Academic Merit, a Portland-based software company tackling the education technology space, has raised $600,000 from investors to help it ramp up product development and expand its capabilities.
CEO Steve Shapiro described the raise as a follow-on seed round. In total, the company has raised just north of $3 million from investors over the past three years, he said.
The company is headquartered in Portland, though Shapiro is based in Boston. It currently has 18 employees spread between the two states.
Academic Merit currently offers three software products that focus on professional development for teachers and student writing assessment—FineTune, Assessments21, and Literary Companion. Shapiro said the $600,000 is being used to increase its product development efforts as the company works with a significant business-to-business (B2B) customer that’s looking for additional features. Shapiro said the product enhancements will not only make the company’s products a “much larger proposition,” but could also enable it to potentially enter other verticals.
While the potential was there to self-fund the product development, he said the need for speed necessitated selling equity to investors.
“You never want to [sell equity], but we’re in a market where things move quickly, so we need to move quickly to be able to execute on our strategy,” he said.
Part of that strategy is to continue to shift focus towards a B2B business model as opposed to a direct-to-consumer model, which is how the company was founded back in 2004 by Ogden Morse, who at the time was an English teacher at Falmouth High School who wanted to develop a product to help other teachers with professional development. Shapiro, who joined the company two and a half years ago, said Academic Merit is now working with larger organizations like education publishers and large testing services like The College Board, which administers the SATs.
The company is on track this year to post revenue of roughly $2 million, “which is exponential growth from previous years,” Shapiro said. He also hopes 2017 will mark the year the company becomes profitable.
“We’re very, very close to that,” he said.
This most recent investment round included seven investors, according to paperwork filed last month with the U.S. Securities and Exchange Commission. Shapiro said all but one investor in this current round was an existing investor.
One of those existing investors was Maine Venture Fund, which has invested a total of $350,000 over two rounds, including this most recent one, according to John Burns, MVF’s managing director.
“What we like is they’re a sound platform that addresses an EdTech need that has been underserved—writing,” Burns tells Maine Startups Insider. “They have an increasingly deep relationship with The College Board, who is interested in … finding ways to make essay grading more consistent. They continue to build other strategic partnerships as well. They are also led by a very smart and dynamic CEO, who is deeply immersed in the Boston EdTech scene as a Venture Partner at LearnLaunch’s accelerator, a strong CTO, well-respected founder, and a well connected and smart Board of Directors.”
Burns continues: “EdTech is still fraught with risk, but the opportunities are huge, and I like a ‘platform’ company.”
Other investors in Academic Merit include Maine Angels and the Red Bear Angels, an angel investment group made up of people with a Cornell University affiliation that invest in companies with a strong Cornell affiliation. Shapiro is a member of the Red Bear Angels, according to his LinkedIn profile, and received an undergraduate degree and an MBA at Cornell.