ApplyBoard, a startup that helps international students find opportunities to study abroad, announced today that it has nearly doubled its valuation in a little over a year. The Ontario-based company is now worth around $3.2 billion after raising a $300 million Series D round led by the Ontario Teachers’ Pension Plan Board.
ApplyBoard makes money from revenue-sharing agreements with colleges and universities. If a student attends a college after using their services, ApplyBoard receives a cut of the tuition. Meanwhile, the service, which helps students search and apply to schools, is free to use.
Co-founder and CEO Martin Basiri did not share specifics on revenue, but he confirmed that his company is growing its sales at a 400% year-over-year rate in 2021. For context, sales in 2019 hit $300 million, meaning that ApplyBoard is making at least $1.2 billion in sales this year.
These figures violate the prevailing edtech narrative from last year: Higher ed is dead! Students don’t want to attend college anymore. Bring back the gap year, but make it permanent!
Instead, this company is proving that the university tech stack is more lucrative than many assumed, especially if you look beyond content offerings and into back-end marketing support.
My take: Startups that help students navigate institutional bureaucracy so they can get more value out of their educational experience may become a growing focus for investors as consumer demand for virtual personalized learning increases.
“Students want a seamless and pain-free application process”
ApplyBoard’s recent fundraising efforts shed a light on its strategy to become, effectively, a tech-savvy guidance counselor for the approximately 200,000 students that it has served to date.
The company raised a $55 million extension round in September to bring on a partner, Education Testing Services (ETS) Strategy Capital, the venture arm of the world’s largest nonprofit education testing and assessment organization. ETS helps administer the TOEFL English-language proficiency test and the GRE graduate admissions test.
The synergies there led ApplyBoard to launch ApplyProof, a service that helps admissions and immigrant officers verify documents that international students need to apply to colleges around the world. Today’s financing event similarly brings in a strategic investor, Ontario Teachers’ Pension Plan.
“The demand remains high post-pandemic and we continue to see a strong, pent-up demand from students wishing to study abroad,” Basiri said. “Students want a seamless and pain-free application process and be able to have all the information they need to make an informed decision.”
The executive pointed to two trends to illustrate his point. First, he said students have been searching for lower-cost programs due to financial challenges brought on by COVID-19, underscoring how choice matters when looking for college. Second, he said that there was a 300% surge in international applications to U.S. schools compared to April 2020, illustrating interest. The company is expanding efforts in destination countries, which include the United States as well as the U.K. and Australia.
While ApplyBoard provides a front-end service that can connect students to a variety of other schools, another startup, far more nascent, wants to go one step further in removing friction.
Concourse Global brings a Tinder-like interface to college admissions. Students create online profiles, which can then be swiped through by admissions officers on partner institutions, which include Colorado State, the University of Alabama and the University of La Verne.
If an office swipes right, a student is accepted to the university. And if a student swipes right back, the enrollment process begins. The company plays the right-hand man of a school guidance counselor in this way, helping high schools get more of their students into college by creating an easier process where it is harder to fall through the cracks.
Concourse CEO Joe Morrison, whom I spoke to back in February, explained how the current admissions process is like “a giant assembly line that is slow and hard to steer.” While there’s a lot more nuance to how Concourse works, its existence paints a picture of how universities might be nearing a more nimble and precise way to enroll students.
“Ivy Leagues already have enough support; generally, there is an entire company and marketplace [there] with customized specialized admission processes,” he said. “If you’re not going to an Ivy League, which is most of the world, you need better support than just going to a website.”
Top-of-funnel matchmakers
Career Karma is another startup in this expanding sector, albeit one that is differentiating by investing in community cultivation. The startup was founded in 2018 by Ruben Harris, Artur Meyster and Timur Meyster. Instead of creating its own upskilling curriculum, the startup empowers students to find the best bootcamps for their price point and career goals.
By positioning itself as a top-of-funnel matchmaker, Career Karma saves itself from having to compete with every bootcamp out there. Instead, similar to a company like Stackin, its business is all tied to placing students in the best type of bootcamp for their career goals and financial health.
Career Karma puts coders into small peer mentorship groups, called Squads, to give students support during the program and into the job search process. This product allows the company to have a longer relationship with students, moving it from a one-and-done superconnector to a pseudo-upperclassman mentor.
RaiseMe, a company acquired last year by CampusLogic, similarly positions itself as a partner with students as they go through education. Founded in 2012, RaiseMe helps low-income and first-generation students earn micro-scholarships throughout high school to use when they get to college. By doing activities like volunteering, or earning good grades, students are able to earn money that they can then put toward tuition. The company also launched an AI-powered digital assistant to help users with financial aid navigation.
More than 2 million students across the United States have used RaiseMe to get money. Unlike other startups in this space, RaiseMe is seeding ambition and financial capabilities in students, with college discovery as part of the process.
Lower-ranked universities are embracing digital strategies
James Kim, a partner at Reach Capital who previously served as a college admissions officer, nonprofit executive and high school math teacher, thinks that higher ed is still threatened.
“The vast majority of higher-ed institutions in the country are tuition-dependent,” he said. “They are faced with this dilemma of a secular trend decrease among college-aged students combined with this [perception] that traditional higher ed isn’t worth it.”
This tension, he said, has triggered the rise of startups that promise “they can provide a novel source of students that these colleges normally don’t have access to.” Startups can pop up to help domestic universities increase their international awareness, or help second-tier colleges grow brand awareness among populations that may not know them already.
“In this era, where Gen Z is on digital devices and social media all the time, why wouldn’t you explore digital strategy if you’re an enrollment officer at a lower-ranked university?” he added.
While the solution makes sense, there is a graveyard of college placement startups. Kim thinks it is because many are predicated on a false assumption: that students want to go to a school based on their personality or major, instead of ranking. College matriculation data show that if students get into a highly ranked school, chances are that they will go there over other options.
An app that connects students to opportunities through light surveys and periodic content might not be enough.
“In our experience, [that is] not compelling enough of an experience for students to spend a lot of time or even download and use the app,” he said. “And without the student engagement, you really have nothing to offer a value to the universities that they really couldn’t do themselves or buy from Niche.com or College Board lists.”
Placement services aren’t inventive, or defensible, as an entire business. ApplyBoard had to get into the verification and financial guidance game; Concourse had to reinvent admissions workflow; Career Karma went into the community game; RaiseMe used financial incentives as a deal sweetener.
The growth of these tools suggests that higher education is starting to challenge widely held assumptions about students, who are more unconventional, diverse and busy than they might have originally thought.
8 edtech investors talk reskilling, digital universities, ISAs and other post-pandemic trends
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