Kahoot, the popular Oslo-based edtech company that has built a big business out of gamifiying education and creating a platform for users to build their own learning games, is making an acquisition to double down on K-12 education and its opportunities to grow in the U.S. It is acquiring Clever, a startup that has built a single sign-on portal for educators, students and their families to build and engage in digital learning classrooms, currently used by about 65% of all U.S. K-12 schools. Kahoot said that the deal — coming in a combination of cash and shares — gives Clever an enterprise value of between $435 million and $500 million, dependent on meeting certain performance milestones.
The plan will be to continue growing Clever’s business in the U.S. — which currently employs 175 people — as well as give it a lever for expanding globally alongside Kahoot’s wider stable of edtech software and services.
“Clever and Kahoot! are two purpose-led organizations that are equally passionate about education and unleashing the potential within every learner,” said Eilert Hanoa, CEO at Kahoot, in a statement. “Through this acquisition we see considerable potential to collaborate on education innovation to better service all our users – schools, teachers, students, parents and lifelong learners – and leveraging our global scale to offer Clever’s unique platform worldwide. I’m excited to welcome Tyler and his team to the Kahoot family.”
The news came on the same day that Kahoot, which is traded in Oslo with a market cap of $4.3 billion, also announced strong Q1 results in which it also noted it has closed its acquisition of Whiteboard.fi, a provider of whiteboard tools for teachers, for an undisclosed sum.
The same tides that have been lifting Kahoot have also been playing out for Clever and other edtech companies.
The startup was originally incubated in Y Combinator and launched with a vision to be a “Twilio for education“, which in its vision was to create a unified way of being able to tap into the myriad of student sign-on systems and educational databases to make it easier for those building edtech services to scale their products, and bring on more customers (schools, teachers, students, families) to use them. As with payments, financial services in general, and telecommunications, it turns out that education is also a pretty fragmented market, and Clever wanted to figure out a way to fix the complexity and put it behind an API to make it easier for others to tap into it.
Over time it built that out also with a marketplace (application gallery in its terminology) of some 600 software providers and application developers that integrate with its SSO, which in turn becomes a way for a school or district to subsequently expand the number of edtech tools that it can use. This has been especially critical in the last year as schools have been forced to close in-person learning and go entirely virtual to help stave off the spread of the Covid-19 pandemic.
Clever has found a lot of traction for its approach both with schools, and investors. With the former, Clever says that it’s used by 89,000 schools and some 65% of K-12 school districts (13,000 overall) in the U.S., with that figure including 95 of the 100 largest school districts in the country. This works out to 20 million students logging in monthly and 5.6 billion learning sessions.
The latter, meanwhile, has seen the company raise from a pretty impressive range of investors, including YC current and former partners like Paul Graham and Sam Altman, GSV, Founders Fund, Lightspeed and Sequoia. It raised just under $60 million, which may sound modest these days but remember that it’s been around since 2012, when edtech was not so cool and attention-grabbing, and hasn’t raised money since 2016, which in itself is a sign that it’s doing something right as a business.
Indeed, Kahoot noted that Clever projects $44 million in billed revenues for 2021, with annual revenue growth rate of approximately 25% CAGR in the last three years, and it has been running the business on “a cash flow neutral basis, redeploying all cash into development of its offerings,” Kahoot noted.
Kahoot itself has had a strong year driven in no small part by the pandemic and the huge boost that resulted in remote learning and remote work. It noted in its results that it had 28 million active accounts in the last twelve months representing 68% growth on the year before, with the number of hosted games in that period at 279 million (up 28%) with more than 1.6 billion participants of those games (up 24%). Paid subscriptions in Q1 were at 760,000, with 255,000 using the “work” (B2B) tier; 275,000 school accounts; and 230,000 thousand in its “home and study” category. Annual recurring revenue is now at $69 million ($18 million a year ago for the same quarter), while actual revenue for the quarter was $16.2 million (up from $4.2 million a year ago), growing 284%.
