Editor’s note: The original headline noted that this was the largest U.S. edtech deal to date. Two days after this story published, Coursera announced a $130 million fundraise—and the headline has been changed.
The biggest venture funding round of 2020 so far for a U.S. education technology startup goes to a provider of financial-aid tools for higher-ed institutions. And it comes at a time when colleges have different plans for reopening campuses in the fall, and as parents and students question the value of an experience that may be fundamentally different from years past.
CampusLogic, a Phoenix-based developer of tools and resources used by college officials to help students manage scholarships, loans and other financial supports, has received a $120 million investment entirely from Dragoneer Investment Group. This marks the first education investment for the San Francisco-based firm, whose portfolio includes many highly-valued technology companies and ones that went public, including Facebook, Slack and Spotify.
Founded in 2011, CampusLogic initially focused on digitizing paper forms and other manual processes involved in student financial-aid applications. The company has since added more services to support the vision of its founder and CEO, Gregg Scoresby, to become a full-fledged “student financial success company.”
By that, he elaborates in an interview with EdSurge, “we want students to make informed financial decisions, connect them with opportunities like grants and work-study programs, and ultimately help them borrow less in loans.”
Over the years, CampusLogic has added services to help students research and obtain grants, loans and other financial support. In 2017, the company made its first acquisition, a college-cost calculator to help prospective students better understand the price and opportunities of different higher-ed programs. Two years later, it bought a tool that helps students raise money to cover their tuition and educational expenses.
Just last week, CampusLogic acquired its third company: RaiseMe, which offers a tool that lets high school and college students earn “micro-scholarships” from colleges and universities.
To date, the company has raised $192 million in venture capital. And expect more purchases to come, Scoresby teases: “This money is for acquiring more assets. Otherwise, we wouldn’t have done this transaction.”
With roughly 750 colleges and universities paying for its tools, CampusLogic is currently cash flow positive, Scoresby claims. The company has a headcount of 170 staff, and revenue has been growing by nearly 40 percent year over year. The annual licensing fee ranges from the “low tens of thousands of dollars” for customers buying a single product, up to “several hundreds of thousands of dollars” for the full suite of tools, he adds.
Helping students pay for school is more than an altruistic endeavor for colleges and universities; it also helps their bottom line. A 2017 survey of more than 1,800 higher-ed administrators from Tyton Partners, a consulting and investment banking firm, suggested that nearly three million students drop out each year for financial reasons.
Scoresby kept mum when pressed for details about the kinds of tools that CampusLogic may buy next. But he noted that the pandemic has forced higher-ed institutions to “better communicate their cost and value” if they want to stay in business. “Nobody thinks COVID is going to be good for student enrollment,” he says.
But beyond immediate concerns over how—or whether—students return to campus this fall, there are longer-term implications for colleges and universities.
Scoresby has a bold prediction—that over the next 12 months, “every college and university across the U.S. will be test optional” and no longer require ACT and SAT scores as an admissions requirement. For college officials, these tests serve purposes beyond assessing students’ knowledge, he notes. Often, institutions buy lists of student names from the testing organizations to support recruiting and enrollment efforts.
Without these tests, higher-ed institutions will look for other ways to establish relationships with prospective students, says Scoresby. His company’s recent purchase of RaiseMe, which is used in over 25,000 U.S. high schools, offers one new channel. Future acquisitions may serve this purpose as well.