profitable, Coursekit boys.

Photo: Coursekit

One of the hottest startup sectors right now is education.2Tor, for example, has raised $90 million in venture capital to make credible online degrees for universities.  Knewton has raised $54 million to make customised content for students. Even Coursekit, a startup founded by three UPenn students to disrupt Blackboard, has raised $6 million.

We’re just scratching the surface here. There’s also Skillshare, General Assembly, Khan Academy, Codecademy, Schoology, TutorSpree, ShowMe, Coursera, Chegg, Udemy, and plenty more.

But there’s no Google or Facebook in the education space.

So who is going to acquire these startups for hundreds of millions of dollars?

“It’s a great question heretofore unanswered,” says Hashable founder and angel investor Mike Yavonditte. “[Education startups need to] go public or get profitable.”

For a company like 2Tor, profitability is a real possibility.  Students are paying 2Tor and its partnering universities the same expensive tuition for an online degree as those paying for the physical campus experience.  More than 3,500 students from 30 countries participate in 2Tor’s online and mobile degree programs. 

But the cost of on-boarding a university isn’t cheap — 2Tor spends about $10 million on every college it works with, perfecting and customising their programs until they’re happy.

For others, the path to profitability is far from clear.

We’ve compiled a list of potential education acquirers, but most don’t have enough cash to write many — if any — big checks for startups. Of course cash isn’t the only factor — last year Texas Instruments acquired National Semi for $6.5 billion and it only had $992 million in cash and cash equivalents.

Pearson is the largest education company in the world

It has a has a few billion in cash and cash equivalents, so it could write a sizable check for a startup.

McGraw-Hill has nearly $1 billion on hand and could spend some of it snatching up innovative startups

Educational software and content is a large portion of the McGraw Hill business. It has about $944 million in cash and cash equivalents.

Apollo Group owns University of Phoenix and could snatch up other online education startups

Apollo Group owns University of Phoenix and other for-profit education institutions.

It has about $2 billion in cash and cash equivalents, so it could afford to write a big check for a startup.

If Apple starts disrupting textbooks, it could acquire a startup like Chegg or Knewton.

Steve Jobs said one of the industries he wanted to disrupt is education and textbooks. If it makes a move in that space, it could start acquiring relevant education startups.

Texas Instruments is a software company but it makes a few education products like calculators

Texas Instruments has about $992 million in cash and cash equivalents, and it has made big acquisitions before. Last year the software company bought National Semi for $6.5 billion. It makes a number of educational products and tools including calculators, so acquiring an education startup wouldn't be out of the question.

DeVry doesn't have as much cash to throw around as other leading education companies.

DeVry Inc owns for-profit education institutions like Advanced Academics, DeVry University, and more.

It has about $430 million in cash and cash equivalents, so it probably won't be making many costly acquisitions.

The Washington Post Company owns Kaplan but has a limited cash supply.

The Washington Post Company owns big education company, Kaplan Inc. But only has $406.4 million in cash and cash equivalents. You won't see them making any multi-million-dollar acquisitions.

News Corp, the owner of The Wall Street Journal and Fox News, thinks education is worth spending a lot of money on

Last year, Rupert Murdoch hired former New York City schools chancellor Joel Klein to become one of his deputies and trusted advisors at News Corp.

The owner of The Wall Street Journal and Fox News, News Corp could be willing to spend big bucks in the education space. It has about $12.7 billion in cash to play with.

There's always an off-chance Google could get into the education space

Google has been known to dip its hands in a lot of places they don't necessarily belong.

We wouldn't be surprised if they locked up a few education startups in the future.

For more startups that could get acquired, check out:

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