Entangled No More: Guild Education Buys Edtech Venture Studio

May 19, 2020

Innovation—and mergers—may either melt or bloom in the heat of a crisis. For Guild Education, the coronavirus epidemic has accelerated its work and locked in the chief executive's decision to make her first acquisition and buy the Entangled Group.

The deal, announced today, was an all-stock transaction, which valued the company at about $150 million, say insiders, and included the operating assets along with Entangled’s consulting and venture studio work. Just about all of Entangled’s 90 employees now work for Guild. Entangled, which also invests in other companies, says its portfolio and ownership stakes in others were not part of the deal.

Guild Education rocketed into the headlines in the past year as a one of the rare, female-led education technology startups valued at more than $1 billion. The five-year old, Denver-based company connects higher-ed programs with companies that pay some or all of the tuition for their employees to upskill or earn a degree.

The San Francisco-based Entangled Group, meanwhile, has also attracted significant attention. Named by founder and chief executive Paul Freedman after a physics concept, the company pioneered a suitably complicated but successful business model as a “venture studio.” It invested in and then advised education startup companies. It also provided consulting services to an array of organizations including foundations, startups and large corporations.

“We were one of the first investors in Guild,” said Freedman, in an interview with EdSurge.

“I’ve had Paul on speed dial for six years,” added Rachel Carlson, co-founder and chief executive.

The combination says volumes about the need for speed and scope in the emerging “future of work” industry, where the rules are getting rewritten daily by the aftermath of a pandemic that is forcing just about every organization to rethink what it does when employees must either stay far apart or work from home.

“There are 88 million Americans who need our work to exist,” Carlson says. “Once a vaccine is available, Harvard will be fine. But the group we’re worried about are the 88 million people who aren’t ready to work from home.”

Adds Freedman: “One of the challenges is that our [edtech] industry is fragmented. We’re excited to join Guild’s parade. Hopefully it becomes a parade that others join, too.”

When Guild got started in 2015, Carlson wanted to find a way to help low-wage earners at companies either go back to school or get additional training and upskilling with support from their employers. She curated the programs that could deliver real results for “adult working learners,” namely people who already had a job and could only pursue their studies parttime and online. Guild compiled a plump catalogue of more than 1,600 online degree programs, from the likes of the University of Arizona, Purdue Global and Southern New Hampshire University. It added in its own support and mentoring services.

Then Guild persuaded companies to offer partial or full tuition support to employees. It took a percent of the fees paid to the universities; in exchange, the universities saved the expense and hassle of marketing to recruit candidates. Chipotle became an early marquee client. (The restaurant chain now covers full tuition for employees who have been with the company for more than 120 days and who clock in at least 15 hours per week.) The Walt Disney Company, Lowe’s and Walmart are also on Guild’s client list.

Entangled, also founded in 2015, had been building a robust consulting program that increasingly focused on supporting human capital. “Our mission was helping the education ecosystem transform from a product economy to a knowledge economy,” Freeman says. About a year ago, Entangled raised $15 million with an eye toward expanding its consulting and investing projects. (That fundraise valued the company at just under $100 million.) Entangled now manages an investment portfolio of 21 education companies, including Yellowbrick, Course Hero and RaiseMe, and has helped build several businesses such as ReUp Education and Pathstream. Entangled president, Nick Hammerschlag, plans to continue to manage that portfolio outside of Guild and serve as a part-time advisor to Guild.

As COVID-19 ripped through the economy, the need to help people find better jobs exploded. In May, Guild launched a program it calls Next Chapter. “It’s a replacement for outplacement services,” Carlson says. Typically, when companies lay off employees, they hire an outplacement organization to provide job counseling, support on writing resumes and other employment help. Too frequently, however, those services yield little for the job seekers. Next Chapter uses algorithms to assess new roles in fields that are hiring that might suit workers, then lines up programs to retrain them. A former food worker or beautician might learn to repair appliances, or administer a customer success platform.

“There are a million open jobs across the partner companies” working with Guild and Entangled, declares Freedman, at places including Walmart, Unity, Gainsight and Paschall Truck Lines. Helping laid-off workers build the skills for the positions that are available will help them build a path to economic stability, he adds.

To do that work, Guild has been on its own hiring blitz, too. The company employed about 400 people six months ago; with the Entangled acquisition, the headcount is now 675.

“When the pandemic broke, others put [mergers and acquisitions] on hold. But that wasn’t an option for us,” Carlson says. The deal is critical to helping Guild deliver services. And she sees more hiring ahead—both at Guild and due to the team's work.

Editor's note: An earlier version of the story misstated the value of the transaction.


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