Guild Education cofounder and CEO Rachel Romer Carlson is no stranger to celebrity: She worked in the Obama White House, hails from a family famous in Colorado politics and just months after her edtech unicorn was named one of Time’s most influential companies, is set to announce a Series F funding round of $175 million Thursday led by Wellington Management—news that’s being first reported by Forbes.
Still, Carlson, who Forbes has named one of America’s Richest Self-Made Women, can’t help but have a fangirl moment about another investor who’s part of the round: Oprah Winfrey.
“I feel like I learned leadership and empathy watching the Oprah show every day at 4 p.m. as a kid,” says Carlson, whose company plays matchmaker between higher education programs and lower-skilled workers of its business partners—corporations like Walmart, Chipotle and Disney. A fellow entrepreneur made the connection, she says, and “it’s a little bit like manifesting in life. You talk about it enough and finally somebody said, ‘Oh, I know she’s making some investments and could introduce you.’”
Guild is not disclosing the size of Winfrey’s investment—along with those from others that include Citi Impact Fund, an impact investing unit of big bank Citigroup, and Cincinnati-based healthcare group Bon Secours Mercy Health. But as part of the $175 million round being led by Wellington, which also includes existing backers, these investments help bring Guild’s valuation to $4.4 billion, up from a previous $3.75 billion, amid continued demand by employers to reskill and retain their workforce. Forbes estimates Carlson’s net worth, previously estimated at $500 million, will grow to $570 million, based on Carlson’s estimated 14% stake.
The latest funding round—which would rank among the 10 largest in the edtech space over the past year, according to PitchBook data—comes as clouds gather over the state of the economy, with inflation boosting recession talk, tech companies and startups announcing hiring freezes or job cuts and a falling stock market hitting investors’ portfolios. Data from the Labor Department Wednesday showed that job openings slipped by about half a million in April from a revised record high of 11.9 million vacancies the prior month, but hiring demand remained strong.
Downturns have historically spelled bad news for investments in employee training and benefits. But Carlson and at least some of her investors sense opportunity, bolstered by structural changes in the workforce, a shift in how employers view talent and Guild’s plans to invest its latest funding round, which involve expanding into in-demand markets like healthcare and exploring ways to offer platform users access to tools such as loan repayment programs, childcare solutions and career assessments.
“We just hit this massive inflection point where the market—not just the innovative companies, every company—is now saying we have to do this.”
“We just hit this massive inflection point where the market—not just the innovative companies, every company—is now saying we have to do this,” Carlson says, referring to investing in worker reskilling and education benefits. Given “the acceleration we saw in COVID, coupled with the labor market dynamics that are pretty structural coming down the pike,” she says, citing the country’s current immigration policies, number of retirees and skills gap, “for the next two decades, America doesn’t have enough skilled workers.”
Ken Chenault, chairman of venture capital firm General Catalyst and a Guild board member, has been a backer since 2019. He says that in past recessions, some corporate leaders “would cut almost any discretionary item,” but he thinks CEOs “understand a lot better the costs now of losing qualified people … because they fully understand the cost of acquiring and hiring,” especially amid one of the tightest labor markets in decades.
He also thinks Guild’s business model has an advantage: Employers pay tuition directly to higher ed partners, who typically pay Guild as students progress, rather than students paying in full upfront and getting reimbursed. “As a leader, if I don’t know what the outcome is, there are just so many risks that I can take,” says Chenault, who was CEO of American Express from 2001 to 2017. “But [when] I know where the outcomes are and I know what the returns are, then that can give me confidence to make some of the tradeoffs that I would need to make in a downturn.”
Carlson says the new round will help Guild—which has about 1,500 employees, up from 400 in March 2020—continue to meet current demand, as well as expand its reach in additional markets. Guild doesn’t disclose revenues, but Carlson confirmed it hit one investor’s revenue prediction of $100 million for 2020. The total number of employees who now have access to Guild’s platform has grown to nearly 5 million, the company reports, and the number of working adults who use the platform has grown 140% since June 2021.
A late 2021 Bloomberg article raised some questions related to Guild or its growth, such as the diversity of staff and graduation rates of students. Carlson says Guild disagreed with some issues raised in the piece, but acknowledges Guild wasn’t as diverse as it wanted to be and has “dramatically” increased diversity in part by focusing on its recruiting and sourcing strategies.
One of the sectors where Carlson hopes to expand further is healthcare, where she says she’s seen an “explosion of interest” as that industry faces a labor crisis as a result of the pandemic. She notes how healthcare should be more protected than other industries from a downturn. “The rate at which people get sick is not connected to how the stock market trades,” she says. “And so that labor crisis is pervasive no matter what happens in the environment we’re walking into.”
One of those healthcare customers, Bon Secours Mercy Health, began working with Guild last year, knowing it wanted to do more to retain and “upskill” workers into high-demand job categories such as nursing. Like nearly all hospital systems amid the pandemic, Bon Secours has struggled with labor shortages; it had to increase hiring by 40% over the past year.
Today, its turnover has flatlined, says Allan Calogne, chief people officer for Bon Secours Mercy Health’s core operations, and Bon Secours is even investing in Guild. Calogne says turnover is about 4.2 times lower among the cohort of workers that has signed up for a Guild account than those who haven’t, and 52% of new hires have cited the benefit as a reason for taking the job. “This has really recalibrated the notion of internal mobility,” he says.
“Everything a worker would need to know to move into the middle class and then thrive there is what we’re thinking about.”
Carlson says the funding round will also help expand Guild’s “ecosystem” to address issues other than education. “Just like how Vanguard in the ‘80s made it possible for an employer to do a 401(k), we’ve made it possible for companies to fund their employees’ education through a payments layer, a data layer,” she says. Guild’s “payments model,” Carlson suggests, can apply to problems other than education, such as helping workers address student loan repayment or take occupational assessments about career prospects.
Eventually, she says, “the products that sit around education—everything a worker would need to know to move into the middle class and then thrive there—is what we’re thinking about.”
Joe Fuller, a professor who co-leads Harvard Business School’s Managing the Future of Work initiative and was a founder of the consulting firm Monitor Group, says such a strategy would make sense for a company that has had a “very significant impact in removing a barrier to companies offering a plausible [tuition] benefit,” even if it’s still “early innings” on the impact Guild will ultimately have on economic mobility.
Guild, he says, “has developed a really good benefits management capability” that it could use to connect employees with other fractured markets through its portal. “Why wouldn’t that apply to child care? Why wouldn’t that apply to relocation? That’s a really interesting question for Guild going forward.”