TMT Blog: SaaS and e-learning

Here at Clearwater International, we are gearing up to start our second Cloudex 20:20 programme and so it was with impeccable timing that our Danish team completed a really interesting SaaS transaction just a couple of weeks back. The business, Clio Online, is a provider of SaaS model interactive education materials to the schools market – covering everything from Maths, Danish, English and German to History, Religion and Science. The buyer was Bonnier, one of the largest media groups in the Nordic region with interests across a range of markets including TV, newspapers, magazines, books and digital media. With the backing of Bonnier, the business expects to continue to grow its international operations and take advantage of the market shift towards ed-tech which has driven growth of over 50% annually.

We are continuing to see both strategic and private equity money flooding into the e-learning market all around the world. In 2014, a report by Docebo – an e-learning platform provider – suggested around €5.7bn has been invested over the last 5 years, with a particular uptick in activity from 2012 as the economy in the Western world began to come back to life. And the opportunity is still huge, not just in that fundamental shift to digital from more traditional classroom resources but also in the international opportunity – no prizes for guessing that the biggest goal is the Asian market, and China in particular, for those businesses brave enough to attempt it.

There are some heavy hitters in the market already, the likes of Pearson and McGraw-Hill for example, and Private Equity investors have been busy backing the second tier – particularly in the more mature US market, where Hellman & Friedman invested in US-based Renaissance Learning in a €1bn transaction last year. In Europe, the market is much more fragmented but potentially represents an even greater opportunity: Europe reportedly has more than 110 million students compared to 90 million in the US. Against this backdrop, we expect to see continued and growing interest in ed-tech targets around Europe as well as an increased level of consolidation amongst second-tier players. Watch this space.