As students head back to school, PE-backed edtech deals may be slowing down

The pandemic forced K-12 education to go online in 2020, creating opportunities for private equity firms to invest in education technology. But now, with students returning to in-person learning as a new school year begins, it may be time for PE to move on.

One sign that this may be a good time for private equity firms to sell their edtech portfolio companies came just Tuesday when Thoma Bravo announced a big exit in the sector, selling Frontline Education to Roper Technologies for $3.7 billion.

Thoma Bravo bought Frontline Education before covid, and the edtech sector grew prominently during the pandemic, as schools adopted remote learning to slow the spread of the virus.

“Over the past five years, we have worked closely with the management team to significantly grow the ARR of the company and build an integrated, market-leading software and analytics platform developed specifically for the unique challenges faced by K-12 administrators and educators,” remarked Holden Spaht, Thoma Bravo managing partner, in a statement.

A few ill omens for edtech have appeared recently. Venture capital funding for edtech and education start-ups is down sharply from a year ago, Crunchbase News reported in August.

And next month, Edmodo, a popular platform for K-12 schools, will shut down permanently.

Dealmaking activity in edtech may be waning, but it isn’t over quite yet. Here are a handful of edtech deals PE Hub and PE Hub Europe covered this summer:

Just Wednesday, Clearlake Capital Group-backed Discovery Education, a Charlotte, North Carolina based global edtech company, announced the acquisition of Pivot Interactives, which is based in Minneapolis. Discovery Education serves approximately 4.5 million educators and 45 million students worldwide. Pivot develops cloud-based activities and labs designed to engage students in exploring scientific phenomena. Pivot Interactives will complement Discovery Education’s offerings, including its K-12 platform, Mystery Science, the Science Techbook series and STEM Connect, according to the buyer.

Earlier in August, Discovery Education spread its international wings by acquiring DoodleLearning, a Bath, UK-based company that creates personalized learning experiences for students via products that support mathematics and English language tutoring.

Also this month in the UK, LDC, a London-based PE firm, invested in Avantis, a provider of virtual reality-based learning technology to the international education market. Avantis said its technology is used in more than 100,000 classrooms worldwide and that it developed the world’s first virtual reality system for K-12 classrooms.

In July, Alpine Investors, a San Francisco, California-based firm, acquired FEV Tutor, a Boston-based online K-12 tutoring platform. FEV Tutor CEO Jim Tormey told PE Hub in July that the desire to close equity gaps together with increased acceptance of online learning in K-12 education was at the center of edtech.

In June, Northlane Capital Partners, a Bethesda, Maryland-based PE firm, invested in Infobase, a cloud-based educational services provider alongside the company’s management team, led by CEO Paul Skordilis.

Not everyone agrees the surge in edtech is over. A report delivered by Adroit Market Research earlier this month predicted the global K-12 edtech market will increase at a compound annual growth rate of nearly 20 percent from $105.68 billion in 2022 to $322.68 billion in 2029.