From "Refresh Miami" | Nancy Dahlberg | Published August 15, 2023
After several years of doubling and tripling its business, ClassWallet, the digital wallet-based purchasing and reimbursement platform for public funds, announced today it closed a growth funding round of $95 million.
"ClassWallet has fundamentally transformed the way state agencies and school districts disburse funds, By adopting ClassWallet, state agencies no longer have to struggle with the cumbersome, manual processes that have plagued public fund distribution," said Gene Nogi, General Partner of Guidepost Growth Equity. GuidePost led the fundraise, which included Education Growth Partners (EGP) and Lazard Family Office Partners.
Founded in 2014, the Hollywood-based ClassWallet today provides the leading purchasing and reimbursement platform for public funds. Through its patented digital wallet technology, ClassWallet enables customers to disburse funds quickly and compliantly at scale, while automating every step of the purchasing and reimbursement lifecycle.
"The problem we’re solving is helping public agencies get public funds to the right people, and ensure that they’re being used for the right purpose. Managing the compliance around getting public funds to the right people and ensuring that it’s being used for the right purpose is very, very complicated," explained ClassWallet Founder and CEO Jamie Rosenberg, in an interview with Refresh Miami.
"The reality is compliance is often the root cause of why government programs stagnate. Governors and policy makers fund programs based upon perception of demand yet find themselves months or even years later with unspent funds because of the enormous amount of friction associated with compliance-related bureaucracy."
To solve that, ClassWallet is used by state government agencies and school districts across 33 states and has been winning a lot of lucrative contracts in the past year. Rosenberg rattles off a few: "We were just were renewed by the Arizona Department of Treasury to manage a $600 million K12 scholarship school choice program for that state. We just closed in Arkansas to manage their school choice program. The Indiana Department of Treasury just signed ClassWallet to manage a workforce development program for that state. In Texas, we’re managing a program that is helping families with special needs get funding to pay for tutors. The state of Georgia will use ClassWallet technology to manage some of the financial transaction processing for several early childcare programs."
This year, ClassWallet is on track to run about $1.3 billion through its digital wallet system platform, and that’s more than 100% growth year over year, said Rosenberg [pictured above]. About 8% to 10% of the nation’s teachers have a ClassWallet account – including every teacher in Georgia and about two-thirds of Florida’s teachers – that helps them track and reconcile classroom supply and professional development purchases.
With a three-year revenue growth of 1,217%, ClassWallet ranked No. 477 on Inc. Magazine’s 2023 list of fastest-growing private companies in America that was released on Tusday.
ClassWallet has "taken a transformative and thoughtful approach to improving efficiency and transparency around fund disbursement in education and driven positive learning outcomes with significant impact for students – exactly what we look for in the education-technology companies in which we invest," said EGP Managing General Partner Andy Kaplan.
The company has doubled its headcount over the last year, after doubling it the year before. ClassWallet now employs 300 people, about 50 of them in South Florida. With the growth funding, ClassWallet plans to build up its sales and marketing teams and its senior management team. The funding will also go into product improvements, including more business intelligence and artificial intelligence, to create more efficiencies for the client.
Over the next year, Rosenberg and the team are focused on expanding ClassWallet’s state government agency vertical, while continuing to focus on K12 and early childhood education. "There’s still a lot of remedial efforts going on in education as the result COVID and there are still billions of dollars that have yet to be deployed, and that’s a big area of focus for us," he said. Agencies like FEMA and HUD could be a horizontal opportunity for ClassWallet’s technology, too.
"We genuinely believe that in the next three to five years, if you work for a public agency or are getting some sort of budget allocation, or you’re a constituent receiving some sort of benefit or a subsidy or programming through a public agency, you will get that through our digital wallet," Rosenberg said. "We believe that we can change the way government does business and ultimately help public agencies maximize the impact of the dollars they’ve been responsible for."
ClassWallet is homegrown through and through. Rosenberg, a University of Miami alum and former attorney who previously founded the nonprofit AdoptAClassroom in South Florida, launched ClassWallet some nine years ago.
"We got some of our first funding from the Miami Angels and then they came back with follow-on funding when we really needed it," Rosenberg said, referring to ClassWallet’s seed round in 2016. "ClassWallet truly is Miami born and raised. We really couldn’t have done it without the community here."