Course Hero, once an edtech unicorn valued at $3.6 billion, conducts layoffs

Course Hero, a tutoring business last valued by investors at $3.6 billion, has cut 15% of staff, or 42 people – its first round of layoffs in 17 years, TechCrunch has learned from numerous sources.

A spokesperson confirmed the layoffs, saying that “the layoffs are happening as a part of a strategic effort to set Course Hero business line up for future growth.” The company says it does not anticipate future layoffs.

“Part of this transition support includes providing several months of severance, health care benefits through the end of June, outplacement and immigration support services, and we are working with individuals with special circumstances to make sure we do everything we can to ease their transition,” a spokesperson said.

The workforce reduction comes after Course Hero itself, a rare edtech unicorn, saw co-founder Andrew Grauer leave his post as chief executive four months ago. Course Hero then was put under a parent company, Learneo, which took that multi-billion dollar acquisition and named Grauer as CEO.

He was succeeded by John Peacock, who was formerly the VP of product at the company. The layoff appears to be one of the new CEO’s first significant changes to the business since taking over. Peacock sent an email to staff this week explaining the changes.

“This is the first time in Course Hero’s 17 years that we have done a layoff of this size, and it’s not a decision we made lightly,” the email, obtained by TechCrunch, reads. “It follows careful deliberation with the leadership team about the moment we’re in.” He went on to say that the layoff was done to meet the needs of the “rapidly evolving” sector and that it was “absolutely necessary” for the future of the company.

Launched in 2006, Course Hero was somewhat allergic to venture capital until recent. After launching, the company waited eight years to raise a $15 million Series A. Then, after going another nearly six years without raising venture capital, Course Hero closed two financings in 2020.

Then in 2021, the edtech company announced yet another tranche of capital: a $380 million Series C at a $3.6 billion valuation. It brought a 227.3% increase to Course Hero’s valuation in a little over a year. With fresh capitalization and a broader vision of its total addressable market, the company began scooping up businesses, including Scribbr and LitCharts, a Sparknotes spin off. It’s unclear how the acquisition cadence will change given today’s scale back, if at all.

The business tells TechCrunch that Course Hero and Learneo are cash flow positive and profitable on an adjusted EBITDA basis.

If you have a juicy tip or lead about happenings in the venture and startup world, you can reach Natasha Mascarenhas on Twitter @nmasc_ or on Signal at +1 925 271 0912. Anonymity requests will be respected.  

Course Hero, once an edtech unicorn valued at $3.6 billion, conducts layoffs by Natasha Mascarenhas originally published on TechCrunch

Course Hero scoops up Scribbr for subject-specific study help

For an undisclosed price, Course Hero has acquired Scribbr, a proofreading and editing service for academic writing. This is Course Hero’s latest deal in a string of buys – including CliffNotes, LitCharts, QuillBot and Symbolab – all powered by a duo of financings that saw the edtech platform valued at $1.1 billion.

Founded in 2012, Scribbr says it has an international network of 700 editors that offer a variety of services, from edits, to notes and clarity checks. The deal will help Course Hero expand its footprint in Europe, since Scribbr is a Netherlands-based business. Overall, Scribbr’s focus specifically compliments Course Hero’s 2021 buy of Quillbot, an AI tool that helps clarify writing that feels somewhat reminiscent of Grammarly.

Course Hero CEO Andrew Grauer has explained that the mission of his company is to create a question-and-answer platform with extreme levels of specificity for students. It sells subscriptions to students that unlock access to all of its learning and teaching content, which include course-specific material created by teachers and publishers.

The startup wants to be subject-agnostic, meaning that it can connect students to any specialty that they need advice in, whether it’s a niche grammar rule or a one-off algebra question. In some ways, that feels like the future of education: students shouldn’t have to piecemeal together advice, and even better if it’s on-demand help. Edtech companies that help the same students across different subjects can even poke out consistent gaps in their understanding. What if a company could tell a middle-schooler that they constantly get stumped when it comes to inferential questions?

The flipside, though, is hard to ignore. Just because a student wants to come to Course Hero for math help, doesn’t automatically mean that they want to come to the company for a summary of the Shakespeare reading. That reality can take away from Course Hero’s assumed goal of creating a stickier, more useful product for customers.

Graeur’s response to that concern is that he says he doesn’t plan to rush the integrations between the new, and different companies within the Course Hero umbrella.

“We start with the thesis of ‘let’s be decentralized, let’s empower and continue the entrepreneurialism of building out those individual companies,” Graeur said. “And then if and when there’s these moments, and you’re gonna start to see more and more of integration of different content, tools and services between the offerings at the right moment in time.” The answer suggests that Course Hero wants to play a backseat, and more of a platform role in these companies’ lives, versus combining and paywalling them to drive more subscriptions.

And to take a minute to believe the founder, who started the company in 2006 and only recently began using venture capital as a leverage to grow the core business, it does appear that every acquisition continues to stand alone in its own, specific world. There’s more to come, he tells me, which means that we’ll see what the edtech’s appetite looks like as it scales.

“We’re a company of relatively more independent, autonomous brands,” he said. “There is so much amazing opportunity for integrating each other’s technology and services with each other. And the question is how to stack rank those and prioritize them.”

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For Course Hero, venture capital was once an unobvious solution

Launched in 2006, education startup Course Hero started its life away from the attention of venture capital. After launching, the company waited eight years to raise a $15 million Series A. Then, after going another nearly six years without raising venture capital, Course Hero closed two financings in 2020.

Yesterday, the edtech company announced yet another tranche of capital: a $380 million Series C at a $3.6 billion valuation. The financing, led by Wellington Management with participation from new investors Sequoia Capital Global Equities, OMERS Growth Equity and D1 Capital Partners, as well as existing investors, brings a 227.3% increase to Course Hero’s valuation in a little over a year. The business has been cash flow positive and profitable on an adjusted EBITDA basis for over 5 years, it claims.

The raise comes as a stark contrast to CEO and co-founder Andrew Grauer’s comments in 2020, when he spoke on the “risk and reward of raising capital.”

“If you raise too much money early on, you can get misaligned expectations based on different time horizons set up by different terms of incoming shareholders or investors,” he said. Course Hero’s rapid capitalization today thus suggests that Grauer now thinks that the startup has graduated past a point of dealing with unfavorable incentives from its investors.

And to be fair, his new vision for the company makes a good argument for why he needs so much capital in this given moment.

The founder believes that Course Hero has evolved past its main business model – a place where students can come to access more than 80 million course-specific study resources and guides – into a platform play. Going forward, Course Hero will formalize its mass consolidation mindset, as we’ve seen through its acquisitions of Symbolab, LitCharts, CliffsNotes, and QuillBot, as a business strategy.

“We’re working to build a platform that serves the entire learning journey, almost like a productivity suite for learning,” he said. “Each business will continue to build their products and brands, and there’s an opportunity for us to build an ecosystem to integrate the products into each other that create more value for learners and educators.” PR speak side, the capital will be used to fuel acquisitions. And we know edtech is full of them.

Grauer estimates that he can grow Course Hero from gaining 2 million subscribers per year to 50 million subscribers per year by 2030 by serving more than just as a “study platform for students and a resource for educators.” Going forward, students will be able to go to like they traditionally have, but also navigate to its broader product and brand suite.

“The last two years we have seen a bigger shift in advancing pedagogy online and the way that we evaluate and assess student comprehension is evolving as a result,” he told TechCrunch. “All of these changes require better, more affordable and effective resources, tools and services to meet the needs of today’s students and educators.”

The co-founder explained that he plans to use the new capital to acquire businesses operating in new verticals, subject areas, grade levels and countries. “This definitely includes a focus on technical topics and skills as well as tool-driven product solutions,” he added. And clearly, there’s still solid room to grow.

Grauer said that Course Hero hasn’t yet to “fully dive into crypto and Web 3” a movement that could definitely use some translation help to the legions of people who haven’t fallen down the rabbit hole just yet. As the company’s total addressable market becomes more broader, and hopefully diverse, Course Hero will need to evolve to support a whole range of learning needs – not just requests for 24/7 homework help or study guides on the latest lit assignment.

Duolingo boosts IPO price target in boon to edtech startups

U.S. edtech company Duolingo released a revised IPO price range this morning, boosting its potential per-share value to $100 after initially targeting a range that topped out at $95 per share.

Per the unicorn’s SEC filings, Duolingo is now targeting a $95 to $100 per share IPO price range, up from $85 to $95 per share, or a gain of around 12% at the bottom and 5% at the top.

TechCrunch previously called the Duolingo debut a bellwether of sorts for the larger U.S. edtech ecosystem; if Duolingo can price and trade well, investors in private companies may be more willing to invest, given a more proven and attractive exit market. On the other hand, if Duolingo prices weakly or trades poorly, the company could place a wet blanket atop the startup edtech world.

The fact that Duolingo is raising its IPO price range indicates that we are more likely on the path for a strong offering than a weak one.

For edtech companies that have hit unicorn status — like Masterclass, Course Hero, Quizlet and Outschool — it’s good news. For reference, those companies have raised $461.4 million, $97.4 million, $62 million and $130 million, respectively, per Crunchbase data.

What’s Duolingo worth?

The terms of the company’s IPO have not changed, aside from its proposed price. So, Duolingo is still selling 3.7 million shares in its debut, and some 1.41 million shares will be sold by existing equity holders. The company’s underwriters also reserved their right to buy 765,916 shares of the company’s stock at IPO price in the 30 days following its debut.

At the upper and lower bands of the company’s IPO price, its simple valuation excluding underwriter shares now lands between $3.41 billion and $3.59 billion. Inclusive of its greenshoe offering, those numbers rise to $3.48 billion and $3.67 billion.

Recall that when private, Duolingo’s November 2020 Series H valued the company at just over $2.4 billion. So long as Duolingo prices in its range, it will provide investors with a nice bump in the value of their investment. Duolingo was valued at just $1.6 billion in mid-2020, indicating that it has more than doubled in value since that investment.

Course Hero acquires LitCharts, founded by the creators of Sparknotes

I’ll admit it: I was the student that tipped the teacher off that half of our English class, including me, was using Sparknotes to “read” Twelfth Night by Shakespeare, instead of actually reading the text itself. The site, which offered cliff notes and summary of books on a chapter by chapter basis, was the best way to review novels before a quiz — or, was the best last-minute savior if you procrastinated too much and never got around to opening the book in the first place.

History in mind, it makes sense that the creators of everyone’s favorite procrastination tool, Sparknotes, are getting noticed by an edtech unicorn. Litcharts, an offshoot of Sparknotes, got scooped up today by a newly-minted edtech unicorn, Course Hero. The price of the deal was undisclosed. That said, Course Hero last raised an $80 million Series B in August 2020, and assumedly a portion of that check went to this deal.

The creators of Sparknotes, Ben Florman and Justin Kestler, created LitCharts as an extension of their initial success. LitCharts gives notes, definitions, translations, on over 2,000 literary texts. Similar to Sparknotes, LitCharts is all about making complex passages less complex. Grauer estimates that about 30% of LitCharts’ subscribers are teachers and educators.

“We want to make sure that we have the best solution for a specific area, and then at the right moment in time, be able to make a really authentic recommendation of another tool or another offering that can be helpful for you [as a student],” Grauer said, of Course Hero’s long-term ambition. That webbing – or connecting students from one resource to another – could be one of the benefits of virtual education, because there is essentially a history log of every error, stumble, and pause that a student makes as they’re going through a lesson.

The heart of Course Hero, per founder Andrew Grauer, is to create a question and answer platform with extreme levels of specificity for students. It sells subscriptions to students, which unlock access to all of its learning and teaching content, which include course-specific material created by teachers and publishers. Naturally, a big part of Course Hero’s strategy is to offer material on common subjects that students struggle with – English being one of those subjects.

“We’ve been looking at the data on the platform, and where students are actually getting stuck the most, where they need the most help, and where they are asking the most questions,” said Grauer. “And that’s quite informative.”

The company has been building out its literature library for the past five to six years. With LitCharts underneath its wing, Course Hero is putting a significant investment in its literature library, which is chockfull of videos, illustrations, and notes on texts.

This is Course Hero’s second acquisition in the past eight months. In October, Course Hero acquired Symbolab, an artificial intelligence-powered calculator that helps students answer and understand complex math questions. That deal helped bolster Course Hero’s math offering, and today’s acquisition should help Course Hero deepen its literature resources. Both of these brands will continue to operate independently – a choice that Grauer says is part of his operating thesis of supporting the “decentralized, empowerment of entrepreneurs.”

“If you centralize everything, maybe there’s power to that [since] it all looks the same, but actually in doing so many times do you can actually move slower, and not be able to move fast and make decisions and make progress towards the goal because you’re optimizing for so many small specific use cases,” he said. The two recent startups that Course Hero acquired have been operating for over a decade, and Grauer thinks that their scale and brand power is worth keeping as is, instead of forcing into an umbrella brand.

Across its various platforms, Course Hero estimates that it will hit between 2 million to 3 million paid subscribers this year, up from 1 million subcribers the year prior.

Course Hero buys Symbolab in a rare edtech acquisition

Months after its $80 million Series B fundraise, Course Hero has acquired Symbolab, an artificial intelligence-powered calculator that helps students answer and understand complex math questions.

The price of the deal was undisclosed. The 9-person Symbolab team, based in Tel Aviv, will join Course Hero . The platforms will live under independent branding for the near future, according to Andrew Grauer, CEO of Course Hero.

Founded in 2011, Symbolab is an advanced calculator and question solver that is on track to answer 1 billion questions this year, Grauer says. The service has a deep focus on college-level math, and solves complex geometry problems with explanations and proofs.

Course Hero is a question and answer platform at its core. The addition of a calculator and company that holds a data-set on the most asked mathematics questions could give Course Hero a bigger edge on its math services, which the company says is one of its most popular subjects among its current students. The service will be offered to Course Hero subscribers as a deal-sweetener.

The model of using a computational engine to give solutions to stuck students is fairly common. In a remote schooling word, flexibility is key for students who might be lost in their classes. While teachers and tutors might only be available for a certain amount of hours, a technology service powered by AI could prove to be a 24/7 solution that students can rely on — and pay for.

Symbolab feels similar to Wolfram Alpha, a popular computational engine. While Grauer says that Wolfram Alpha is a “powerful tool” he thinks that Symbolab does a better job on depth and explanations. Big companies have added similar services too, such as Google, which acquired homework helper app Socratic in 2019, and Microsoft, which built Microsoft Solver in the same year.

Grauer had to decide between building or buying. The founder ultimately decided to acquire the technology because the true success of artificial intelligence only comes if a platform is able to compound data over time. Symbolab was founded nearly a decade ago, and back-end information is valuable. Grauer says he’s excited to approach the solver problem differently than Google and Microsoft.

“You can’t just [do this] in a short amount of time,” he said. “You’re looking for how do we get the right, accurate answer. But then, how am I going to get, not just accurate, but step by step solutions that are actually helpful.”

Consolidation remains rare in the sector that has historically been underfunded. Edtech acquisitions have been growing steadily but slowly. In 2018, edtech had less than 40 acquisitions. In that same year, fintech had 193 acquisitions, according to Crunchbase.

Still, amid edtech’s larger boom, this acquisition makes a good amount of sense. Course Hero recently raised its biggest tranche of money yet, passed $100 million in annual run revenue, and became profitable. Thus, the company likely had money in the bank to afford the deal. In 2012, Course Hero bought InstaEdu, an on-demand video platform.

Grauer says that he expects Course Hero to make more acquisitions across a variety of subject areas in the future. In edtech more broadly, he thinks that the next 5 to 10 years will have more acquisitions.

“If you look back 15 years, there just weren’t that many education technology businesses,” Grauer said. “Now, I think there’s enough of them that potentially have this scale, and both have metrics on the distribution side technology and built out product market fit during the expansion phase.”

Making sense of 3 edtech extension rounds

While venture capitalists are pouring funding into edtech startups, the surge of interest isn’t coming without pressure.

Edtech companies are searching for new ways to tap into a booming market. As Course Hero co-founder Andrew Graeur put it, the goal for his Q&A platform went from reaching a million subscribers to “many millions” as a result of the COVID-19 pandemic.

One way edtech companies are approaching these unprecedented times is by raising extension rounds that are earmarked specifically to bring on strategic partners from around the world. The approach of trading equity for a chance at globalization is neither rare nor cheap, but comes with new weight given the sector’s boom.

Today, ApplyBoard closed a $55 million extension round for its Series C, which now totals $130 million. ApplyBoard helps international students search and apply to universities and colleges across the world. It wants users to think of it as a Common App for international students, serving as a college undergrad application.

A spokesperson for the startup — which became a unicorn valued at over $1.4 billion in May — says the round did not change its valuation. Instead, the financing was “less about funding, and more about the partners that we were able to bring on board as a result.”

Course Hero, a profitable edtech unicorn, raises rare cash

Like any successful founder, Andrew Grauer had bright, long-term ambitions for Course Hero from the moment he launched it in 2006.

He started the business to create a place where students could ask questions and get answers similar to Chegg, which launched 15 months before Course Hero . But as he slowly built it, he was tempted by a larger question: “What would a university look like if it was built by the internet?”

And so, the Redwood City-based startup itched at that nebulous goal throughout the years. Course Hero tested and failed products: free curated e-courses, in-person tutoring and teacher advice and ratings.

Clarity only came when Grauer realized that the core goal Course Hero launched with — giving students a place to ask and answer questions — wasn’t simply one product that should be fit into a broader suite of services. Instead, it was a thesis around which to build products. So, the startup began looking for different ways and formats to organize knowledge and questions and answers.

“That was a breakthrough insight,” Grauer said. The startup stopped launching other business verticals and decided to stick to Q&A as its core — and only — business. It sells Netflix-like subscriptions to students looking for access to learning and teaching content. Teachers and publishers can put course-specific study content on the platform.

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Image via Getty Images / manopjk

In 2020, Course Hero is a profitable business with annual run revenue upward of $100 million.

Today, Course Hero tells TechCrunch that it has raised a new tranche of capital in a Series B extension round of $70 million. The round is now totaling $80 million, bringing Course Hero’s total known venture capital to date at $95 million.

Its $80 million Series B round is one of the largest U.S. funding deals of 2020, and brings Course Hero’s valuation to $1.1 billion.

From a high level, the new raise is not surprising. Other edtech companies have also recently added on more capital to their balance sheets to meet remote learning demand amid the coronavirus pandemic.

But in Course Hero’s case, the new capital comes as a stark contrast to how the business functioned before 2020. After launching, the startup waited eight years to raise a $15 million Series A. Now, after going another nearly six years without raising venture capital, Course Hero has closed two rounds in this year alone.

Grauer tells TechCrunch that the capital will be used for operations, product innovation and feature development. It also plans to use the capital for future acquisitions (in 2012, Course Hero bought an in-person tutoring business).

Course Hero’s change of heart with venture capital boils down to the company meeting new scale demands. Last year, it passed 1 million subscribers on the platform. Now, it is eyeing “many millions” of students, the co-founder says.

Paraphrasing Bill Gates, Grauer said, “We do overestimate what we can do in just three years. And we dramatically underestimate what we can do closer to 10 years.”

Any edtech company that raises money off of current momentum in remote education will have to face the reality of what it is like to grow when remote learning is no longer a necessity. In other words, when the coronavirus pandemic ends, will these same platforms still find surges in usage?

“That’s the risk and reward of raising capital,” Grauer said. He added that “if you raise too much money early on, you can get misaligned expectations based on different time horizons set up by different terms of incoming shareholders or investors.”

Course Hero sees tailwinds in a dynamic that has been brewing since before the pandemic, and will likely grow during and after: the growth of “non-traditional students” enrolling in and participating in higher education. Grauer noted that more than 40% of students work 30 hours or more per week. Over a quarter of students are parents, and of that quarter, over 70% are single moms.

“Because that’s the reality, and because we can make an affordable subscription and the economics can work, Course Hero is aligned to serving the majority, the real majority, and that’s the beauty of opportunity,” he said. There is a freemium model, but on an annual plan, a subscription costs $9.95 per month. On a monthly plan, a subscription costs $39.99 per month.

It’s not an opportunity the company hopes to expand into, its a reality of its diverse customer base. An internal data analytics survey of Course Hero shows that 58% of students that subscribe are employers part time or full-time. Over 1/4 of subscribers are 35 years old or older, and 22% of subscribers are parents.

Looking ahead, Course Hero hopes to continue to broaden its multi-sided marketplace.

In July, the business announced it is launching Educator Exchange, which allows college faculty to make money by uploading study materials for fellow teachers or students.

The “direct-to-faculty” relationship could pacify earlier tensions between the platform and teachers by giving the latter a way to monetize on how Course Hero “open sources” creative content on the point of copyright infringement.

Grauer compares Course Hero’s long-term vision to that of Google Maps, in that the platform can make recommendations of content based on other people’s usage.

But we’re not talking recommendations for the closest gas station. Based on how a user learns, Course Hero can recommend a specific professor who has a specific syllabus on a topic in which the user is interested.

“We’ve seen that specificity level differentiates us from others,” he said. “It helps students when they’re doing their real work, that one homework, that studying for one test. And I think that’s where the magic is for us.”