Class raised a $30mn Series A round co-led by Insight Partners and Owl Ventures.
Key facts about Class and the deal:
Value Proposition: Class integrates exclusively with Zoom to provide teachers and students a ‘real classroom experience’ through customized features such as attendance, live quizzes, and one-on-one chats
Founded: 2020 / HQ: Washington, USA
Latest Funding Round: Series A | Funding: $30mn (total $46.8mn)
Estimated ARR: pre-revenue (running pilots with ~60 customers)
Class was founded by the co-founder of Blackboard, Michael Chasen, and aims to develop a specialized tool for online teaching on top of Zoom. The company has been backed by several Zoom investors and has raised significant Seed ($16mn, September 2020) and Series A ($30mn, February 2021) rounds despite being pre-launch and just under a year old.
🚀 Why you should really care about this deal:
Class already has significant funding and traction - The demand for the solution is high, with more than 6k institutions from USA, Dubai, Japan and Europe across the K-12, Higher Education and corporate training segments on its waiting list. Class also has a short sales cycle (~1 month as opposed to ~9 months for Blackboard), which is symptomatic of a widespread understanding of the problem statement among customers. In my view, the company has done a great job of segmenting the classroom learning experience and solving for each block with a thoughtfully designed feature - some examples include integration with CMS (content management systems) and interaction design changes that make teachers the center of attention.
Source: Class’ website
Their focus on Zoom also opens up a realistic exit option for the investorsthrough an acquisition by Zoom. Zoom’s heavy focus on scale caused them to drop the ball on building more intricate features over the past months for different use cases (the rise of Hopin in the virtual events space is a testimony to that) and if Class gets significant traction then an acquisition would be almost a no-brainer in our opinion.
🤔 What you would need to believe in:
Class can turn their reliance on Zoom into an asset - The company has no current plans to integrate with Teams or WebEx, and relies heavily on the Zoom SDK. This creates significant platform risk for Class, and they would have to figure out sometime down the line how they can de-risk the relationship. At the same time, however, being built on top of Zoom (and being funded by Zoom’s backers) lends it a sense of credibility among potential customers. It would be interesting to see how Class fares in the post-pandemic world where courses return to being largely offline. I foresee a potential pivot in the company’s future - developing solutions for MOOC-based hybrid teaching formats with universities (as described in our Market Spotlight) or complementing LMS for B2B customers, for instance.
Class can sufficiently alleviate data privacy concerns among customers - Safety issues were widespread with Zoom among consumers, and Class for Zoom has some controversial features such as attention tracking which would involve providing the company access to students’ laptops. Concerns around data privacy and access to minors (via Zoom) could be a deterrent to adoption and the company will have to be airtight in terms of cybersecurity. Targeting teachers and parents as the key customer persona for the purpose of sales could also be a part of the solution (for K-12 students).