Dear Friends and Colleagues,
We hope this message finds you and your family healthy and well. The Thanksgiving holiday has come and gone and most likely had a very different feel for you, as it did for us. But nonetheless, Thanksgiving remains a time for reflection and an opportunity for each of us to take stock of what matters most in our lives. As a group, we are grateful for our health, our families, our friends, and for all those that have helped to fight this awful pandemic. In addition, we are grateful for the type of work we do and the difference we can make through the partnership with each Avathon company. In their own way, each and every company is working to solve an important problem across the education and workforce management markets and is led by a team of resilient, thoughtful and determined leaders.
REFLECTIONS
Nearly one year ago at our annual executive summit in Chicago, we launched the Avathon Capital brand and entered 2020 with full realization that no one had 20-20 vision on what lay ahead. We were at the tail end of an economic expansion, riding high on full employment and a decade of robust growth and expansion, but in opposition, geopolitical tensions were high and income inequality and social divide were palpable. However, never in our wildest dreams did we foresee a global pandemic becoming the black swan event of our lives. We last wrote to you in early July, sharing reflections from those first four months of crisis; and now we write to you in early December to do the same. Times are certainly complicated. We are just one month past a monumental election, yet divisiveness persists and control of the Senate remains unknown. As you may have seen, our colleague Jeff Keith shared his thoughts on how Congress could act to materially impact access and equity in higher education.
We can see the light at the end of the tunnel growing brighter with encouraging vaccine news, yet the darkness of winter and a Covid-19 resurgence will continue for the next several months. As investors and business leaders, we carry the weight of navigating and simplifying these often competing and complex issues and we know that having true partners and advisors is more important than ever.
BEYOND THE BUMP (OR SLIDE)
We often think of the letter “K” when reflecting on which segments of the market have benefited and which segments have been challenged because of Covid-19. As some of you may have seen, Jason published a piece in EdSurge addressing this issue in K12 education. Yet when it comes to discussions of mid- and longer-terms impacts, we know that the pandemic has lasted well beyond the time typically required for true behavior change to set in. As we envision a post-vaccine world, we believe the following structural changes are here to stay:
- Whether you believe in DIY or OPM, it is clear that multi-modality has become a necessity for both the delivery of content and/or services. We would expect a permanent share shift to online vs. in-person where efficiency and access are a priority and efficacy remains high
- Experiential learning and enrichment activities aren’t going away; rather they will be more important than ever. We would expect a surge in “learning by doing” offerings as standalone or supplemental to their online counterpart
- Not only will humans need more social-emotional and mental health support coming out of the pandemic, but there will be a greater recognition of the importance of critical “soft skills”
- Global learning will once again thrive in the next decade on the heels of diplomacy, digital platforms, and demand for higher education as a means for mobility and opportunity
- Financial sustainability and demographic headwinds have long been topics in US Higher Education. We would expect an acceleration of school closures absent significant clarity on brand value proposition and student ROI
- College entrance exams (and the student data they provide) won’t magically return as the norm. We would expect new models to emerge that incorporate program matching, configuration, and affordability
- Education to employment fragmentation will be replaced by networked platforms that leverage advanced analytics, technology-enabled support services, and guided recommendation engines
- Employer spend on workforce development will continue to shift from a “buy” to “build” philosophy as both a diversity and inclusion imperative as well as out of necessity to ensure their talent strategy keeps up with their technology-forward business strategy
2021 THEMATIC FOCUS AREAS
The strength of our Avathon community comes from cultivating relationships and celebrating diversity of thought. We welcome your insights and views as we press forward with supporting our existing portfolio with add-on acquisition or commercial partnership ideas. And we would love to collaborate on new investment efforts. Several of our team members are currently working on targeted investment areas and we would love to hear directly from you.
Enrichment and SEL Opportunities for K12 Students – Shawn Domanic
The Next Wave of HE Partnership Models – Joe Shroyer
Next Gen Career Navigation and Employer-led Approaches to Workforce Development – Nishaad Balachandran
The Future of Healthcare Education, Training and Certification – Jeff Keith
Innovative Solutions to Address GRC 2.0: Cyber, Compliance, D&I, and Contingent Worker – Brian Schwartz
Wishing you good health and joy as we head towards the New Year.
The Avathon Capital Team
Fall 2020