Anyone who has received any military type education or training will certainly appreciate a driver or combat engine that would be able to read your route, turn left or right, not make glaring errors and, in the case of artificial intelligence, make automated decisions. Nowhere is this clearer than in the realm of automotive technology.
What Is Online Learning Machine Learning
One area that has become extremely interesting for investors over the last several years has been the automated learning machine learning (ALM) market space. Everything from classroom learning programs to bank app developers are looking to apply this area in combination with AI to enhance and improve the user experience.
In one of the largest space deals to date (already) which gives some indication of things to come (if not already here), Bridgepoint Education, Inc. (BPI) announced recently that it has acquired ALM tech innovator – Inceptia. Bridgepoint took a chance on the technology and also the people, as Inceptia has global scale in the business of providing ALM solutions.
The San Diego-based Bridgepoint offers educational services including career planning, admissions, on-boarding, and online study and learning. The company has a slew of different divisions catering to a variety of industry segments. Some of these services include the two that had the most to offer using AI – learning analytics and business analytics.
Currently the largest ALM solution provider is Aspiring Minds, but it is not the only one. Online learning leader Coursera also makes use of ALM within their business. AlumniBuddy is also an ALM solution provider. ALM is becoming a vital component in large academic institutions such as MIT which also has its own flavor of ALM. This space will no doubt grow with more entrants.
The opportunity for the future is worth noting as the market has potential. ALM is used to predict student performance, identify motivation, student changes, and offers improvements in teaching and learning. The market for this kind of tool is huge and gets bigger each year. ALM offers employers valuable tools to help gain insight into people’s past experience and contribute to the current environment. ALM is also at the forefront of financial analytics as companies use it to gauge employees’ future potential. ALM and AI marry to help significantly improve the user experience of both the applications and the overall outcome of these courses.
Some schools are rolling out ALM software to drive the effectiveness of their classroom methods. Some schools are using ALM to train teachers to adapt their teaching methods based on the student’s interests and abilities. While student outcomes are a large part of ALM, it is most relevant for the employer because employees use ALM to measure their performance. When companies consider ALM and AR-based training, they look at the greater impact on their own needs and expenses versus AI-based enhancements alone. This all lends itself to a very powerful use case that could grow over time.
Bridgepoint took a risk with Inceptia for a number of reasons. Inceptia is a global business, so it is likely that they invested in the company for that reason. They took a risk in that Inceptia was homegrown (none of Bridgepoint’s other divisions came with ALM technology) and thus is a little on the early side. Inceptia has won larger financial services deals and training leads. They also had two national associations (credit unions and colleges) as well as four global clients.
The price tag for Bridgepoint was very small with Inceptia garnering approximately $40M pre-money. Some background might be in order as the majority of cash (around $32M) came from the company’s $140M IPO priced around the beginning of the year (but IPO priced later in 2018). As in any industry, the industry certainly has its lumps, as Bridgepoint has seen several of its divisions go through quite a bit of transformation this year.
Overall, Forrester Research sees the market for ALM software hitting $5.5B in 2025. That sounds big but the ALM players are tiny compared to the old world of corporate banking and other cash flow intensive activities that target large-scale clients. Between these niche players that now occupy the ALM space and very large, well-funded platforms such as Coursera, ALM has a number of attractive growth platforms. And the opportunities for ALM growth lie at both the educational and institutional ends of the spectrum. This investment makes a lot of sense for Bridgepoint, as it has huge cash balances and experienced a very bumpy course this year.
ALM continues to be a source of interest as ALM lures more companies and integrations continue to be made.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.