EdTech Investment: $200M Bet on Lifelong Learning

Emeritus Expands into K-12 Education with iD Tech Acquisition

Emeritus, a Mumbai-based edtech firm specializing in online upskilling for professionals, has announced a significant investment to enter the K-12 market.

The company, operating under the Eruditus group, intends to acquire iD Tech, a provider of STEM education programs for children. This acquisition, currently pending closure, is valued at approximately $200 million.

Strategic Expansion and Funding

Eruditus recently secured $113 million in Series D funding in August, with participation from investors such as Chan Zuckerberg Initiative, Sequoia India, and Leeds Illuminate.

Currently, the startup boasts a portfolio of over 200 programs. These range from intensive bootcamps to complete online degree programs, delivered in collaboration with over 50 leading global universities, including MIT, Harvard, and Columbia.

iD Tech introduces a new demographic to the Eruditus ecosystem: students from elementary school through high school. Courses are delivered globally by U.S.-based college students.

The Rise of Lifelong Learning

This acquisition enables Emeritus to broaden its scope beyond adult education and venture into the realm of lifelong learning. Industry trends, identified in a January edtech investor survey, highlighted the necessity for remote education to extend beyond traditional school hours.

The survey indicated that edtech companies must cater to learners at all stages of their educational journey, from early childhood through post-employment. This shift necessitates creating value for students throughout their entire learning experience.

Addressing the Challenges of Diverse Learners

Successfully navigating lifelong learning presents complexities, as the learning styles of a high school freshman differ significantly from those of a working professional with several years of experience.

Ashwin Damera, CEO and co-founder of Emeritus, discussed the strategic rationale behind the acquisition with TechCrunch, focusing on both product development and revenue potential.

“We observed a substantial increase in online K-12 instruction last year,” Damera explained. “This prompted us to reconsider our previous assumption that this age group wasn’t prepared for online learning.”

He continued, “We realized it was time to re-evaluate that belief.”

The Landscape of Educational Institutions

For a company to effectively support continuous learning, it must facilitate a smooth progression of its user base – from secondary education through higher education and into professional life – across its offerings. Damera detailed how Emeritus and iD Tech already share common ground within this sequence, specifically in the realm of higher education.

Currently, iD Tech reports that 97% of its students enroll in a four-year college program. Furthermore, the company asserts that nine out of ten of these students pursue studies in STEM fields. While iD Tech views college as a culminating objective, Emeritus positions it as an intermediate stage, partnering with universities to develop programs tailored for working professionals.

This integration appears logical: iD Tech’s carefully selected community of motivated students could be directed towards Emeritus’ affiliated universities. This would maintain customer engagement throughout their academic journey and beyond, ultimately leading to employment opportunities where they could once again become students.

Damera believes the most significant potential lies in capitalizing on existing university partnerships.

“We offer a nine-month program in collaboration with MIT for individuals aspiring to become coders,” he stated. “A substantial opportunity exists in developing a comparable program designed for a 15-year-old considering a future career in coding.” He indicated that both program formats – in-person and fully virtual – could be available as early as 2022.

The co-founder also acknowledged a key challenge: maintaining iD Tech’s focus on product development within the K-12 sector, while simultaneously expanding into higher education and lifelong learning initiatives.

“It’s crucial that we, at Emeritus, do not impose our course creation methodologies onto iD Tech,” he emphasized.

Navigating the Core Challenge

A central challenge arises with the increasing prominence of lifelong learning: effectively maintaining the distinct strengths of separate products while integrating them to enhance their value for a broader customer base.

Damera detailed how, at Emeritus, individuals typically enroll in courses to facilitate career advancement. These learners are often working professionals dedicating 40 to 60 hours weekly to their jobs, necessitating course formats that are concise and easily accommodated during weekends or after work hours.

“Securing dedicated time for learning is a significant hurdle,” he noted, “therefore, course design must prioritize the needs of the adult learner.” Damera also highlighted their willingness to engage with courses at any point throughout the year, a contrast to traditional students.

Traditional students generally seek supplementary educational opportunities during summer breaks or other school holidays, leading to course structures designed as concentrated, intensive programs.

The approach to course development also differs between these two demographics. While Emeritus tailors its offerings to resonate with employed professionals seeking promotions, iD Tech’s engagement with younger learners emphasizes inspiration and enjoyment, rather than direct job placement.

Finally, let's examine Emeritus’ financial performance and the rationale behind its co-founder’s belief that the benefits of integration outweigh the potential complexities it may introduce.

Financial Projections and Growth at Eruditus

Damera projects that Eruditus will achieve approximately $185 million in bookings revenue for the fiscal year concluding in June. This figure largely reflects the company’s operations within the higher education sector, as the recent acquisition is still in the process of being finalized.

Further expansion is anticipated, with estimates suggesting Eruditus, in conjunction with iD Tech, will reach $500 million in bookings revenue by fiscal year 2022. A significant portion, 80%, of this revenue is expected to originate from higher education, while the remaining 20% will be generated from the K-12 segment.

This optimistic outlook is primarily attributed to the strength of the company’s university collaborations. The pandemic served as a catalyst for this growth, prompting many university partners to prioritize and expand their online learning capabilities.

“The primary driver of our growth is directly linked to the changes spurred by the pandemic,” Damera explained. “Numerous university partners have recognized the necessity of a robust online strategy, moving beyond a solely classroom-based approach.”

Consequently, the volume of courses being developed and the number of partnerships established are contributing significantly to this projected expansion.

Strategic Expansion and Future Outlook

The core objective of this deal is for Emeritus to attain $500 million in bookings revenue in the coming year. The company believes that expanding its reach to encompass earlier stages of the educational journey is the most effective path to achieve this goal.

While lifelong learning emerges as a beneficial consequence of the ongoing consolidation within the edtech industry, its implementation proves more challenging than simple acquisition and integration.

The future trajectory of education will largely depend on the ability to adapt and revise content to accommodate the diverse needs of all students, rather than relying on traditional categorization methods established before the pandemic.