Degreed Raises $75M to Expand in Growing Workforce Training Sector
Degreed, which helps businesses upgrade the skills of their staffers through an online gateway to learning resources, announced Thursday it has raised $75 million to grow the service and expand internationally.
San Francisco-based Degreed is among the educational technology companies now classified as “learning experience platforms,’’ because they organize staff participation in skills development training and coordinate it with the goals of employers, who are their clients.
Among Degreed’s goals is to help businesses keep up with technological change by offering workers easy access to online courses and other materials that can fill knowledge gaps or add new areas of expertise. While computer programming and other tech-related skills are a big part of the mix, Degreed also offers paths to competency in areas such as forklift operation and floral design.
Degreed says it has more than 220 paying clients, including large corporations such as Unilever (NYSE: UN), Cisco Systems (NASDAQ: CSCO), AthenaHealth, Airbnb, Boeing (NYSE: BA), Ericsson (NASDAQ: ERIC), and Booking.com (NASDAQ: BKNG).
Clients pay software subscription fees for each employee “seat,’’ at the rate of of about $10 to $12 for big companies that enroll large numbers of workers. Currently, the number of paid seats is approaching 5 million, CEO Chris McCarthy says.
The company’s new capital comes from two sources. Degreed raised $35 million in equity funding from new investor AllianceBernstein and previous investors Owl Ventures, Jump Capital, Signal Peak Ventures and GSV Accelerate. Along with that, Degreed secured $40 million in venture debt from AllianceBernstein Growth Stage Capital. Counting both sources of new money, Degreed’s fundraising total has now reached $140 million.
“This round of capital will, if we choose to, drive us through to profitability at some point next year,’’ McCarthy tells Xconomy. But Degreed plans to continue to invest in expansion into regions outside the United States, in possible acquisitions, and in the development of new ways to support employers.
Less than two years ago, Degreed’s revenue from ex-US sources amounted to no more than 3 percent, McCarthy says. Since then, it has grown to 20 percent. The company plans to deepen its presence in the three regions where it already has some traction—in Europe; India and other countries in Asia; and Latin America, he says.
In 2018, Degreed acquired Pathgather, the New York company McCarthy says was Degreed’s most comparable and most sustainable competitor. After integrating Pathgather (terms were not disclosed), Degreed has more than 300 employees.
Degreed is now competing with other companies that are trying to help employees and workers find the educational content that best correlates with gaining work-related skills. Those competitors include EdCast, LinkedIn, and even IBM (NYSE: IBM), according to a recent report by industry analyst Josh Bersin. Another function highly sought by customers of such companies is the measurement of an individual worker’s existing skills, Bersin says.
From its founding in 2012, Degreed has been aiming toward the creation of a skills assessment certification that would be exact enough to function as a credential in the job market, as college degrees now do. That kind of alternative credential is a benefit for learners that is already offered by edtech companies such as Farmington, UT-based Pluralsight and Mountain View, CA-based Udacity, whose courses in programming skills are included among the choices in Degreed’s educational menu for its clients’ employees.
McCarthy says Degreed is continuing to develop a credentialing product called Skills Certification, which currently assesses an employee’s or applicant’s mastery in about 1,500 different skill categories. The skills include social media marketing and the design of user experiences, but not all are tech-related. Other popular categories include creative writing and change management, for example.
Degreed also develops skills assessments of individual employees within a client’s workforce as they interact with its learning platform. These assessments can be used as an aid for employers trying to matching staffers with the job assignments best suited to them. It can also flag opportunities for employees to qualify for new positions by using the educational resources they can find through Degreed’s portal, which lists not only an employer’s in-house training modules, but also formal course sequences from companies like Coursera, as well as videos, articles, and books.
McCarthy says Degreed gains insights from employees’ explorations of those resources—such as frequent hunts for training on topics such as basic business skills and public speaking.
“We see what employees are searching for,’’ McCarthy says.
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