Paper secures $343 million CAD with US schools drawn to its remote tutoring tech

Paper doubled the number of students on its platform to two million since last year.

On a mission to “democratize access” to academic supports outside of the classroom, Montréal-based EdTech startup Paper has secured $343 million CAD ($270 million USD) in Series D capital to do just that.

The round comes less than a year after Paper closed a $123 million Series C round. Paper has seen significant growth in that time, doubling the number of students it serves – from one million last year to two million students now.

This is the fourth round of funding Paper has secured since the beginning of 2020, with a surge in digital transformation in education brought about by the COVID-19 pandemic. The Series D financing makes the company Canada’s newest unicorn and brings Paper’s total funding raised to date to around $496 million CAD.

“Historically schools have had a reputation of moving [at a] very slow, glacial speed,” Cutler told BetaKit. “That’s no longer the case.”

The round was led by two new investors to Paper: Sapphire Ventures and SoftBank Vision Fund II.

Institutional Venture Partners, which led Paper’s previous round, also took part as did fellow returning investors Salesforce Ventures, Framework Venture Partners, Bullpen Capital, Reach Capital, Red House Education, and BDC Capital through its Growth Venture Capital Fund.

The $343 million consists of primary and secondary capital, with Paper CEO and co-founder Phil Cutler refusing to disclose the breakdown of the financing. He did note that early investors in Paper sold a portion of their shares as part of the deal, but no investor was fully bought out.

What primary capital Paper did secure is going towards meeting the demand the startup is seeing for its educational support system targeted toward K-12 students.

Paper partners with school districts to provide students with one-on-one tutoring on a live, 24/7 basis. The idea is to provide students and schools with additional support outside of the classroom in order to tackle individual learning gaps and create equal opportunities for students to succeed.

And don’t let Paper’s name fool you, the startup is taking advantage of the rapid digital transformation disrupting school systems.

“Historically schools have had a reputation of moving [at a] very slow, glacial speed,” Cutler told BetaKit in an interview. “That’s no longer the case. We’re seeing innovation enter our schools faster than it ever has before, primarily driven by billions of dollars invested in hardware and network infrastructure to get students online.”

Cutler claimed that, pre-pandemic, around 60 percent of school districts in the US were one-to-one with tech devices for students, but by August 2020, that number had risen to 95 percent.

RELATED: EdTech startup Prodigy Education raises $159 million CAD Series B round

Paper is seeing this trend mostly in the United States, where Cutler says it has 99.9 percent of its customers. There Paper works with a variety of school districts, ranging from some of the largest – like Clark County in Nevada and Florida’s Hillsborough County – to smaller districts as well. Cutler explained that Paper is currently partnered with schools in wealthy and poor communities, emphasizing that the company’s solution works for all types of schools.

That is an important aspect to Cutler, who started Paper after working as a teacher himself and seeing inequities for students.

As a teacher, Cutler noticed that about 10 to 20 percent of his class were getting tutor help, but it appeared to be the wealthiest students.

​​”The other 80 to 90 percent of the students in my classes that needed that help just didn’t have the resources to get it,” Cutler said. “And as a teacher, the expectation was that I assess all of my students the same … evaluate everybody as though they have the same resources, but they didn’t and that didn’t seem equitable or fair to me.”

After launching Paper in 2014 and steadily growing the company over that time, it was the pandemic that proved a boon to Cutler’s business.

Cutler claimed the surge in investment in hardware and network infrastructures made it easier for schools to work with Paper and provide their students with additional support.

As a teacher, Cutler noticed that about 10 to 20 percent of his class were getting tutor help, but it appeared to be the wealthiest students.

But while schools are investing more in tech, the pandemic has only highlighted the inequalities that Cutler and Paper are looking to tackle.

“[Cutler] has tapped into a large business opportunity in a timely way,” Ram Trichur, partner at SoftBank, told BetaKit. “School districts are really lacking in the solution needed to address this problem, and there is nothing today that addresses the problem except for Paper.”

The American education system has long been known for its inequalities, with unequal access to resources spanning district to district and state by state. This has left a significant education gap for those with fewer resources to spend on learning.

Where Paper comes in is it provides what it calls cost-effective resources to schools districts. Those schools then have access to live help and writing feedback for students, as well as insights for teachers aimed at tackling individual learning gaps, and “actionable data” for administrators to inform “strategic decisions.”

Paper is currently working with 350 school districts that span nearly 30 states. But the market opportunity for Paper is huge, with more than 13,000 schools districts in the US alone.

Paper is focused on tackling that market for now, but Cutler noted the company is also interested in working with Canadian schools. However, while Paper has seen US schools embrace its tech offering, the same can not be said for Canada. Cutler told BetaKit that despite many conversations with Canadian school districts, there seems to be a lack of interest in the type of solution Paper offers.

While Paper waits for Canada to catch up, Cutler is hopeful that the digital transformation brought about by COVID-19 will continue and sees opportunities to support schools in different ways. The CEO spoke to using Paper’s tech beyond tutoring to fill school’s gaps in mental health support, college guidance counselling, and after-school programs.

Photo by Giovanni Gagliardi on Unsplash

Meagan Simpson

Meagan Simpson

Meagan is the Associate Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.

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