A Montreal company that has emerged as one of Canada’s fastest-growing startups by using instant messaging to tutor students has raised US$100-million, led by Silicon Valley venture capital giant IVP.
Paper Education Co. Inc. has been in the market selling online tutoring for only three school years, but already has 100 U.S. school districts as clients and is available to one million students. Paper says it is on track to reach $50-million in annualized revenue in 2021, up from less than $1-million in early 2019. Prepandemic, the company had 100 tutors and 30 other employees; today it has 1,000 tutors and 130 staff.
“This isn’t just good growth for an educational technology company or a Canadian company, this is amazing growth for any company anywhere in any sector,” said Tom Loverro, general partner with IVP, which previously backed Coinbase, Netflix and Twitter. “Their growth speaks to how much this product is needed. If they can take this to every public school district in America” – there are about 13,500 of them – “it could be a very large market.”
Paper aims to transform tutoring by making the service equitable and accessible to any student, who often need help around the clock. The company doesn’t sell to parents, but to school districts, which pay US$50 to US$100 per student a year. It is available free to students in English, Spanish, French and Mandarin, covering 200 topics.
“I was always bothered by the fact that it was students that could afford tutors that would use tutors,” said Cassie Parham, assistant superintendent with Irvine Unified School District, a Paper client with 42 schools near Los Angeles. “I love the idea of providing tutors for free,” she said, praising Paper for the quality of its tutoring, accessibility and responsiveness. “There’s not many companies I would go out on a limb for and endorse. Paper is one of them.”
Philip Cutler, Paper’s 32-year-old chief executive officer, grew up in privilege in Westmount, Que., the son of a real estate developer and art gallery owner. His grandfather was a judge and his grandmother was May Cutler, an author, onetime mayor of Westmount and founder of Tundra Books, which published The Hockey Sweater. Mr. Cutler attended private school and played football at McGill, where he earned an education degree. In his 20s he started a summer camp and was elected to Westmount Council.
Despite his comfortable circumstances, Mr. Cutler was struck by inequities in the classroom as he began teaching at two schools in Westmount. Only the wealthiest students had private tutoring, but “rarely was it the students who actually needed the help the most” who got it, he said.
He also knew from his experiences tutoring that the process was inefficient. Students might only need a few minutes of help in an hour-long session. Or they might need well over an hour, or help when it wasn’t available. So he left teaching to start Paper, originally called GradeSlam, with developer Roberto Cipriani, the company’s chief technology officer. They took the company through a local accelerator to test whether students would respond well to tutoring by text, which they did.
The service uses the Socratic teaching method, meaning tutors don’t provide answers but prompt students to find them themselves. Rather than sit with one student at a time for set sessions, tutors handle four to five simultaneously and are available on demand. Paper uses artificial intelligence to match students and the best available tutors, and to predict optimal staffing levels based on demand. “We’ve eliminated a lot of the inefficiencies; that has allowed us to pass on those savings,” Mr. Cutler said.
Paper also allows students to run first drafts of essays by tutors. Teachers can monitor all interactions between students and tutors.
Paper scouted out school districts that were early tech adopters but found no takers in Canada, which Mr. Cutler calls “disappointing ... but we have to focus on who wants to work with us.”
That turned out to be California districts – which account for 75 per cent of Paper clients – starting with Laguna Beach Unified School District. “The first time I saw [Paper] I thought, ‘why didn’t I think of this,’” says Michael Morrison, chief technology officer with the district. In a district of 3,000 students, users signed on a total of 1,470 times last year, which was above expectations. Laguna Beach also referred other local districts to Paper.
Mr. Morrison attributed Paper’s success to a pent-up demand for equitable tutoring, plus the flow of U.S. federal funding to schools to help them step up digital learning efforts, particularly during the pandemic. “I know a lot of districts used [federal funds] to do this,” he said.
The financing was also backed by past investors Framework Venture Partners, Bullpen Capital, Reach Capital, Birchmere Ventures, Salesforce Ventures and BDC Capital.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.