B2B Edtech Startup Secures $100M in Venture Funding

Edtech's Shift Towards School Partnerships

Historically, edtech startups have found it simpler to market directly to consumers rather than navigating the complexities of selling to school districts. School district sales processes are often lengthy and rigid, whereas direct-to-consumer approaches offer greater adaptability in securing purchases. The COVID-19 pandemic reinforced this trend, significantly boosting consumer-focused companies like Quizlet and Outschool, propelling them to unicorn status.

The Appeal of B2B in Education

Despite the success of direct-to-consumer models, many startups believe that a business-to-business (B2B) strategy, targeting schools directly, will ultimately have a broader impact on student learning, particularly for those lacking the financial resources for out-of-school supplemental education. This approach represents a longer-term investment, and Montreal-based Paper, a provider of school-integrated tutoring software, has recently signaled that venture capital returns and school district collaborations are not mutually exclusive.

Paper Secures $100 Million in Series C Funding

Paper has announced the completion of a $100 million USD Series C funding round, spearheaded by IVP. Additional investors participating in this round include Framework Venture Partners, Bullpen Capital, Reach Capital, Birchmere Ventures, Salesforce Ventures, BDC Capital, and ETW.

How Paper's Tutoring Software Works

Established in 2014, Paper provides tutoring software to K-12 schools throughout the United States and Canada. The platform enables students to request immediate, live tutoring assistance. This support is available in four languages and encompasses over 200 academic subjects. Over the past year, Paper has expanded its tutor network from 100 to 1000 individuals.

Ensuring Tutor Quality and Consistency

“School districts require assurance when engaging with companies whose educators have access to their student populations,” explained Paper CEO Philip Cutler. “They need to be confident that these educators adhere to the same professional standards as classroom teachers.” To this end, Paper employs its tutors as part-time workers, fostering a sense of commitment and professionalism, and potentially reducing employee turnover.

A New Career Path for Educators

Cutler envisions Paper as offering an alternative career path for teachers seeking opportunities outside of traditional school systems. However, the demands of scalability could potentially conflict with the core values of the teaching profession – prioritizing the volume of completed requests over providing consistent, in-depth assistance.

Flexible and Accessible Support

The adaptability of Paper’s support model is a key strength. The company offers 24/7 assistance, allowing students to request help via live chat for durations ranging from five minutes to several hours, depending on the complexity of the assignment. Because the service is integrated within school districts, teachers can identify areas where students are struggling and adjust their instruction accordingly.

The Evolution of Tutoring

Paper embodies a trend that companies like Quizlet, Course Hero, and Brainly have recently begun to embrace: the shift towards intelligent, efficient tutoring sessions. These companies are betting that modern supplemental learning will not necessarily involve video conferencing, but rather live chat interactions supplemented by features like interactive whiteboards.

Growth and Market Positioning

While the company has not disclosed its valuation, Paper highlighted other growth indicators to demonstrate its market position. The company’s workforce has expanded from 30 to 130 employees. Furthermore, revenue has increased fortyfold over the last two years, driven primarily by strong customer retention and the network effect within school districts.

The Power of Peer Adoption

“Districts are motivated to adopt solutions that are already in use by their peers within the community or region,” Cutler stated. “There’s a desire to avoid being the last to implement a beneficial program.”

A Potential Turning Point for B2B Edtech

Cutler acknowledged the relative scarcity of successful B2B edtech companies, but believes that Paper’s recent funding – its third in the past 18 months – could signal a shift, bringing the innovative energy of the direct-to-consumer market into the education sector.

Increased Openness to Innovation

“School districts are more open to change and experimentation than ever before, and recent events have demonstrated that taking calculated risks and exploring new approaches in education is possible,” Cutler observed.

He concluded: “A willingness to innovate has been lacking in education for some time, and I am proud of the progress made over the past year.”