Deals

UK publishing giant TSL snaps up ed-tech startup Wikispaces (exclusive)

Above: Wikispaces founders James Byers, Dominick Bellizzi, Adam Frey (L-R)

Image Credit: Ohad Ben-Yoseph

Digital publishing giant TSL Education has acquired scrappy upstart Wikispaces to maintain its hold over educators.

TSL bills itself as the “largest network for teachers in the world.” The UK-based firm claims to provide 60 million educators and students around the world with online teaching resources. On TSL’s flagship service, TSL Connect, teachers download and share lesson plans, course content, worksheets, and more. They can also peruse job listings, which is how TSL makes a good chunk of its revenues.

TSL’s core business has shifted in the past few decades from print publishing to online education. The London-based company was bought by U.S. private equity firm TPG Capital in July of 2013, marking its third change of ownership in under a decade. TSL was previously owned by News International, as part of the Times newspaper stable of publications before it was sold to private equity firm Exponent in 2005 and later to Charterhouse.

Nestled under TPG’s umbrella, TSL’s executive team has been keeping its eye out for acquisition candidates. According to chief executive Louise Rogers, TSL has been watching San Francisco-based Wikispaces for several years. Wikispaces launched its wiki hosting service, which is primarily used as a collaborative writing tool in schools, in 2005 to combat rivals like WikiaPBworks, and a handful of others.

A shared vision

Teachers “trust each other” when it comes to content, Rogers told VentureBeat in an exclusive interview. On TSL, teachers freely share resources and modify each other’s content to meet the standards for their country and/or state.

TSL expects the Wikispaces acquisition will bolster its core product and its reach. Wikispaces has a strong following in the United States; TSL is best known among teachers in India, Australia, and the UK. TSL offers a vast store of content; Wikispaces has developed a collaboration tool.

“We had a conference call with the founders of Wikispaces recently and were blown away by the sheer scale of the service, the obsessive nature of the audience, and how culturally aligned we were,” said Rogers.

“After we got together in person, it was clear that nothing was stopping this deal from happening.”

Wikispaces will retain its headquarters in San Francisco and will develop its product and team with backing from TSL. The company hopes that students, parents, and administrators – not just teachers — will use the content and cloud tools to interact instantaneously no matter where they are.

“More and more, you’ll see teachers taking advantage of all the tremendous content that exists, and not from a blank slate,” said Wikispaces cofounder James Byers in a phone interview.

“They’ll teach Hamlet by collaborating with teachers at other schools and use resources that have already been purpose built.”

Rogers and Byers declined to disclose the financial terms of the deal.

The benefits of a lean approach

Wikispaces did not always intend to focus on the education vertical, but it quickly saw that teachers were voraciously using the software. To appeal to this sector, founders Adam Frey and Byers decided to start giving away thousands of premium accounts to K-12 teachers free of charge.

The founders also opted to bootstrap the company rather than raise multiple rounds of venture funding. This lean approach stood out to Rogers and the TSL corporate development team.

“We were impressed by what they had produced with so few resources,” she said.

Taken at face value, the deal is mutually beneficial to both companies. It’s also a boon for the education technology space, which is increasingly attracting investment from the leading venture capital firms.

Michael Staton, an ed-tech investor with Learn Capital, said we should expect to see a slew of acquisitions of this nature in the coming years.

“The publishing giants are actively thinking about their corporate development strategy,” he said.

“They realize that the future is user-generated, digital, and interactive.”

Staton said the Wikispaces team won the wiki hosting battle over the competition “fair and square” as their marketing struck a chord with teachers. By phone, he said he’s been following the Wikispaces team since 2006 and has recommended them to various investors. He added that he’s “not surprised” that the company proved to be an attractive acquisition candidate.

According to Staton, buy-ups like this are a positive step for ed-tech, as they demonstrate that “there is liquidity and [that] publishers and private equity firms have their checkbooks open.”

But Staton is disappointed that the terms of the deal were not made public, as investors need more concrete examples of “really good returns” in the space.

He concluded, “It’s a positive signal in the market overall — but the question is, how positive?”

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