Educational Software Startup Tegrity Bought by McGraw-Hill

U.S. frim snaps up Israeli developer whose audio-video products are targeted at American universities.

Guy Grimland
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Guy Grimland

Publishing giant McGraw-Hill announced yesterday it is buying Israeli educational software company Tegrity. The terms of the deal were not disclosed but a few million dollars will change hands.

Avishai Silvershatz

Tegrity's main products are designed for institutions of higher learning, mostly in the U.S. market. They allow universities - and other educational institutions - to record all lectures using video and/or audio, and let students view them anytime and anywhere over the Internet or on any audio or video-enabled device.

Students can also search the video or audio files for specific words and can include Powerpoint presentations.

Over 200 American schools use Tegrity's software and the company's services have been sold as part of McGraw-Hill Education's Connect platform for the past year. The two companies have been working together since 2008.

The company's main investor, the Infinity Group private equity fund of the IDB group, adamantly refused to cite any figures. But Infinity's managing partner, Avishai Silvershatz, said the fund would be making a nice profit. Most of the other investors in the privately-held company, founded 15 years ago, long ago wrote off their investments. Tegrity has raised tens of millions of dollars. Among its early investors was Clal Electronic Industries, the Gemini, Quantum, Yozma and Star funds, as well as Intel. Several Israeli basketball stars also invested in the firm, including Guy Goodes, Oded Katash and Nadav Henefeld. Most of the the investments were made before the Internet stock bubble burst, and Tegrity and the online education market looked like promising investments - at the time.

Tegrity's business model is based on subscription fees, and institutions pay based on actual usage.

The company has changed its product line several times said Silvershatz, but has always remained in the education business. It used to produce smart blackboards for classrooms. Four years ago it switched to the lecture recording business. Tegrity says its products have received very high customer satisfaction ratings, with students saying it made their study time more efficient.

"We are thrilled to become part of McGraw-Hill Education," said Isaac Segal, CEO of Tegrity. "As a company, our mission has always been to help institutions improve student success, and having the resources of McGraw-Hill behind the service will only strengthen our ability to fulfill this mission."

Tegrity has a development center in Yehud and offices in Santa Clara, California. McGraw-Hill said it would keep the company's Israeli developers and facilities.

This is McGraw-Hill's second Israeli purchase. In 2008, McGraw-Hill Companies, through its Standard & Poor's division, acquired Maalot, Israel's largest credit and mutual fund ratings company. McGraw-Hill has more than 280 offices in 40 countries and its 2009 sales were $5.95 billion.

"One of Tegrity's biggest assets is the knowledge and experience of its employees," said Vineet Madan, vice president of Learning Ecosystems at McGraw-Hill Education. "Tegrity's expertise will bolster McGraw-Hill's ability to develop and provide next generation educational services."

A professor of management at Arkansas Tech University, Dr. Genie Black, said: "In addition to serving as a great study tool for my students, Tegrity lets me spend more class time on difficult topics that students can struggle with if they're only reading the text." She added: "While there's no substitute for attending class, students who were absent can easily access classes whenever and wherever they want, and my foreign students were able to review lectures to pick up on information they missed in the classroom."

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