Maine venture capital firm North Atlantic Capital Corp. acquired two parts of Boston edtech startup ConnectEDU’s business on Tuesday, mere weeks after filing for Chapter 11 bankruptcy protection.
ConnectEDU, which is in North Atlantic Capital’s portfolio, offers an online portal called CoursEvals that lets universities keep track of course and instructor evaluations. The firm bought both the CoursEvals product and Academic Management Systems Inc. in the deal.
The company cited its inability to pay debt owed to over 200 creditors in late April. The 12-year-old company estimated assets of $1 million to $10 million and liabilities between $10 million to $50 million.
"ConnectEDU was forced to terminate all but the approximately 10 of its approximately 65 employees, with the remaining employees associated primarily with Academic Management Systems, Inc.," according to a press release at that time.
ConnectEDU said at the time it owed its leading creditor, Maryland venture capital firm New Market Education Partners, a whopping $1 million. Other creditors include The New York Times Co. and AOL.
The company raised $10 million in venture funding led by New York investment bank Allen & Co back in 2011. In September 2013, the startup also received a generous $500,000 grant from the Melinda and Bill Gates Foundation to develop an online teaching and learning platform to improve students' literacy skills in the Common Core Standards.
Considering the dire financial shape the company was in, ConnectEDU’s acquisition makes for a bittersweet ending for all parties. It seems like the rest of ConnectEDU's offerings will be dropped. As for those 55 recently fired employees, there’s no promise that they’ll get their jobs back.
But, hey, at least ConnectEDU is no longer teetering on the brink of bankruptcy with $1 million in the hole.
Brian Hopewell, Academic Management Systems’ vice president, said in the release:
CoursEval’s anticipated relationship with North Atlantic Capital is energizing on several fronts. This new partnership with a seasoned financial investor will allow us to bring more resources to bear on innovation and growth, and the opportunity to become a stand-alone company is exciting and motivating for our whole team.
North Atlantic Capital’s interest in the edtech company is a bit of a mystery. The 26-year-old Portland venture firm makes mostly on business-to-business tech investments, like Boston-based Zmags, a SaaS rich media marketing platform.
The deal remains subject to court approval at a hearing scheduled for May 23rd.
