Online university degree provider 2U acquires Trilogy for $750M to expand into tech bootcamps and training

Published April 8, 2019

As more universities turn to offering online degrees to expand their student bodies by way of cyberspace, one of the pioneers in enabling that trend has made an acquisition to expand into new territory around skills training and continuing education. 2U, which helps build online degree programs for a number of top universities, is paying $750 million to acquire Trilogy Education, which creates online and in-person “boot camps” — continuing education programs — in collaboration with universities to train those already in the workforce with tech skills in areas like coding, data analytics, UX/UI and cybersecurity.

The deal, which is expected to close in the next 60 days, is coming in a combination of cash and shares — $400 million in cash and $350 million in newly issued shares of 2U common stock — the company said. It’s a decent exit for Trilogy, which was valued at $545 million (according to PitchBook) when it raised $50 million in June 2018. Its investors include Highland Capital, Macquarie and Exceed, among others.

2U, meanwhile, has a market cap of $3.85 billion and is publicly traded on Nasdaq.

The acquisition helps 2U consolidate its university footprint, which will get bumped up to 68 from its previous 36. And it presents an obvious opportunity to up-sell and cross-sell: those who are already jumping into building degree programs can diversify into more skills training, while those who have yet to build full degree services but have created skills training programs now might consider how to parlay that experience into degrees — all from one provider, 2U. This also opens more generally a bigger window for 2U to expand into the continuing education market, which it estimates is worth some $366 billion.

It also helps it better compete with other companies that have already built a dual-track approach to online education, building degrees as well as short courses, like Coursera (Udacity and Udemy are among those that have focused on further education).

“[Trilogy Education] is a natural strategic fit and growth driver for 2U that will extend our reach across the career curriculum continuum, deepen our relationships with new and existing partners, drive marketing efficiencies, and open a more direct corporate training and enterprise sales channel for the company. We expect the addition of Trilogy to accelerate our path to $1 billion in revenue by one year from 2022 to 2021,” 2U co-founder and CEO Christopher “Chip” Paucek said in a statement. “Increasingly, universities are attempting to add practical, technical skills to their degrees. We simply future-proof the degree by adding this type of technical competency.”

The presence of commercial companies building educational courses for nonprofit universities, and taking a cut in the process, has seen more than a little controversy. The business spin that is put on education through these programs not only calls into question how and what schools (and their partners) prioritise in the curriculum, but they raise issues around how higher education is priced, and who profits from these degrees — which sometimes can still cost more than $60,000, despite no physical time in classrooms. (There is an excellent dive into the issue here in the Huffington Post, featuring an interview with the co-founder of 2U, John Katzman, who also founded the Princeton Review.)

To be fair, some of the issues around higher education — such as the exorbitantly high cost in some countries, and the fact that it still feels like a largely elitist endeavor with the odds of students gaining acceptance and achieving in top universities still in favor of too-small a privileged subset of families — cannot be completely tied to the development of online learning courses powered by for-profit companies.

And you could also argue that this was bound to be the next step, given how technology has evolved across all of education, and the fact that edtech is not a core competency for many institutions.

One of the potential positives that comes out of online degree programs is that it gives opportunities to a much wider group of would-be students, and mass market is something that Trilogy knows: it has to date already provided courses for 20,000 people and 1,200 instructors across 120 programs, it says, with an emphasis on practical skills to bring up local workforces, and working with universities to build these courses and connecting with big companies — customers include Google, Microsoft and Bank of America — to deliver them.

“By joining forces with 2U, Trilogy Education can empower universities to reach more students, in more places, throughout more of their lives, while driving positive economic impact in their local regions,” Trilogy Education CEO and founder Dan Sommer said in a statement. “Trilogy and 2U share a belief that universities are critical to lifelong learning and to meeting the workforce development needs of local economies both domestically and internationally, and we’re proud to further our mission and continue this important work as part of the 2U family.