The textbook era is over. VC investment in sector-shifting EdTech innovations, like interactive classroom apps and web-based assessment tools, is mounting. Toronto-based startup Top Hat, under the leadership of CEO Mike Silagadze, is the latest to benefit: the company just netted a $22.5 million investment in a series C funding round, according to Bloomberg.
From Classroom Clicker to Teaching Platform
Top Hat started small. According to the company’s own history, Mike Silagadze and Mohsen Shahini founded it in 2009 in their apartment near the University of Waterloo, two students who wanted to fix the university lecture.
Its first product, under the name Top Hat Monocle, was a classroom response system that let students answer a professor’s questions from their phones. TechCrunch later called that tool Top Hat’s “Trojan horse”: it got the company into lecture halls, which gave it a base to sell much more.
With its cloud-based interactive software that helps educators create and distribute academic content, Top Hat’s technology is currently used in 75% of the top 1,000 schools in North America. The rivals Top Hat’s taking on next? Traditional “overpriced” textbook publishers like McGraw-Hill and Pearson. Backers including Union Square Ventures, iNovia Capital, and Georgian Partners have put millions of dollars of confidence behind this savvy startup.
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Why Investors Warmed to EdTech
Once considered a risky venture, as TechCrunch reports, EdTech has captured the attention of investors and teachers, too. As EdTech Magazine reports, 84 percent of students, faculty, and administrators believe a digital shift will help them conquer classroom challenges.
Selling to schools has a reputation for being slow. Decisions often go through committees, budgets are tight and contracts follow the academic calendar. Top Hat’s approach got around part of that by winning over individual professors first, then building on that foothold.
Taking On the Textbook Publishers
Top Hat moved quickly after the Series C. In June 2017, it raised $7.5 million in follow-on funding from Toronto-based Leaders Fund and launched Top Hat Marketplace out of beta. The marketplace gave professors tools to build interactive online textbooks and course materials, and to share them with other teachers, either for free or for a price.
Silagadze didn’t hide what that meant for the big publishers. “Probably by next year, there will be the realization that we are an existential threat to their business,” he told TechCrunch at the time.
What Happened Next
In February 2020, Top Hat raised a $55 million Series D co-led by Georgian Partners and Inovia Capital, with earlier investors including Union Square Ventures also taking part. At that point, about 2.7 million students were enrolled in courses using its tools, and the company planned to put the money toward digital textbooks and course materials. It had also signed exclusive partnerships with textbook publishers Fountainhead Press and Bluedoor Publishing.
“Higher education is undergoing a sea change brought on by the massive price of a degree, combined with an economy undergoing radical transformation,” Silagadze said in announcing that round.
Today, Top Hat says more than 1,200 North American institutions use its platform, more than 3 million students learn on it, and it has raised $225 million in funding to date. Its product line now includes an AI assistant for educators and students called Ace.
What It Means for EdTech Founders
Top Hat’s path shows the value of a narrow starting point. A simple tool that solved one problem for professors earned the company a place in classrooms, and that trust is what let it move into the much bigger textbook and courseware market later.
It’s also a reminder that taking on incumbents is a long game. The 2017 headlines were about going after Pearson and McGraw-Hill. Years later, Top Hat is still building out the course materials side of its business, one professor and one course at a time.
Frequently Asked Questions
How much did Top Hat raise in 2017?
Toronto-based Top Hat raised $22.5 million in a Series C funding round in February 2017, according to Bloomberg. In June 2017, it added $7.5 million in follow-on funding from Toronto-based Leaders Fund.
Who founded Top Hat?
Mike Silagadze and Mohsen Shahini founded Top Hat in 2009 in their apartment near the University of Waterloo. Its first product, under the name Top Hat Monocle, was a classroom response system students used from their phones.
What is Top Hat Marketplace?
Top Hat Marketplace, launched out of beta in June 2017, lets professors build interactive online textbooks and course materials and share them with other teachers, for free or for a price. It was Top Hat's challenge to traditional textbook publishers like Pearson and McGraw-Hill.
How much did Top Hat raise in its Series D?
In February 2020, Top Hat raised a $55 million Series D co-led by Georgian Partners and Inovia Capital. At the time, about 2.7 million students were enrolled in courses using its tools.
How big is Top Hat today?
Top Hat says more than 1,200 North American institutions use its platform, more than 3 million students learn on it, and it has raised $225 million in funding to date.