By Doug Ward
Canvas will soon be absorbed by KKR, one of the world’s largest investment firms.
That is unlikely to have any immediate effect on Canvas users. The longer-term effects – and costs – are impossible to predict, though.
Instructure, the company behind Canvas, has agreed to be acquired by KKR for $4.8 billion. KKR and similar companies have a reputation of laying off employees and cutting salaries and other expenses at companies they acquire. The investment firms look at it another way: They simply increase efficiency and make companies healthier.
KKR also owns TeachingStrategies, an online platform for early childhood education. Earlier this year, it acquired the publisher Simon & Schuster. It also owns such companies as Doordash, Natural Pet Food, the augmented reality company Magic Leap, and OverDrive, which provides e-books and audio books to libraries. (The Lawrence Public Library uses OverDrive’s Libby platform.)
The acquisition of Instructure occurred on the same week that the online program manager 2U filed for bankruptcy protection. The company was valued at $5.8 billion in 2018, according to The Chronicle of Higher Education, but its finances faded as institutions began to rethink agreements in which the company, like similar providers, took 50% or more of tuition dollars from online classes.
The acquisition and the bankruptcy are reminders of how connected education and learning are to the world of high finance. Even as institutions struggle to make ends meet, they spend millions of dollars on technology for such things as learning management systems, online tools, online providers, communication, video and audio production, internet connection, wifi, tools for daily tasks like writing and planning, and a host of services that have become all but invisible.
A multi-billion-dollar market
By one account, education technology companies raised $2.8 billion in funding last year. That doesn’t include $500 million that Apollo Funds invested in the publisher Cengage. The total is down substantially from 2021 and 2022, when investors put more than $13 billion into education technology companies, according to Reach Capital, an investment firm that focuses on education. That bump in financing took place as schools, colleges, and universities used an infusion of government pandemic funds to buy additional technology services.
None of that is necessarily bad. We need start-up companies with good ideas, and we need healthy companies to provide technology services. Those tools allow educators to reach beyond the classroom and allow the steady functioning of institutions. They also make education, which rarely tries to create its own technology, a captive audience for companies that provide technology services.
The companies have used various strategies to try to gain a foothold at colleges and universities. Over the past decade, many have provided free access to instructors who adopt digital tools for classes. Students then pay for those services by the semester. That charge may seem trivial, but students rarely know about it before they begin classes, and even a small additional fee can create financial hardship for some.
The university pays for tools like Canvas, drawing on money from tuition and fees and a dwindling contribution from the state. That makes the individual costs cheaper by spreading them among a larger body of users and making costs to students more transparent. It also commits the university to tens or hundreds of thousands of dollars in spending each year – money that investment firms like KKR see as well worth the investment in companies like Instructure.