By his own account, Varsity Tutors founder Chuck Cohn says the edtech startup had humble beginnings.
It started 15 years ago at Washington University in an introduction to entrepreneurship course. Cohn financed the firm initially thanks to a $1,000 loan from his parents.
Varsity Tutors, which was eventually founded in 2007, has come a long way since those early days. On Tuesday, it became St. Louis’ newest public company.
“I certainly had no idea that it could become this,” said Cohn, reflecting on the company’s origins.
Nerdy, the parent company of Varsity Tutors, on Tuesday began trading on the New York Stock Exchange under the ticker “NRDY.” Its debut on the public market is the result of a business combination, which closed Monday, with special purpose acquisition company (SPAC) TPG Pace Tech Opportunities. SPACs are created with the intent of raising capital through an initial public offering, then using the proceeds to acquire a private company and take it public.
Varsity Tutors debuted initially as a tool to connect people with in-home tutoring and test prep. It has since become what it describes as a "live learning company," offering an array of online tools for everything from immersive online instruction to self-study. Cohn, Nerdy’s chairman and CEO, launched the company as a student at WashU after having difficulty finding a tutor for one of his courses.
“This has been the moment we have been building toward since 2015 when we first raised institutional capital. We now have a durable company with exciting, robust growth vectors and we feel really well positioned for what’s ahead,” Cohn said.
Though Tuesday was the company's first day as a public company, the SPAC that preceded it was already trading on the New York Stock Exchange. Its shares closed Monday at $11.20. By Tuesday afternoon, trading under NRDY, it gained 2.6% to $11.50 per share.
Cohn, along with members of Nerdy’s management team, celebrated the company’s milestone by ringing in the opening bell of the New York Stock Exchange, an experience he described as “completely surreal.”
“My heart was thumping pretty good. The energy in there is incredible. It’s an amazing experience,” Cohn said. “I’m fortunate to have experienced it. I absolutely had the adrenaline pumping as I went up there.”
Nerdy’s deal with TPG Tech Pace Opportunities values it at a $1.7 billion market capitalization and provides the firm with up to $750 million in cash proceeds.
"We'll actually have more than 10 times the amount of cash and capital on the balance sheet to invest in some of these growth vectors to extent that we never could before," Cohn said.
Cohn said Nerdy plans to use that financing to strengthen areas like engineering, product design and data science as it seeks to expand its educational offerings. The company had 530 employees, as of Dec. 31, 2020, saying in a recent regulatory filling that it plans to significantly add to its staff.
The Covid-19 pandemic has marked an evolution for Nerdy, with the company releasing an array of new products since March 2020 as online learning platforms have taken on greater prominence. It has seen an influx of hundreds of thousands of new users coupled with its product development efforts.
“Our team had to come together with the beginning of Covid. We innovated our way through it. I am incredibly proud of what we accomplished and the evolution that has taken place over the course of the last two years. I think it speaks to the team we’ve assembled and then the passion that people have for this particular opportunity,” Cohn said.
Moving forward, Nerdy believes it is positioned to be a key contributor in helping schools and parents navigate the pandemic’s impact on students. It recently launched Varsity Tutors for Schools, a new collection of products that includes live instructional tools meant to provide quarantine support, office hours, tutoring and distance learning tools.
“Students have experienced immense learning loss and we’re in a unique position to help people on an unprecedented scale at a time where it’s incredibly important that we do so,” Cohn said.
Nerdy reported revenue of $32.8 million for the second quarter ended June 30. Its revenue was up 52% year over year and more than $4.5 million beyond its projection, the company said. Nerdy reported a net loss of $336,000 for the quarter, narrower than the $4.1 million loss reported in the year-ago period.
