Kahoot Acquires Clever for $500M, Hoping to Expand Its Presence in the U.S.
Kahoot is, as it appears, is in the process of getting hotter. The publicly traded, game-based education company announced that it had acquired Clever which is a digital learning platform widely used in K-12 schools across the U.S.
Kahoot will purchase Clever for a mix of shares and cash with an estimated value of $500 million to $435 million, depending on the business’s financial performance and its revenue for the school year 2021-2022.
The acquisition–Kahoot’s fifth in under a year, after adding Drops, Actimo, Whiteboard.fi and Motimate to its portfolio–will unite two giants in education technology.
For Kahoot that was launched 2013 as a service, the acquisition could prove beneficial. The Oslo-based company has an extensive presence across the globe with 1.6 billion users participating in around 280 million games on its platform during the past twelve months. By the acquisition of Clever Kahoot, the company’s presence on its U.S. education market will increase dramatically. Clever is a privately-owned, California-based company that was founded in 2012 has claimed to have served more than half of U.S. students in 2020 With a presence of 89,000 schools. This is 65 percent of the country’s 133,000 schools.
“What is the deal from Kahoot’s point of view,” says Phil Hill who is an analyst in the education industry as well as a consultant and writer. “For them it appears to be an negative net.”
But what about Clever? This is evidently the “weaker group” in this agreement, Hill says. “It’s not an instant sale however, what’s happening is that you’re seeing that Clever wasn’t successful in its efforts to transform this world.”
Clever is among the many Edtech companies that have attempted in recent times to tackle the issue of dispersion in the market for K-12 education. Although it sounds like a technical issue, from the point of view of parents and children, “fragmentation” really just refers to the harrowing frustration of trying, sometimes in vain, to access various platforms utilized by their schools. It was especially evident in the aftermath of the pandemic, as many families were confronted with problems with technology and confusion trying to connect to a portal for students or a math program or any other instrument.
“It’s extremely difficult,” Hill says. “Students get lost. It’s been a persistent issue and now is in crisis.”
The solution Clever created is a one-sign-on solution that allows students to sign-in to the front-end interface in order to access the various apps that their teachers and classes require students to use. With Clever’s portal teachers and students can move between classes and assignments without having to leave the platform.
In addition, Clever is free for schools. It charges vendors of edtech to access its sign-on system and a lot of companies are thankful, Hill says, not to have to address the integration issue on their own. As per the press release made by Kahoot Clever, it is working with over 600 application developers which includes Khan Academy, Google Classroom and McGraw Hill.
Clever will soon be adding Kahoot to this list, according to Tyler Bosmeny, CEO and co-founder of Clever. Bosmeny says Kahoot is the number. #1 most requested app by teachers and, with the acquisition the app will soon be accessible via Clever’s platform.
Do you want to integrate or bundle?
Another, possibly most viable option to reduce dispersion, Hill states, is to provide edtech programs in a bundle. This is exactly what PowerSchool as well as other providers are currently doing. In essence, PowerSchool is attempting to take over all the companies and equipment that schools could reasonably wish to license and employ and provide its range of services and products to schools as one supplier. This ensures that the school has a consistent appearance and feel, and also simplifies the process for schools, Hill explains.
The purchase, Hill says, “proves that the Clever method hasn’t been as financially effective as the bundling model that companies such as PowerSchool are exploring.”
The proof, Hill argues, is from the numbers that came from the acquisition. In the news release, Kahoot noted that Clever is expecting to make the company $44 million this year “running Clever on the basis of cash flow neutral.” Cash flow neutral is a positive sign, Hill says, but the revenue of $44 million, after just nine years of operation and considering the reach that it is able to expand into K-12 institutions isn’t exactly spectacular.
“They weren’t a high-flying firm in terms of financials,” Hill says.
In forming a partnership to Kahoot, Bosmeny argues, Clever will be more flexible as well as resources and support to develop new features for its platform, and also expand into new markets.
“Together we’ll be able to accomplish far more than any of us could accomplish by ourselves,” Bosmeny says, noting that Clever will be able to have a wider global reach, which is something it often receives from app developers and users from around the world. He also says the fact that Kahoot has a larger footprint within the U.S.
The most important question that comes out of this agreement Hill says the biggest question that will be raised by this deal Hill concerns whether Kahoot will be able to leave Clever’s business model in its current form, namely that it is free to schools.
“If I’m in a school district” Hill says, “I want to be able to answer this question: “Are you going to alter everything for me What do you think?”
If asked about the possibility of charging schools for their services or altering Clever’s single sign-on platform Bosmeny doesn’t mince words. Clever remains an educational platform that teachers can use, Bosmeny claims. Clever will “absolutely” remain available free to districts–“that’s not changing one tiny bit,” he says–and the platform will stay unchanged except for certain new features and add-ons coming soon.
“One thing that I am most impressed with about the manner Kahoot thinks about this partnership is that they’d like for Clever remain Clever,” Bosmeny says.
Clever continues to run under the current brand name, Kahoot said in a statement. It will also operate as an independent company as part of the umbrella of the Kahoot Group.
The deal is expected to be completed on July 30, which is by the close of the second quarter.