The Edge: Behind the $800-million deal for an unsexy ed-tech company

Fueled by key trends in education and tech, Parchment transformed itself over more than a decade into a valuable platform for digital credentials. ADVERTISEMENT [The Edge Logo]( You can also [read this newsletter on the web](. Or, if you no longer want to receive this newsletter, [unsubscribe](. I’m Goldie Blumenstyk, a senior writer at The Chronicle covering innovation in and around higher ed. This week I report on what led to an “unsexy” ed-tech company being acquired for some $800 million. ADVERTISEMENT SUBSCRIBE TO THE CHRONICLE Enjoying the newsletter? [Subscribe today]( for unlimited access to essential news, analysis, and advice. Is even unsexy ed tech worth $800 million? I’ve known the entrepreneur Matthew Pittinsky for more than a quarter of a century. We met around the time he co-founded Blackboard, a pioneering learning-management system, and he’s always struck me as [a thoughtful observer of the innovation landscape](. Yet as much as I appreciate Pittinsky’s levelheadedness in an [ed-tech industry often buffered by fads and hype]( for the longest time I found it hard to work up much interest in his second venture: a company that sent verified transcripts between high schools and colleges. The company, Parchment, seemed, well, boring. I was still envisioning the transcript-sharing technology I had written about in 1995, back when my story on [“Student Records On Line”]( excitedly proclaimed (without irony!) how transcript data could follow students onto “the information highway.” What I wasn’t fully seeing was Pittinsky’s vision for Parchment, and its evolution into a digital platform for sharing a variety of academic and professional credentials. Instructure Holdings, the company known for its Canvas LMS, [bought Parchment for about $800 million]( [in February](. That’s a big bet for the publicly traded company, with annual revenue of $530 million. I was curious about what factors influenced the deal and what they might indicate about the prospects for digital credentials. Spoiler alert: When Pittinsky and I chatted at the ASU+GSV Summit this spring, he said that despite the endorsement embodied in that nice payday, he still sees obstacles ahead. He also shared some warnings for other ed-tech companies, which he thinks too often enter the market with more arrogance than understanding. Worth noting: Unlike the entrepreneurs known to do a little preening at ASU+GSV after closing a big deal, Pittinsky, once a tenure-track professor of sociology at Arizona State University and now [a visiting scholar there]( was as self-effacing as ever as he reflected on his 13-year journey bringing Parchment to this point. Also worth noting: It’s unclear how much profit Pittinsky himself ended up with in the deal. Over the years, Parchment raised about $66 million from investors, according to Crunchbase, and then in 2020, a private-equity firm called Brentwood Associates bought the company, keeping Pittinsky as chief executive. That sale price and Pittinsky’s ownership stake were not disclosed at the time, but Matthew Tower, who writes the [ETCH newsletter on the ed-tech industry]( told me he would guess Brentwood paid “substantially less” than the $800 million it got from Instructure, and so likely “scooped up a healthy portion of the returns.” But I’m sure Pittinsky made out OK. Credit all that to what he calls his philosophy of “radical incrementalism.” Parchment began when Pittinsky bought a company called [Docufide]( which sent high-school transcripts to colleges, in 2011. He had a bigger vision. “I didn’t get back into ed tech to lead a transcript company,” he told me. And he agreed that “unsexy” was a fair description, at least at the start. What he wanted to build was a lifelong credentialing platform, and Docufide was “the chassis.” The idea of a platform that can manage and exchange credentials doesn’t sound that unusual now, but it was at the time. Credits, then the main currency of higher education, were mostly seen as an administrative record that belonged to the institution granting them. Pittinsky envisioned a system where “the learner was at the center.” But before he could get to that point — to what today we call comprehensive learner records and learner and employment records, or LERs — Parchment grew from Docufide not only to exchange transcripts, but to digitize them, then to transmit other kinds of credentials, like badges and certificates. In the Brentwood deal, Parchment merged with Credentials Solutions, adding to its capacity. Three broader forces propelled Parchment’s value, Pittinsky said. - Rising interest in blockchain technology. While that system isn’t part of Parchment’s technology, the concept advanced the notion of individuals holding greater control over their own records and resources. - Colleges’ continuing quest for enrollment growth. That has made leaders more willing to explore nontraditional offerings that aren’t necessarily represented with standard grades or as typical degrees. “People are willing to be more experimental,” he said. - Higher ed’s need to demonstrate relevance. A world in which “everything needs to be legitimized” has given Parchment a tailwind, Pittinsky said. But actually, he doesn’t fully welcome that. He’s uneasy about feeding a movement that might be more about credentialing than learning. He still prefers that students “be intrinsically motivated” to pursue education. Despite that concern — and [some skepticism I’ve heard from others about the importance of digital credentials]( — the momentum for them continues to build. In May, [ETS announced its acquisition of the nonprofit Mastery Transcript Consortium,]( which focuses on high-school transcripts. And in April, the American Association of Collegiate Registrars and Admissions Officers, along with nine other higher-ed groups, [announced the Learner and Employment Record Accelerator coalition](. In the end, neither advocacy by higher-ed groups nor a company’s big-ticket acquisition will determine whether learner records really get traction, Pittinsky said. It’s whether employers care about them, and rely on them in hiring. The records’ value, he said, “is paced by the demand side.” Clearly, Instructure believes that day is near. The next couple of years will show if it’s right. In the meantime, here’s what other ed-tech companies could learn from Parchment’s slow-but-steady march, Pittinsky said. Patience was key. From the start, he said, “I didn’t try to build the company that I wanted it to be. I started where the market was.” And transcripts were the digital currency of the time. Too often, entrepreneurs and investors create companies that are “disconnected to the needs of the market,” he said, and then “they blame the education market for not being visionary enough.” I’ve seen plenty of that myself. Pittinsky and his early investors had the temperament for his “radical incrementalism.” Many don’t. Got a tip you’d like to share or a question you’d like me to answer? Let me know, at goldie@chronicle.com. If you have been forwarded this newsletter and would like to see past issues, [find them here](. To receive your own copy, free, register [here](. If you want to follow me on X, [@GoldieStandard]( is my handle. Or find me on BlueSky Social, which I just joined with [the same handle](. 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