Course Hero acquires LitCharts, founded by the creators of Sparknotes

I’ll admit it: I was the student that tipped the teacher off that half of our English class, including me, was using Sparknotes to “read” Twelfth Night by Shakespeare, instead of actually reading the text itself. The site, which offered cliff notes and summary of books on a chapter by chapter basis, was the best way to review novels before a quiz — or, was the best last-minute savior if you procrastinated too much and never got around to opening the book in the first place.

History in mind, it makes sense that the creators of everyone’s favorite procrastination tool, Sparknotes, are getting noticed by an edtech unicorn. Litcharts, an offshoot of Sparknotes, got scooped up today by a newly-minted edtech unicorn, Course Hero. The price of the deal was undisclosed. That said, Course Hero last raised an $80 million Series B in August 2020, and assumedly a portion of that check went to this deal.

The creators of Sparknotes, Ben Florman and Justin Kestler, created LitCharts as an extension of their initial success. LitCharts gives notes, definitions, translations, on over 2,000 literary texts. Similar to Sparknotes, LitCharts is all about making complex passages less complex. Grauer estimates that about 30% of LitCharts’ subscribers are teachers and educators.

“We want to make sure that we have the best solution for a specific area, and then at the right moment in time, be able to make a really authentic recommendation of another tool or another offering that can be helpful for you [as a student],” Grauer said, of Course Hero’s long-term ambition. That webbing – or connecting students from one resource to another – could be one of the benefits of virtual education, because there is essentially a history log of every error, stumble, and pause that a student makes as they’re going through a lesson.

The heart of Course Hero, per founder Andrew Grauer, is to create a question and answer platform with extreme levels of specificity for students. It sells subscriptions to students, which unlock access to all of its learning and teaching content, which include course-specific material created by teachers and publishers. Naturally, a big part of Course Hero’s strategy is to offer material on common subjects that students struggle with – English being one of those subjects.

“We’ve been looking at the data on the platform, and where students are actually getting stuck the most, where they need the most help, and where they are asking the most questions,” said Grauer. “And that’s quite informative.”

The company has been building out its literature library for the past five to six years. With LitCharts underneath its wing, Course Hero is putting a significant investment in its literature library, which is chockfull of videos, illustrations, and notes on texts.

This is Course Hero’s second acquisition in the past eight months. In October, Course Hero acquired Symbolab, an artificial intelligence-powered calculator that helps students answer and understand complex math questions. That deal helped bolster Course Hero’s math offering, and today’s acquisition should help Course Hero deepen its literature resources. Both of these brands will continue to operate independently – a choice that Grauer says is part of his operating thesis of supporting the “decentralized, empowerment of entrepreneurs.”

“If you centralize everything, maybe there’s power to that [since] it all looks the same, but actually in doing so many times do you can actually move slower, and not be able to move fast and make decisions and make progress towards the goal because you’re optimizing for so many small specific use cases,” he said. The two recent startups that Course Hero acquired have been operating for over a decade, and Grauer thinks that their scale and brand power is worth keeping as is, instead of forcing into an umbrella brand.

Across its various platforms, Course Hero estimates that it will hit between 2 million to 3 million paid subscribers this year, up from 1 million subcribers the year prior.

#course-hero, #edtech, #tc

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Course Hero buys Symbolab in a rare edtech acquisition

Months after its $80 million Series B fundraise, Course Hero has acquired Symbolab, an artificial intelligence-powered calculator that helps students answer and understand complex math questions.

The price of the deal was undisclosed. The 9-person Symbolab team, based in Tel Aviv, will join Course Hero . The platforms will live under independent branding for the near future, according to Andrew Grauer, CEO of Course Hero.

Founded in 2011, Symbolab is an advanced calculator and question solver that is on track to answer 1 billion questions this year, Grauer says. The service has a deep focus on college-level math, and solves complex geometry problems with explanations and proofs.

Course Hero is a question and answer platform at its core. The addition of a calculator and company that holds a data-set on the most asked mathematics questions could give Course Hero a bigger edge on its math services, which the company says is one of its most popular subjects among its current students. The service will be offered to Course Hero subscribers as a deal-sweetener.

The model of using a computational engine to give solutions to stuck students is fairly common. In a remote schooling word, flexibility is key for students who might be lost in their classes. While teachers and tutors might only be available for a certain amount of hours, a technology service powered by AI could prove to be a 24/7 solution that students can rely on — and pay for.

Symbolab feels similar to Wolfram Alpha, a popular computational engine. While Grauer says that Wolfram Alpha is a “powerful tool” he thinks that Symbolab does a better job on depth and explanations. Big companies have added similar services too, such as Google, which acquired homework helper app Socratic in 2019, and Microsoft, which built Microsoft Solver in the same year.

Grauer had to decide between building or buying. The founder ultimately decided to acquire the technology because the true success of artificial intelligence only comes if a platform is able to compound data over time. Symbolab was founded nearly a decade ago, and back-end information is valuable. Grauer says he’s excited to approach the solver problem differently than Google and Microsoft.

“You can’t just [do this] in a short amount of time,” he said. “You’re looking for how do we get the right, accurate answer. But then, how am I going to get, not just accurate, but step by step solutions that are actually helpful.”

Consolidation remains rare in the sector that has historically been underfunded. Edtech acquisitions have been growing steadily but slowly. In 2018, edtech had less than 40 acquisitions. In that same year, fintech had 193 acquisitions, according to Crunchbase.

Still, amid edtech’s larger boom, this acquisition makes a good amount of sense. Course Hero recently raised its biggest tranche of money yet, passed $100 million in annual run revenue, and became profitable. Thus, the company likely had money in the bank to afford the deal. In 2012, Course Hero bought InstaEdu, an on-demand video platform.

Grauer says that he expects Course Hero to make more acquisitions across a variety of subject areas in the future. In edtech more broadly, he thinks that the next 5 to 10 years will have more acquisitions.

“If you look back 15 years, there just weren’t that many education technology businesses,” Grauer said. “Now, I think there’s enough of them that potentially have this scale, and both have metrics on the distribution side technology and built out product market fit during the expansion phase.”

#acquisition, #course-hero, #edtech, #ma, #startups, #tc, #unicorn

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Making sense of 3 edtech extension rounds

While venture capitalists are pouring funding into edtech startups, the surge of interest isn’t coming without pressure.

Edtech companies are searching for new ways to tap into a booming market. As Course Hero co-founder Andrew Graeur put it, the goal for his Q&A platform went from reaching a million subscribers to “many millions” as a result of the COVID-19 pandemic.

One way edtech companies are approaching these unprecedented times is by raising extension rounds that are earmarked specifically to bring on strategic partners from around the world. The approach of trading equity for a chance at globalization is neither rare nor cheap, but comes with new weight given the sector’s boom.

Today, ApplyBoard closed a $55 million extension round for its Series C, which now totals $130 million. ApplyBoard helps international students search and apply to universities and colleges across the world. It wants users to think of it as a Common App for international students, serving as a college undergrad application.

A spokesperson for the startup — which became a unicorn valued at over $1.4 billion in May — says the round did not change its valuation. Instead, the financing was “less about funding, and more about the partners that we were able to bring on board as a result.”

#andrew-grauer, #applyboard, #asia, #course-hero, #covid-19, #duolingo, #edtech, #education, #ggv, #jenny-lee, #labster, #tc, #venture-capital

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Course Hero, a profitable edtech unicorn, raises rare cash

Like any successful founder, Andrew Grauer had bright, long-term ambitions for Course Hero from the moment he launched it in 2006.

He started the business to create a place where students could ask questions and get answers similar to Chegg, which launched 15 months before Course Hero . But as he slowly built it, he was tempted by a larger question: “What would a university look like if it was built by the internet?”

And so, the Redwood City-based startup itched at that nebulous goal throughout the years. Course Hero tested and failed products: free curated e-courses, in-person tutoring and teacher advice and ratings.

Clarity only came when Grauer realized that the core goal Course Hero launched with — giving students a place to ask and answer questions — wasn’t simply one product that should be fit into a broader suite of services. Instead, it was a thesis around which to build products. So, the startup began looking for different ways and formats to organize knowledge and questions and answers.

“That was a breakthrough insight,” Grauer said. The startup stopped launching other business verticals and decided to stick to Q&A as its core — and only — business. It sells Netflix-like subscriptions to students looking for access to learning and teaching content. Teachers and publishers can put course-specific study content on the platform.

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Image Credits: Getty Images/manopjk

In 2020, Course Hero is a profitable business with annual run revenue upward of $100 million.

Today, Course Hero tells TechCrunch that it has raised a new tranche of capital in a Series B extension round of $70 million. The round is now totaling $80 million, bringing Course Hero’s total known venture capital to date to $95 million.

Its $80 million Series B round is one of the largest U.S. funding deals of 2020, and brings Course Hero’s valuation to $1.1 billion.

From a high level, the new raise is not surprising. Other edtech companies have also recently added on more capital to their balance sheets to meet remote learning demand amid the coronavirus pandemic.

But in Course Hero’s case, the new capital comes as a stark contrast to how the business functioned before 2020. After launching, the startup waited eight years to raise a $15 million Series A. Now, after going another nearly six years without raising venture capital, Course Hero has closed two rounds in this year alone.

Grauer tells TechCrunch that the capital will be used for operations, product innovation and feature development. It also plans to use the capital for future acquisitions (in 2012, Course Hero bought an in-person tutoring business).

Course Hero’s change of heart with venture capital boils down to the company meeting new scale demands. Last year, it passed 1 million subscribers on the platform. Now, it is eyeing “many millions” of students, the co-founder says.

Paraphrasing Bill Gates, Grauer said, “We do overestimate what we can do in just three years. And we dramatically underestimate what we can do closer to 10 years.”

Any edtech company that raises money off of current momentum in remote education will have to face the reality of what it is like to grow when remote learning is no longer a necessity. In other words, when the coronavirus pandemic ends, will these same platforms still find surges in usage?

“That’s the risk and reward of raising capital,” Grauer said. He added that “if you raise too much money early on, you can get misaligned expectations based on different time horizons set up by different terms of incoming shareholders or investors.”

Course Hero sees tailwinds in a dynamic that has been brewing since before the pandemic and will likely grow during and after: the growth of “nontraditional students” enrolling in and participating in higher education. Grauer noted that more than 40% of students work 30 hours or more per week. Over a quarter of students are parents, and of that quarter, over 70% are single moms.

“Because that’s the reality, and because we can make an affordable subscription and the economics can work, Course Hero is aligned to serving the majority, the real majority, and that’s the beauty of opportunity,” he said. There is a freemium model, but on an annual plan, a subscription costs $9.95 per month. On a monthly plan, a subscription costs $39.99 per month.

It’s not an opportunity the company hopes to expand into, it’s a reality of its diverse customer base. An internal data analytics survey of Course Hero shows that 58% of students that subscribe work at least part time. Over 25% of subscribers are 35 years old or older, and 22% of subscribers are parents.

Looking ahead, Course Hero hopes to continue to broaden its multisided marketplace.

In July, the business announced it is launching Educator Exchange, which allows college faculty to make money by uploading study materials for fellow teachers or students.

The “direct-to-faculty” relationship could pacify earlier tensions between the platform and teachers by giving the latter a way to monetize on how Course Hero “open sources” creative content on the point of copyright infringement.

Grauer compares Course Hero’s long-term vision to that of Google Maps, in that the platform can make recommendations of content based on other people’s usage.

But we’re not talking recommendations for the closest gas station. Based on how a user learns, Course Hero can recommend a specific professor who has a specific syllabus on a topic in which the user is interested.

“We’ve seen that specificity level differentiates us from others,” he said. “It helps students when they’re doing their real work, that one homework, that studying for one test. And I think that’s where the magic is for us.”

 

#course-hero, #education, #recent-funding, #startups, #tc, #unicorn, #usv

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