Carnegie Learning Gets a Makeover After Private Equity Investment

Private equity’s pursuit to acquire puzzle pieces to build comprehensive educational technology platforms shows no sign of slowing down.

The latest move comes from CIP Capital, a New York City-based private equity firm that is investing an undisclosed sum in Carnegie Learning. As a result of the deal, Carnegie will be merging with New Mountain Learning (which is owned by CIP), and the combined operations will continue under the Carnegie Learning name.

The merger marks yet another change for Carnegie Learning, which traces its roots to Carnegie Mellon University. In the 1980s, researchers developed an adaptive-tutoring math system used in high schools and colleges, and the tool was spun out as an independent company in 1998. Since then the company has swapped hands between other private-equity firms and private investors.

Carnegie Learning currently offers online math courseware for middle, high-school and college students, along with accompanying print textbooks as part of its blended-learning programs. It recently added a coding tool to its lineup, after acquiring Globaloria in 2017.

Altogether, these products are used in 800 school districts across the country, according to its chief marketing officer, John Jorgenson. The company also provides professional development services, which he says account for roughly a third of the company’s business. He declined to share whether the company is turning a profit.

In addition to math products, Carnegie Learning will now also encompass existing products under New Mountain Learning’s portfolio. These include: EMC School, a developer of language-learning materials; Paradigm Education Solutions, a suite of print and digital materials for healthcare and computer software literacy (think Excel and Quickbooks); and JIST Career Solutions, a library of career and life-coaching workbooks and videos.

There is little overlap between the audiences and markets that these tools serve, according to Jorgenson. “We’re not trying to smash a bunch of things together. We’re trying to take what we do well in cognitive science and adaptive learning, and bring that to the content that New Mountain has.” But, he acknowledges, “that’s going to take some time for us.”

Among the product integrations in the works is to integrate Carnegie’s digital math offerings with Passport, EMC’s learning management platform that lets teachers assign online classwork, track progress and share reports with parents.

For now, each of Carnegie’s products will remain as distinct brands. And for the most part, there will be minimal disruption for the teams behind these offerings—other than perhaps a few personnel changes. “There are not any layoffs that are happening upon this announcement,” says Jorgenson, who adds that the new Carnegie Learning will keep its offices in Pittsburgh and St. Paul, Minn.

Also staying the same is Barry Malkin’s role as CEO of Carnegie Learning, as he will keep that title after the merger. With “CIP Capital’s continued support,” he said in a statement, “we have an even more inclusive opportunity—to re-imagine the role of adaptive learning technology, not just in math, but across STEM, literacy and beyond.”

Like Carnegie Learning, New Mountain Learning has a storied legacy of its own. Its EMC School product dates back to 1954, when the company behind it produced tape recordings for use in the classroom, with a focus on what is known as the "audio-lingual method" of language instruction. In 2005, EMC was acquired for $44 million by private equity firm Wicks Group, which later acquired JIST in 2007. Wicks then combined EMC, JIST and Paradigm into New Mountain Learning, and sold it to CIP Capital in April 2018.

Expect Carnegie Learning to add more edtech tools to its portfolio. “Going forward, [Carnegie Learning] will aggressively explore additional investments to better serve educators through new products, services, acquisitions and research,” offered CIP Capital’s principal, Daniel Schwartz, in a prepared statement.

Snapping up edtech assets has become a familiar pattern for private-equity firms in education. Weld North has been among the most active, having amassed a portfolio of 16 edtech companies since 2010.

The tempo has picked up in recent years. PowerSchool (owned by Vista Equity Partners) and Frontline Education (owned by Thoma Bravo) have each gone on acquisition sprees. Last year, BV Investment Partners invested $150 million in Hero K12 to assemble a portfolio of edtech assets. Hero K12 used part of that money to acquire Schoolmint (whose CEO, Jinal Jhaveri, is now head of Hero K12). This year, Francisco Partners acquired two established brand-name education assets in Discovery Education and Renaissance Learning.