Santa Clara-based education technology company Chegg has acquired online coding startup Thinkful for $80 million, with potential additional payments of up to $20 million. It is the company’s first startup purchase of the year and its largest deal to date.
According to Dan Rosensweig, the company’s Chairman, President, & CEO, the deal is intended to augment Chegg’s Learning Services, a division that offers courses to help students accelerate their path from learning to earning.
Founded in 2001, Chegg provides students a wide range of services such as homework help, online tutoring, test preparation, scholarship searches, internship matching, college application advice, textbook rentals, and after school/college activities.
On the other hand, New York-based Thinkful was founded in 2012 by Darrell Silver and Daniel Friedman. It branded itself as “Building the world’s next workforce”. It believes that all jobs today are tech jobs and that the world needs a new workforce. And the startup provides students with the required tools, training, and network to build it.
It provides students online learning, one-on-one mentorship, living stipends, career coaching, access to one of the most enviable employer networks in the industry, and a tuition refund guarantee. Thinkful has a unique method of generating revenue. If students don’t find new career within six months of graduating, they don’t have to pay even a cent, but if students do get a job, they have to pay the company 15% of their income for three years. The company also offer another option with a job guarantee at the end of the program for $16,000.
Thinkful secured $16 million in venture-capital funding over its lifetime from investors such as Owl Ventures, Floodgate, and RRE Ventures. It raised a $9.6 million Series A in January 2018.
Interestingly, following the Thinkful deal, Chegg disclosed some growth numbers to give a forecast of what’s to come.
The company expects its calendar 2019 revenue, inclusive of Thinkful, to be around $400 million and $404 million. It expects its adjusted profit to reach $121 million to $124 million over the same time frame, and its revenue to rise by $2 million from prior guidance. It is reported Chegg Learning Services has 2.2 million subscribers, up 30% year-over-year.
Chegg believes that the company is all about removing the obstacles that stand in the way of the education that students want and deserve. And the company described this in the best and shortest form on its website -
“As a student in today’s world, you’re used to doing things your own way. They said you’ll need this textbook; you said I’ll find it cheaper online. They gave you strict class times; you said I’ll make my own course hours. They said we can’t help you financially; you said I’ll earn it elsewhere. They play by yesterday’s rules; you’re today’s student.”
Well, if this sounds right to you, I believe Chegg is just for you.