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  • Writer's pictureMatt Kim

Why We Invested in Pearl: Blu Ventures' Strategic Bet on Data-Driven Tutoring Solutions

The academic landscape for students in the US has faced unprecedented challenges due to the COVID-19 pandemic. Research indicates that American students are 5-6 months behind in math and reading, and this learning loss is projected to have an annual impact of $150B on the US GDP by 2040. In response, the US government has allocated over $25B through the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) for programs that mitigate learning loss, and tutoring has been identified as the primary approach. Consequently, the US tutoring market has doubled in size since 2021, leaving educators with the momentous task of onboarding, matching, managing, and meeting federal reporting standards for hundreds of thousands of tutoring relationships each month. 

Enter Pearl, a service that capitalizes on this opportunity, providing states, districts, and educational organizations with a proprietary learning management platform that allows users to onboard, match, manage, and meet federal reporting guidelines for tutoring relationships each month, with the ability to scale up to hundreds and thousands of tutors. 

Blu Ventures recently participated in Pearl's $2 million seed round, contributing $250,000 through their two B2B SaaS investment funds, Core Blu and Innovations.

About Pearl:

  • Pearl targets large-scale tutoring companies and can scale to hundreds of thousands of students. Tutoring companies must keep track of vast amounts of data for each session, such as what sessions occurred, who was involved, and what was taught, and this data is then sent back to government entities in order to continue to receive funding. Pearl provides tutoring companies with a platform to keep track of all statistics and data, aggregating the largest data set in the country related to ARP-ESSER funding and tutoring performance.

  • Pearl actively collaborates with its current customers to develop and enhance the product with new features that meet their evolving needs. This responsiveness to market demands and commitment to innovation highlights Pearl's leadership in the educational technology space.

  • Targeting a broad spectrum of the tutoring market, from state-sponsored initiatives leveraging ARP-ESSER funds to large private enterprise tutoring organizations, Pearl addresses the challenges faced by these entities. Its go-to-market strategy, backed by exclusive partnerships and a focus on underserved needs, positions Pearl as a key player in educational recovery and tutoring services.

Inside Look at Blu’s 5 Ts for Pearl:

Blu Ventures’ investment criteria comprises the 5 Ts: Team, Total Addressable Market, Technology, Traction, and Terms. We spoke with deal lead and Blu Ventures Partner Eric Adler regarding this criteria and why Blu Ventures ultimately invested in Pearl. 

Team: Pearl has a small, yet impressive team with experience in the tutoring field. Additionally, Pearl has investors from Rosetta Stone Sylvan, Laureate Education, 2U, University of Richmond, University of Phoenix, and John Hopkins University. As deal lead and a Pearl board observer, Adler is frequently in touch with Pearl’s CEO, John Failla, through calls and board meetings. Adler states that Failla is a great CEO who knows his business and industry, and has a “functionality that nobody else has.” Failla’s drive and business background as a CEO are what made Pearl an attractive investment to Blue Ventures.

Total Addressable Market (TAM): The COVID-19 pandemic has significantly impacted the education industry, driving peak demand for education and tutoring services. The urgent need to address learning loss has made tutoring the primary solution. In response, the US government has allocated over $25 billion through the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) for tutoring programs. Pearl's go-to-market strategy focuses on targeting organizations that can leverage ARP ESSER funds to launch large-scale tutoring programs. Adler notes that many large tutoring companies need a product like Pearl, creating an attractive marketplace for the company to enter.

Technology: Pearl’s services are one of the first of its kind and are creating a solution to an underserved market. Its technology stands out for its unique capabilities in the market, including its ability to aggregate data for compliance and reporting, setting a high bar for competitors. Pearl's platform is designed to onboard, match, manage, and meet federal reporting guidelines for tutoring relationships on a large scale, providing features such as holistic scheduling, built-in online classrooms, frictionless file sharing, secure messaging, robust reporting, and comprehensive billing & credits. Its nature also gives it the ability to scale to hundreds of thousands of users. While there exist competitors in the market, Adler states they do not have the same comprehensive functionalities that Pearl contains.

Traction: Before the investment, Pearl had already shown promising traction, achieving an ARR of >$100k in their first year. They have since tripled that, demonstrating a strong growth performance. In addition to this, Pearl booked contract revenues in 2022, including the Illinois Tutoring Initiative. This illustrates Pearl's ability to attract and retain large-scale clients, validating the platform's value proposition.

Terms: The deal terms allowed Blu to invest up to $250K of capital in Pearl’s seed round at a $6.2M valuation. The terms included board observer rights and pro-rata rights, ensuring Blu's involvement and potential influence in Pearl's strategic direction. While the terms were fair, Pearl’s value proposition as a company is what truly made the investment attractive.

Pearl additionally stood out to the investment team because of its sticky nature as a product. Adler states that “once [they] get their customers, they’re not likely to change brands.” When a tutoring business begins to utilize Pearl, they base their entire business on the platform, providing them with all of their data. Tutoring services are not likely to change data management services once they begin using Pearl. 

Pearl’s unique offering in an underserved market provides a comprehensive, sleek, and scalable solution to an urgent issue. The US Government’s ARP ESSER funding provides Pearl’s clients with compensation to continue to fund their services. Pearl excelled in all aspects of the 5 T’s framework, making it a desirable investment. Blu Ventures looks forward to further contributing to Pearl's journey, anticipating significant impacts on learning outcomes and the broader educational ecosystem.


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