Nonobvious Acquisitions: 2021 Predictions

The Evolving Landscape of Edtech Acquisitions

Late in 2020, a case was made for edtech companies to broaden their vision to ensure continued relevance beyond the pandemic. The argument centered on shifting focus from simply digitizing lectures to fundamentally reimagining educational systems through technology.

The acquisition activity observed in the early months of 2021 appears to reflect this shift. Companies that experienced significant valuation increases during the pandemic are now actively recruiting to expand their range of services.

A Report on the Bootcamp Market

Ruben Harris, founder of Career Karma – a platform connecting individuals with coding bootcamps – recently collaborated with his team to produce a comprehensive report analyzing the pandemic's influence on the bootcamp sector.

James Gallagher, the report’s author, explained that the 2020 acquisition of Galvanize by K12 provided K12 with access to the corporate training and coding bootcamp markets, areas previously outside their core focus.

This report highlights a trend beyond simple consolidation within the bootcamp industry. Unexpected partnerships are emerging, such as a platform resembling Roblox for education acquiring a language learning application, and a flashcard-based startup purchasing a technology tutoring service.

• How is edtech utilizing its increased capital?
• Reports indicate Byju’s is considering acquiring Epic, a US-based reading platform.
• The rise of technologically advanced, efficient tutoring sessions is becoming apparent.

It is well known that I find unconventional acquisitions particularly interesting. Therefore, any information regarding upcoming deals in the edtech space is welcome – please feel free to share via Signal or Twitter direct message.

Founders of thriving startups are inherently driven and adept at identifying opportunities, persuading stakeholders of their potential for success. However, the benchmark for ambition is constantly rising.

What once constituted a significant achievement is now considered standard, and a notable accomplishment is quickly matched by competitors.

Acquisitions represent a strategy for neutralizing competition and integrating valuable talent, but the subsequent actions are paramount.

Further discussion in this newsletter will cover competitors to Clubhouse, the rapid growth of a company originating from an internal experiment in the fitness tech industry, and a potential cooling trend in public markets. To receive this newsletter weekly, subscribe here.

Clubhouse's Potential for High Valuation Despite Limited Capture of Value

The initial excitement surrounding the development of Stories seems distant now. The recent surge in popularity of audio-based social platforms has prompted numerous companies to announce their own Clubhouse-inspired offerings.

Key Takeaway: Determining which major tech companies aren't developing a Clubhouse competitor may be simpler than identifying those that are. While early predictions are emerging, the proliferation of clones suggests Clubhouse may need to accelerate its monetization strategies – a challenge similar to that faced by Twitter Spaces.

Being the first to identify a significant trend isn't enough; ultimately, success hinges on superior execution of that trend.

A Growing List of Competitors

• Facebook is actively developing a Clubhouse-like feature, currently mirroring many of its functionalities.
• Discord is introducing new channels designed for hosting audio-based events, resembling Clubhouse rooms.
• LinkedIn has confirmed its work on a direct competitor to Clubhouse.
• Swell has released an application focused on asynchronous voice communication.
• Slack is expanding beyond its traditional text-based messaging capabilities.
• Twitter Spaces has become available on Android, preceding Clubhouse’s release on the platform.
• Spotify is entering the live audio space, a logical extension of its existing services.
• Career Karma has integrated audio rooms into its platform.
• In China, several Clubhouse clones have emerged, as reported by Protocol.

Tonal Achieves Unicorn Status

This week marked a significant milestone for Tonal, a company specializing in fitness technology, as it officially reached unicorn status following a recent funding round.

Key Takeaways: This achievement highlights the expanding market for in-home fitness options. While a formal S-1 filing isn't yet available, Tonal has released an EC-1, a detailed company overview compiled by TechCrunch.

TechCrunch reporter JP Mangalindan conducted extensive research on Tonal, covering its history, operational model, community building strategies, and future challenges.

Exploring Tonal's Journey

• The evolution of an initial internal project into a rapidly expanding force within the fitness technology sector is detailed.
• The culmination of substantial investment – totaling millions of dollars – and 3.5 years of development is examined.
• Strategies for fostering thriving online communities to enhance engagement, generate revenue, and improve product development are explored.
• An assessment of Tonal’s potential to dominate the high-end fitness market is presented.

Recent IPO Performance and Market Trends

The past week presented challenges for Compass, Deliveroo, and Kaltura, highlighting potential headwinds for companies seeking public market funding.

Each of these firms encountered distinct setbacks that collectively suggest a possible cooling in investor enthusiasm for initial public offerings.

Specific Company Updates

Compass revised its share offerings and reduced the price per share. Deliveroo experienced a difficult launch on the public markets, and Kaltura delayed its IPO due to unmet valuation expectations.

These developments indicate a more cautious environment for newly listed companies.

Positive Developments Amidst Uncertainty

Despite these challenges, several other companies demonstrated positive momentum in the IPO landscape.

• Coursera successfully priced its IPO at the upper limit of its projected range, bolstering valuations within the edtech sector.
• Coinbase announced its direct listing date of April 14th, alongside a financial update scheduled for April 6th.
• UiPath’s IPO filing revealed substantial growth in the robotic process automation (RPA) market.

These instances suggest continued investor interest in specific high-growth areas.

TechCrunch Updates and Events

We extend our gratitude to all those who participated in TechCrunch Early Stage. For those who may have missed the event, or wish to revisit its content, please note that Disrupt is rapidly approaching.

• Secure your attendance at Disrupt 2021 and receive a complimentary Extra Crunch membership.
• Furthermore, we would like to recommend two additional newsletters, This Week in Apps and The Exchange, to supplement your weekly reading alongside Startups Weekly.

These publications offer valuable insights into the startup ecosystem and the broader technology landscape.

News Roundup: A Weekly Overview

This week’s key developments, as highlighted by leading tech publications.

Featured on TechCrunch

The potential for zero trust architecture is enabling startups to implement passwordless authentication systems.

Founders considering participation in a remote accelerator program should review key strategies for maximizing its benefits.

Data indicates that US iPhone users’ average annual expenditure on applications rose from $138 in 2020 to $180 in 2021, demonstrating continued growth in the app economy.

Niantic’s CEO recently released a preview image showcasing the company’s upcoming augmented reality (AR) glasses device.

The Weeknd is preparing to auction off an exclusive, previously unreleased song alongside associated visual artwork in the form of a NFT.

Insights from Extra Crunch

The emergence of embedded procurement is poised to transform businesses, effectively establishing each company as its own dedicated marketplace.

Common pitfalls that creators encounter during the development of new games on the Roblox platform have been identified.

E-commerce roll-ups are anticipated to significantly disrupt the consumer packaged goods sector, representing the next major wave of innovation.

A specific SaaS startup successfully increased its net revenue retention by over 30 percentage points within just two quarters through strategic improvements.