When Tom Davidson served as a state legislator for a small district in southern Maine two decades ago, he became intimately familiar with the byzantine, bureaucratic, and often, frankly, subpar sausage-making that goes into bankrolling education at a local level. (“There was never a shortage of good ideas, but almost always a shortage of money,” he says.)
So Davidson took his learnings to the private sector and founded EverFi, an education software startup, in 2008. As CEO, Davidson has been rallying some of the biggest names in business behind his cause. Indeed, on Wednesday, EverFi will announce that it has raised $190 million in new funding from a host of magnates to help bring schooling into the digital age. The company last raised $40 million a year ago, news Fortune covered first.
The round marks one of the largest deals to date in the area of education technology, also known as “ed tech.” It is exceeded in size by only two others: German publishing giant Bertelsmann’s $230 million stake in HotChalk, a firm that develops software for online graduate degree programs, and a $200 million fundraising by TutorGroup, an Alibaba-backed (BABA) startup that helps Chinese speakers learn English online. Both of those came in November 2015.
“We’re starting to see for the first time some scale in the space and the investments are reflective of that playing out,” Davidson said on a phone call.
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In addition to catapulting EverFi into the ed tech big leagues, the fundraising round marks the debut deal for lead investor Rise, a newly established social impact investing fund managed by TPG Growth, a private equity firm that has also backed Internet hotshots like Uber and Airbnb. Rise contributed $120 million to the round.
Other new investors included TPG Growth, which contributed $30 million, and L.A.-based MainStreet Advisors. The firms join existing investors Advance Publications, Rethink Impact, Allen & Co, as well as Jeff Bezos, CEO of Amazon (AMZN). Eric Schmidt, executive chairman of Alphabet (GOOGL), and Evan Williams, cofounder of Twitter (TWTR), are investors in earlier rounds.
Nehal Raj, a partner at TPG who leads tech investments, said that EverFi’s business meshes well with the firm’s investment thesis, which involves homing in on an outdated process in a market featuring relatively few competitors. Education has traditionally been “done in a labor-intensive, inefficient way,” Raj said on a call, mentioning the paper-based products, in-person meetings, and binders filled with sign-in sheets and lists of checkboxes, that are its hallmarks.
EverFi “automates all that in a tech-centric way,” Raj added.
Based in Washington, D.C., EverFi has about 200 employees. The company sells software subscriptions to schools and businesses that help teach financial literacy (understanding mortgages and credit, for example), responsible college behavior (involving hazing and alcohol consumption), corporate compliance (like sexual harassment and diversity training), and other programs. Among the firm’s customers are Google, Oracle (ORCL), Whole Foods (WFM), and Airbnb, as well as universities such as Harvard, MIT, and Stanford and 20,000 K-12 schools.
Another part of EverFi’s business involves striking partnerships with organizations that agree to license software on behalf of schools around the country. General Electric (GE), the NHL, the NFL, and Intel (INTC) have all done so.
To date EverFi has raised a total of $251 million including the latest round, its Series D. People familiar with the deal declined to comment on the firm’s private valuation, though one person familiar with the terms suggested that the company had not, at this stage, hit that oft-vaunted billion-dollar milestone.
Davidson said he plans to put money from the latest funding round into international expansion as well as possible acquisitions.
Rise, the lead backer, was cofounded by Bill McGlashan, managing partner of TPG Growth, along with Bono, frontman of U2 and well-known social activist, and Jeff Skoll, an early eBay (EBAY) exec, philanthropist, and film producer. Supplementing that trio, the fund’s board is stacked with philanthropic powerhouses who double as investors, such as Laurene Powell Jobs, Richard Branson, Reid Hoffman, Lynne Benioff, and Pierre Omidyar, to name a few.
Rise is set to announce Wednesday that it is adding three people to its education team as well. John Rogers, a veteran education, healthcare, and social impact investor, will lead the segment. Meanwhile, Arne Duncan, U.S. Secretary of Education under former President Barack Obama, and Rick Levin, CEO of Coursera and former longtime president of Yale University, are joining as senior advisors.
Though Rise has bright-eyed, do-gooder aims, it is far from a charity, in its backers’ view. The fund is expected to deliver social returns—helping underserved communities gain access to educational resources, for instance—along with financial ones, people involved in its management told Fortune.
Davidson said he spent considerable time walking the new set of investors through the fundamentals of EverFi’s business and technology. Bono, for instance, interrupted a few family dinners to go over aspects in granular detail, according to Davidson.
“It was super impressive how in the weeds he was in the deal and what we were building,” Davidson said. “He was hammering me with questions around Title IX school implementations.”
When Davidson’s wife would ask how much longer he might be, Davidson says he would inevitably reply, “I’m still on the phone with him. He’s asking about our rural Mississippi programs.”
Despite the interruptions, Davidson said he loved how involved the Irish rockstar had been in the process. “He is deadly serious about these issues,” he said about Bono. (You can read more about Bono’s business pursuits in this Fortune magazine profile from last year.)
EverFi will no doubt prove a bellwether for Rise’s investment strategy: an attempt to make money while achieving some social good. If the plan works, EverFi could also end up teaching the world a valuable economic lesson—that capitalism can strive for ideals beyond merely increasing shareholder value.
Just don’t call it philanthropy.