ClassWallet, a digital wallet technology provider for K-12 education, plans to expand its reach beyond that market after raising growth equity about two months ago, said Jamie Rosenberg, CEO and founder.
In November 2021, Rosenberg told this news service that the company was aiming to bring in an advisor for a capital raise in 2022. It ended up working with William Blair and raising USD 65m in March of this year from Guidepost Growth Equity. It had previously raised about USD 9m in a seed round in 2016.
Rosenberg would not disclose revenue but said the company, based in Hollywood, Florida, was already profitable prior to the raise. ClassWallet has 235 employees.
The CEO said the company received a lot of interest but settled on Guidepost, who it had known for several years prior to the process. “We are big believers in our future, so a minority (stake) made sense,” he added.
Guidepost has introduced ClassWallet to several candidates for executive roles at the company, the CEO said. It is looking for a senior HR person, chief operating officer and probably a chief financial officer, he said.
Rosenberg said ClassWallet doesn’t have any direct competitors, though it is part of a large segment – financial technology in the business to business spend management space. “Our niche is compliance-driven decentralized spend,” he explained. “We view our digital wallet as industry-defining technology. It helps public funds reach their intended users for the intended purpose.”
The company manages the complexities around handling compliance. In addition to working with K-12 schools, it oversees disbursement of money from states to pay for scholarships, tutoring and therapy services. It also disperses money for early childhood care and education services. It has a new segment in the pipeline as well – Federal Emergency Management Agency (FEMA) and Housing and Urban Development (HUD) funding – Rosenberg said. The size of the total addressable market in all of these segments is about USD 250bn, he said.
Proceeds of the recent round will be used for hiring of sales and marketing people and investing in the technology to create more efficiencies for clients. Within 12 months, he said the company could evaluate whether to make acquisitions.
ClassWallet experienced triple-digit growth in the last five years, more than doubling revenue every year, he said. The market is huge in terms of “public funding and the lack of appreciation for the complexity of implementation of those policies,” Rosenberg said.
The company was founded in 2014. Rosenberg said he could see an exit through an IPO or sale to a large financial services or education company within three to four years.
RSM provides accounting. Bryan Cave is its law firm. Goodwin Procter helped on the recent capital raise, he said.
