Escape Plan II

October 15, 2024

learn

In 2021, EdTech exits hit $41B, up almost 8x compared to 2020.

A wave of IPOs took place including:

  • Duolingo ($12.6B)

  • PowerSchool ($5.6B)

  • Udemy ($1.2B)

  • Coursera ($1.2B)

Of these exits, Duolingo has fared the best, with its stock up 105% over 3yrs

PowerSchool was recently taken private by Bain Capital in a $5.6B deal, an 87% markup to its 2021 IPO, and a 37% markup to its most recent public valuation

Udemy is down 71% since its 2021 debut

Coursera is down 84% since its 2021 debut

Today I want to take a closer look at a trailblazer dominating a growing niche in EdTech

primer

In 2022, Primer announced a $15M Series A led by Founders Fund and Khosla Ventures, with participation from Naval Ravikant, Sam Altman, Balaji Srinivasan, Cyan Banister, + the founders of Shopify, DoorDash, Notion, Airtable, Figma, and more.

The company recently raised a Series A extension at an $80M valuation this past summer

gotta learn before you earn

Primer is a K-12 EdTech platform that enables top 1% teachers to launch their own microschools. Microschools are a hands-on, self-paced, neighborhood schooling solution with classes of 15 - 30 students.

Primer has a couple of tailwinds propelling the platform forward:

  • Only 28% of Americans had a great deal or a lot of trust in the public school system

  • In 2022, Gallup found that only 42% of U.S. adults were satisfied with K-12 education, which is the lowest level of satisfaction in the past two decades

  • The U.S spends $1.5T annually on education, but more than half of adults lack literacy proficiency

  • Data shows a decade of stagnation in math and reading test scores

Primer’s primary product (Microschools) allows students to set their own learning pace in an intimate 15:1 student teacher ratio. The company plans on expanding throughout Florida and Arizona by providing a completely software based solution that leverages top educators.

The majority of Primer students are on financial aid, with a large percentage on full tuition scholarships. Primer makes money from wealthier students paying full tuition (~$20K) + ESA / voucher programs in Florida and Arizona.

Competitors include:

  • Sora Schools: virtual 6th-12th grade education platform that is accredited by the Cognia, NCAA, and WASC. Sora has raised $28M+ in funding at the seed and Series A stages, and they charge $12.5K for tuition

  • Alpha School: Texas based alternative education provider. Alpha students perform 100% better on standardized tests when compared to the average public school student.

  • Kubrio: Founded in 2019, Kubrio provides personalized learning experiences for kids 8-18. Kids can learn about creating movies, games, startups, music, and more.

Primer is the brainchild of Ryan Delk and Maksim Stepanenko.

Ryan’s educational background saw him homeschooled up until high school, after which he enrolled in the University of Florida, and then dropped out to work at Gumroad, a creator economy startup. Later on, he would work at Omni as the COO, where he would make the Forbes 30 under 30 list before leaving to start Primer

Maksim’s educational background starts in Kyrgyzstan, where he went through traditional schooling until high school. In high school, his principal saw he was talented in physics, so he let Maksim skip class to practice for the International Physics Olympiad. Maksim went on to attend MIT. He did an internship at Google before working for Locu as a software engineer.

Ryan and Maksim are attacking the U.S. homeschooling market as a wedge for the broader education system in the U.S.

If they successfully complete the mission, we’ll see Primer on the public market in due time

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Headlines

  • Harry Stebbings of 20VC raises $400M fund to ‘make Europe great again’. TechCrunch article here

    • LPs include MIT’s endowment fund, investors from Coatue, Khosla, Accel, and more

    • This marks 20VC’s 3rd fund and took just four weeks to raise. Fund I raised $8.3M in 2020 and Fund II raised $150M in 2021.

  • Tom Brady set to join Raiders ownership as NFL approval nears. Front Office Sports article here

    • Brady’s proposal to become a roughly 10% Raiders equity holder has cleared the league’s finance committee and is set to be brought before the full ownership during the NFL’s fall business meeting

    • The Las Vegas Raiders are currently worth $6.7B, 7th highest in the league. Brady is also owns a minority share in the Las Vegas Aces

  • Jane Street interns make more money than the Federal Reserve chair. Financial Times article here

  • Amazon is using tech from a Khosla-backed startup to run robot warehouses at Whole Foods. CNBC article here

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