Macmillan New Ventures Buys Late Nite Labs

By Betsy Corcoran     Mar 19, 2013

Macmillan New Ventures Buys Late Nite Labs

Macmillan New Venturesis acquiring New York City-based virtual science lab startup, Late Nite Labs. Both declined to disclosethe price.

Late Nite Labs has been a heraldededtech startup, both a bit older and more substantial than many of its kin. Itssoftware lets students perform "virtual" experiments in physics, chemistryand microbiology by using sophisticated simulation models. Students follow labprocedures--and thanks to the underlying computation model--will get differentresults depending on how well they followed procedures. (Here'sa demo of bacterial growth.)

Some edtech watchers will decry thesale of Late Nite Labs as another sign of the decline of the industry. But thatconclusion would blur important subtles of the edtech market.

After two years of heavy startupactivity fueled by investments measured in tens of thousands of dollars, many companiesare indeed struggling to grow up. "The theory is that a lot of edtechcompanies plateau at the $8 to $15 million [revenue] level and need a majorstrategic partner," notes Troy Williams president of Macmillan NewVentures. "We've even seen a few come through at the $3 million to $10million (revenue) that have already plateaued," he adds.

Some companies will close up shopor be shut down by their investors (such as Alleyoop and likely,Virtual Nerd). Some will make significant changes in their approach or businessmodel (such as Fidelis).Others will sell their assets (such as Lore).Still others will get rolled up by private equity groups (SchoolRack).

Many will brew a veritable alphabetsoup of funding rounds. And many more will try to sell themselves to a largeroperation. The trick is finding a partner who believes in the product, approachand team almost as much as the founders did. All too frequently, the goal ofthe acquiring partners is to generate cash.  

 In June 2012, Macmillan New Ventures laid out its plan tobuild a portfolio of ten to 15 edtech companies over a three to five-yearperiod. Within the past year, Macmillan acquired two edtech companies: EBIMap Works and Sapling Learning. (Its edtech portfolio already included iClicker andPrepU.)

 "We're trying to look at the size the opportunity andcapture companies that have market adoption and can prove efficacy--not justones showing off 'cool' stuff," says Williams. "There's a lot of coolstuff that comes through the door. We're looking for products that genuinelyhelp students learn, when (the companies) are still on that rising tide."

That's what he saw when he took aclose look at Late Nite Labs. "We liked the fully immersive interactivity.These guys have done it well. We felt we bought the best in the marketplace.Everyone else in the simulation space has 'hardcoded' the results."

No canned demos are allowed at LateNite Labs. The company was started in 2006 in Israel by David Jaffe, who spentfive years developing the computational engine that underlies Late Nite Labs.In 2011, with encouragement from Harris Goodman, who became head of businessdevelopment, Jaffe returned to the US. The team scored $1.1 million in fundingfrom a collection of investors including Palm Ventures, Harold Levy, (theformer Chancellor of New York City’s public school system and EVP of Kaplan),Don Burton (former head of Business Development for Disney Education) and investor,Matt Greenfield. They expanded to about a dozen people.

Fast forward to January 2013: Goodmantracked Williams down at the Consumer Electronics Show. Williams liked LateNite's approach and the fact that the company was selling its software tostudents and institutions. (Price of Late Nite Labs? It's $50 per semester forstudents and no cost for teachers. Plus free 24/7 support.) Schools use LateNite labs when they can't afford a traditional "wet" lab. They alsouse it to supplement live lab experiences and give students a chance to eitherprep or review a lab were they've already completed the prep work.  

Late Nite Labs also met finalcriteria for demonstrating growing momentum: surpassing an annualized revenuerate of $1 million.

Harris, Jaffe and the rest of thedozen team members are convinced that Macmillan will let them continue buildingtheir product. "This deal meant we could accelerate what we're doing andbe able to put out the same or better quality products," Harris says."We want to be putting out more science curriculum. We've got biology andmicrobiology. We're building physics with Penn State. We're supposed to doastronomy with Arizona State University. Macmillan gives us the bandwidth to dothis."

Macmillan New Ventures Buys Late Nite Labs

By Betsy Corcoran     Mar 19, 2013

Macmillan New Ventures Buys Late Nite Labs

Macmillan New Venturesis acquiring New York City-based virtual science lab startup, Late Nite Labs. Both declined to disclosethe price.

Late Nite Labs has been a heraldededtech startup, both a bit older and more substantial than many of its kin. Itssoftware lets students perform "virtual" experiments in physics, chemistryand microbiology by using sophisticated simulation models. Students follow labprocedures--and thanks to the underlying computation model--will get differentresults depending on how well they followed procedures. (Here'sa demo of bacterial growth.)

Some edtech watchers will decry thesale of Late Nite Labs as another sign of the decline of the industry. But thatconclusion would blur important subtles of the edtech market.

After two years of heavy startupactivity fueled by investments measured in tens of thousands of dollars, many companiesare indeed struggling to grow up. "The theory is that a lot of edtechcompanies plateau at the $8 to $15 million [revenue] level and need a majorstrategic partner," notes Troy Williams president of Macmillan NewVentures. "We've even seen a few come through at the $3 million to $10million (revenue) that have already plateaued," he adds.

Some companies will close up shopor be shut down by their investors (such as Alleyoop and likely,Virtual Nerd). Some will make significant changes in their approach or businessmodel (such as Fidelis).Others will sell their assets (such as Lore).Still others will get rolled up by private equity groups (SchoolRack).

Many will brew a veritable alphabetsoup of funding rounds. And many more will try to sell themselves to a largeroperation. The trick is finding a partner who believes in the product, approachand team almost as much as the founders did. All too frequently, the goal ofthe acquiring partners is to generate cash.  

 In June 2012, Macmillan New Ventures laid out its plan tobuild a portfolio of ten to 15 edtech companies over a three to five-yearperiod. Within the past year, Macmillan acquired two edtech companies: EBIMap Works and Sapling Learning. (Its edtech portfolio already included iClicker andPrepU.)

 "We're trying to look at the size the opportunity andcapture companies that have market adoption and can prove efficacy--not justones showing off 'cool' stuff," says Williams. "There's a lot of coolstuff that comes through the door. We're looking for products that genuinelyhelp students learn, when (the companies) are still on that rising tide."

That's what he saw when he took aclose look at Late Nite Labs. "We liked the fully immersive interactivity.These guys have done it well. We felt we bought the best in the marketplace.Everyone else in the simulation space has 'hardcoded' the results."

No canned demos are allowed at LateNite Labs. The company was started in 2006 in Israel by David Jaffe, who spentfive years developing the computational engine that underlies Late Nite Labs.In 2011, with encouragement from Harris Goodman, who became head of businessdevelopment, Jaffe returned to the US. The team scored $1.1 million in fundingfrom a collection of investors including Palm Ventures, Harold Levy, (theformer Chancellor of New York City’s public school system and EVP of Kaplan),Don Burton (former head of Business Development for Disney Education) and investor,Matt Greenfield. They expanded to about a dozen people.

Fast forward to January 2013: Goodmantracked Williams down at the Consumer Electronics Show. Williams liked LateNite's approach and the fact that the company was selling its software tostudents and institutions. (Price of Late Nite Labs? It's $50 per semester forstudents and no cost for teachers. Plus free 24/7 support.) Schools use LateNite labs when they can't afford a traditional "wet" lab. They alsouse it to supplement live lab experiences and give students a chance to eitherprep or review a lab were they've already completed the prep work.  

Late Nite Labs also met finalcriteria for demonstrating growing momentum: surpassing an annualized revenuerate of $1 million.

Harris, Jaffe and the rest of thedozen team members are convinced that Macmillan will let them continue buildingtheir product. "This deal meant we could accelerate what we're doing andbe able to put out the same or better quality products," Harris says."We want to be putting out more science curriculum. We've got biology andmicrobiology. We're building physics with Penn State. We're supposed to doastronomy with Arizona State University. Macmillan gives us the bandwidth to dothis."

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