Textbook Replacement Startup Company Newsela Raises $100 Million and Becomes a Unicorn

By McKenzie Carpenter Tuesday, March 2, 2021

The COVID-19 pandemic has affected many aspects of life. In particular, the education system has been forced to shift to an all-online learning or hybrid format. Newsela is an educational software as a service (SaaS) startup company that recently received $100 million in funding, achieving unicorn status.

A teacher teaching a virtual class.

About the Edtech Business

Newsela is an educational SaaS startup company that provides online learning materials for K-12. The edtech business platform adds together educational content from third-party sources and personalizes the learning experience. Additionally, the mission of the startup company is to make classroom learning meaningful for every student.

The service provided by the edtech business costs schools anywhere from $6 to $14 per student, whereas textbooks cost schools anywhere from $20 to $40 per student. During the pandemic, the edtech business estimated its revenue grew 81%, with a 115% new bookings surge. In addition, the edtech business also states that it serves 90% of schools, including 25 million students and teachers.

Matthew Gross, CEO and founder of the edtech business, said, “This is a continuation of the rapidly accelerating growth we've been experiencing for years...Education leaders are breaking free from the limits of an antiquated marketplace that locks schools into a static, unengaging curriculum while the world continues to change around us. School administrators are taking this opportunity to future-proof their schools, and they're not looking back.”

Textbook education can become outdated very quickly and doesn’t offer a variety of interactive, engaging lessons like an aggregation of vetted Internet sources can provide. The online learning startup company uses over 14,000 texts across more than 20 genres and features more than 175 publishers, like, the Associated Press, National Geographic, Scientific American, Encyclopedia Britannica, among many others. Instructors are then subsequently able to structure lessons and materials all in one place.

This rapid growth led to the education startup company announcing Friday that the edtech business raised $100 million in funding, reaching unicorn status. The $100 million round of financing for the educational startup company was led by a new investor, Franklin Templeton. Newsela plans to use the funding to develop and “acquire features and content that help teachers plan and execute more effective lessons, advance the digitization of K-12 classrooms, and accelerate its rapidly expanding customer base.”

About the Edtech Industry

This round of funding from Newsela is a small fraction of the immense market that is the edtech industry. In 2019, the global educational technology industry was valued at $76.4 billion and is expected to grow at a CAGR of 18.1% between 2020 and 2027.

The online education industry is proving to be a rapidly growing one. Newsela reported that private edtech companies raised $2.2 billion in 2020 across K-12, higher ed, and workforce education. Edtech companies are of more use now during a global pandemic than ever before. Newsela and other edtech companies are making the transition to online learning for educators, students, and parents less stressful as their purposes are to make online education easier and just as effective as in-person learning.

About the Author

Headshot for author McKenzie Carpenter

McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.

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