This week, two online math instructional developers found themselves in the crosshairs of private equity firms. One of these deals made for splashy headlines: Dreambox Learning’s $130 million investment from The Rise Fund.
The other slipped by the newswires with little more than a peep. Reasoning Mind, a Houston-based nonprofit, was acquired by Imagine Learning. Imagine is owned by Weld North Education, a private equity firm that has amassed a portfolio of more than 10 education technology companies over the years.
Financial terms of the sale were not disclosed, and no parties offered further details. Multiple former Reasoning Mind employees, however, confirmed to EdSurge that the nonprofit underwent several rounds of layoffs throughout 2017, which affected several dozen staff.
Reasoning Mind was founded in 2000 by Alexander and Julia Khachatryan, who a decade earlier had immigrated to the U.S. from Russia. They built the early versions of the web-based program based partly out of concern that their son seemed uninterested in mathematics in school.
In those early years, the curriculum was based on math pedagogical approaches that were popular in Russia, China and Singapore. Much of this work was done by a team in Moscow, while those in the U.S. office adapted it for use by American students. Later, as the U.S. curriculum market shifted towards purchasing materials aligned to Common Core and state academic standards, the organization began building new offerings based on these U.S. standards.
At its peak, the organization employed around 150 people across the U.S. and Russia. Today, former employees estimate there may be as few as 50 remaining employees at the time of the sale. (Reasoning Mind representatives have yet to comment on the deal.)
As is typical of many nonprofits, Reasoning Mind tapped a long list of donors over the years, including the Bill and Melinda Gates Foundation, the Michael and Susan Dell Foundation and the ExxonMobile Foundation. Technology companies including Google, Oracle and Cisco also gave support through providing hardware and database services.
Yet Reasoning Mind appeared to struggle to develop a self-sustaining business model and wean itself off philanthropic support. According to the nonprofit’s most recently available 990 form, the organization reported a net loss of $4 million for its 2016 fiscal year 2016 (ending Aug. 31). Support from contributions and grants had also declined from approximately $8.3 million in the previous fiscal year to $3.2 million.
As the layoffs began in spring 2017, former employees say it became clear that finding a buyer was likely the best way to keep Reasoning Mind’s products alive. And along with the staff reduction came one major change at the very top: co-founder Alex Khachatryan, who was Reasoning Mind’s first and only CEO during its 17-year history, stepped aside to assume the role of product officer. The group brought in Gregg Fleisher to take over as CEO on Jan. 1, 2018.
According to the press release, Reasoning Mind claims it was used by more than 100,000 students last year. After this acquisition, the plan is to integrate its programs with Imagine Learning’s suite of online curricula that currently spans English literacy, Spanish and math offerings. (Imagine previously acquired Think Through Math, another digital math product, in 2016.)
Founded by former Kaplan executive Jonathan Grayer, Weld North has purchased 16 companies since 2010. In January 2018, private equity firm Silver Lake acquired a subset of that portfolio (9 of those 16 companies) to create Weld North Education (WNE), which Grayer continues to run.
WNE currently consists of three main education assets: Edgenuity, a provider of online K-12 courses; Generation Ready, which offers K-12 professional development services; and Imagine Learning, which offers math and literacy software for elementary-grade students (and where Reasoning Mind’s products now belong). WNE will acquire more companies that fit within these three offerings, according to a spokesperson.
"We will source our curriculum through organic development and acquisition," said the company representative, "always looking to offer our students and teachers the best digital learning tools available anywhere.”
