Degreed lands new cash for upskilling in a down market

June 16th, 2020

Natasha Mascarenhas

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While the pace of layoffs might be slowing down, an extended recession is forcing companies to get smarter about the way they grow. One way to stay lean and stealthy? Have a team that is constantly learning and equally flexible.

Degreed helps employers do exactly that by connecting employees to learning resources to master new skills.

The edtech startup today announced it has raised $32 million in venture capital in a round led by Owl Ventures, bringing its total known raised to $182 million.

The company was founded in 2012.

At its core, Degreed is an upskilling platform that trains existing employees to enhance their current skill set. It does so by matching employees to lessons around different topics, like remote work or coronavirus. Degreed makes money through a monthly fee for clients and is free for employees.

“It keeps people skilled and employable; nobody should become irrelevant in the future because they lack the right skills,” said CEO Chris McCarthy.

Following its buy of Adepto, Degreed is also building out a career mobility product. Users can look at work opportunities based on current skills and see what they need to work on to get a new role. The skill profile will also let individuals see relevant work and learning opportunities such as jobs, one-off projects or tasks.

Today’s financing is specifically earmarked for the company’s career mobility product, part of the reason it is a smaller sum than previous rounds, says McCarthy.

Like many edtech companies, Degreed said the past six months have included unprecedented engagement from customers; nearly one in seven Degreed accounts have been activated between April and May of this year alone.

The uptick might be a mix of more people looking to become invaluable and more people having fundamentally more time on their hands to work on habits. The high engagement also could be because of uncertainty, according to co-founder David Blake.

“People face uncertainty in their work, but if organizations invest in having better skill insights then they can upskill, reskill and redeploy their people,” he said. The goal is that people can keep their jobs and “futureproof themselves against whatever’s on the horizon.”

Certain skills have been more in demand than others. According to Degreed, communication has seen a 15.5% increase and design thinking has increased 12.8%. Other topics that have seen spikes in engagement include crisis management, resilience, mental health and change management. The bottom line here is that people are interested in working on flexible, human-first skills.

It brings up an interesting question: Can edtech teach non-quantifiable skills like vulnerability? CEO McCarthy says that soft and flexible skills will be “essential” in the future. Like any edtech company, Degreed needs to prove efficacy before it touts success.

Anti-harassment tech Ethena faces a similar hurdle. It is hard to prove whether software makes a difference when it comes to harassment, because so much happens behind the scenes or goes unreported.

Ethena is working on a study right now to see if their software leads to higher retention and less attrition. Another company, MasterClass, is just betting that it can prove value by getting exclusive content for its site from A-list celebrities.

Degreed is going the route of many course providers: certification.

Users can go through a process, called Degreed Skill Certification, where work is vetted, verified and analyzed by data scientists, a panel of experts and machine learning to provide a “ranking.” Users also have to provide references of two people who have first-hand knowledge of the skill and can vouch for accuracy, per the company.

To date, Degreed has connected more than 4 million people at over 250 organizations like NASA and Cisco.