Boston-based private equity firm Devonshire Investors has acquired NovoEd, a San Francisco-based provider of an online learning platform. Terms of the acquisition deal were not disclosed.
NovoEd traces its roots to Stanford University, where engineering professor Amin Saberi and Farnaz Ronaghi, then a PhD student, launched their first online course in 2012. In those days the platform was called Venture Lab, and 78,000 students from 150 countries signed up for its first course, which was on technology entrepreneurship. The pair then started the company in January 2013.
At the time they were not alone in their efforts; Coursera, Udacity (both of which were also co-founded by Stanford professors) and edX had launched MOOC platforms a year earlier.
These online courses are easy to sign up for, yet few students actually stick through and finish them. (Completion rates hover in the single digits.) NovoEd aimed to offer online learning experiences that retained the social and collaborative nature of in-person courses with the hope that students would stick around.
NovoEd has tried to differentiate itself from the crowd by designing its platform to facilitate small-group interactions and project-based assignments. So even though hundreds of students may be taking a course, the instructor can break them up into smaller groups of learners and mentors who can interact and provide feedback to one another as the class progresses. The platform also offers collaborative tools so teams of students can work together on projects.
A study published by the company suggested that students who worked in groups were 16 times more likely to complete an online course class than their peers who took it individually.
The company initially focused on working with universities like Stanford and Princeton to offer undergraduate-level courses, but has since pivoted away from hosting MOOCs directly for public consumption. “We are not a B2C [business-to-consumer] content provider,” says NovoEd’s CEO, Ed Miller in an interview. “What we provide today is a platform that allows organizations to deliver content that they’ve created to their employees and their customers.”
Today, NovoEd’s customers include Comcast, General Electric and a handful of corporations on the Fortune 500 list, alongside nonprofits and training firms including Acumen, National Geographic Society and IDEO. Miller estimates that two-thirds of the company’s revenue come from these organizations, which deliver courses on everything from customer service and product-specific knowledge, to mentorship and design thinking to their own staff and clients.
The company also still works with about a dozen universities that use NovoEd to deliver online continuing-education programs. Altogether, NovoEd boasts over 100 customers who have delivered roughly 6,000 courses, according to Miller, who joined the company as CEO in November 2016.
NovoEd charges clients an annual subscription fee that is based on the number of unique users who are watching their courses. The company is currently not profitable; Miller says most of its revenue has been re-invested to continue growing its online course delivery platform.
NovoEd raised $4.8 million in a Series A round in 2014, and has raised $6.3 million overall. The company started looking for more funding in spring 2017, and a year later returned on the fundraising trail in pursuit of Series B funding. Conversations with Devonshire Investors started at the ASU+GSV Summit, an education technology conference, this past April.
In Devonshire Investors, Miller sounds convinced that he’s found an owner that will provide the resources and runway for NovoEd to focus on its business and product—rather than short-term growth targets. “When people talk about growth as the focus, sometimes you are just doing things to try to meet the metrics for the next fundraising round,” says Miller, a technology industry veteran whose past experience include stints at Blackboard and Data Hero. Under Devonshire, “we are not going to be looking to do any more fundraising.”
No personnel changes are happening at the result of this deal, and NovoEd will look to double the size of its 35-employee team. Miller will remain as CEO and will report to Scott Kinney, managing director of Devonshire’s education technology group, who is now Chairman of the NovoEd’s board of directors.
NovoEd’s acquisition marks Devonshire’s first deal in the education technology industry, and there will be more to come, Miller hints.
