Google Capital, Google’s growth oriented fund, invested $40 million in Renaissance Learning, a company that provides schools with evaluation tools. The deal values Renaissance Learning at $1 billion USD.
Renaissance Learning was founded in 1984, went public in 1997 and was bought by the British private equity firm Permira Funds in 2011 for $440 million. Through the investment Google will become a minority shareholder in the company. It is also the first investment in education by Google Capital.
According to re/code Google Capital looked at about 500 edtech companies before deciding to invest in Renaissance. Renaissance Learning is very engaged in spreading the Common Core standard and has developed different products for that vertical in the past years. Its reading and assessment tools are currently used by nearly 20 million students and teachers in 40.000 schools.
Renaissance Learning recorded a 20% gain in revenue in 2013 and acquired edtech startup Subtext for an undisclosed sum. Renaissance Learning did not need the money as the company is generating a lot of cash according to its CEO Jack Lynch. The investment was strategic and the company won’t raise more money in the future.
Lynch sees incredible opportunities to work together with Google as there is quite some overlap between Google’s cloud products and Renaissance’s line of products.
“Google Apps are free in K-12, so there is an entire generation of kids who are learning to use Google Docs instead of Word. There are a number of touch points between Google Apps and what we do.”
According to Bloomberg Google Capital has $300 million in fresh capital to spend so this might not be the last investment in education by the growth fund. Based on the price Permira paid in 2011 it was quite a good investment as with the new evaluation Renaissance Learning more than doubled its value within three years.
- Google Capital Invests $40M in Renaissance Learning, Valued at $1B | re/code
- Google Capital comes out of stealth with third investment | CNNMoney
- Renaissance Learning Draws $40 Million Investment From Google Capital | New York Times
- Google Capital invests $40 Million in Renaissance Learning | Fast Company
- Meet Google Capital, which invested just $40M in Renaissance Learning | GigaOm
- Google Capital Places $40 Million Bet on Renaissance Learning | Wall Street Journal
- Google Capital Lands $300 Million and Leaps Into Web Education | Bloomberg
- Subtext Joins Renaissance Learning | Subtext Blog