Houghton Mifflin Backs New Venture
Jim Milliot -- 9/18/00
Joins with Sylvan Ventures and Inception Capital to back online education company

HM's partner,
Sylvan Ventures.
Houghton Mifflin has joined with Sylvan Ventures and Inception Capital to back Classwell Learning Group, an online education company that will provide pre-K-12 teachers with new teaching and learning resources over the Web. Headed by David Cappellucci, who held a number of operational and strategic positions at HM, Classwell will integrate assessment, instruction and teacher training services, all at the site. "This is a marriage of content and tools that should help teachers reduce their class preparation time," Cappellucci told PW.
HM has invested $7 million in cash and $8.8 million in assets for a 32% stake in Classwell, while Sylvan invested $15.9 million for its 32% stake. Inception Capital invested $7.5 million for a 16% interest in the company, and the remaining 20% will be reserved for Classwell employees. HM chairman Nader Darehshori said the publisher sees its investment in Classwell as a way to "extend our brands beyond traditional channels."

HM will license educational content to Classwell, which the new company will adapt and then distribute online. The service will also use Sylvan's properties to provide professional development for teachers, program training and implementation, online management systems for attendance and grade reporting, and a messaging link among teachers, students and parents. In addition, Classwell expects to announce new partnerships later this fall. "We intend to create a service that will let teachers customize, personalize and localize" different teaching modules, Cappellucci said.

The service will launch in January with only a basic amount of offerings. Classwell's premium service will be ready next August. Cappellucci said he expects that Classwell will earn about 50% of its revenues from site licenses to schools, with the balance coming from sponsorship opportunities and e-commerce sales, which will be aimed first at teachers, but which eventually will target parents as well.