In an era where AI is disrupting everything from content creation to capital flow, investors need more than instincts—they need playbooks shaped by real experience.
Adam Stedham, former CEO of GP Strategies and a seasoned EdTech operator with over 20 acquisitions under his belt, has that experience. In a recent conversation hosted by The EdTech Investor’s Phill Miller, Adam offered a pragmatic yet punchy take on what smart investing looks like in today’s learning and development landscape.
From valuations and leadership strategy to AI resilience and market timing, Adam breaks down what matters most in EdTech investing.
In an era where AI is disrupting everything from content creation to capital flow, investors need more than instincts—they need playbooks shaped by real experience.
Adam Stedham, former CEO of GP Strategies and a seasoned EdTech operator with over 20 acquisitions under his belt, has that experience. In a recent conversation hosted by The EdTech Investor’s Phill Miller, Adam offered a pragmatic yet punchy take on what smart investing looks like in today’s learning and development landscape.
From valuations and leadership strategy to AI resilience and market timing, Adam breaks down what matters most in EdTech investing.
Adam Stedham doesn’t just talk about M&A—he’s lived it. With over 20 acquisitions under his belt, Adam has developed a clear-eyed view of what makes a target company worth the investment. “When I look at businesses, I ask: is it scalable?” he explains.
Scalability is a key trait—especially when founders are still deeply embedded in every process. That’s where risk creeps in. “A lot of EdTech companies are still founder-led, and many are still in startup mode. Sometimes the founder is the product,” Adam notes. For an acquisition to have legs, the company’s value needs to extend beyond the charisma or capabilities of its founder.
This means investors have to look for operational maturity: Are there systems in place? Repeatable processes? Can this business grow without burning out its leadership? If not, you’re not buying a company—you’re buying a personality cult.
Adam also understands that timing isn’t just luck—it’s leverage. “We did a lot of buying during downturns,” he says. Recessions and market slumps, while painful, often create opportunities for well-capitalized companies to snap up undervalued assets.
But here’s the catch: you need cash when others don’t. “The key is to be well-capitalized before the downturn,” Adam advises. Otherwise, you’ll be stuck watching good deals pass by from the sidelines.
So, what’s the real M&A playbook according to Adam? Buy when others are scared, look for scalable models—not personalities—and stay liquid enough to move fast when the market dips. Not exactly revolutionary, but then again, smart isn’t always sexy—it’s just profitable.
Adam Stedham has been on both sides of the table—acquirer and acquired—and if there’s one recurring red flag in early-stage EdTech companies, it’s this: “The founder is the business.” That’s not a compliment.
According to Adam, a founder-led company can appear deceptively strong. Charismatic leadership, energy, and vision might drive early momentum—but investors must ask: If the founder walks, does anything of value remain?
“I've sat down with founders,” Adam said, “and it becomes clear: if they leave, there is no business.” Whether it’s weak infrastructure, no second-tier leadership, or a lack of documented processes, the issue is simple—scalability and sustainability require more than just a visionary.
In Adam’s view, great businesses outlast their founders. And building for that moment—when the founder steps back or sells—is key to maximizing valuation and long-term success.
To prepare for that transition, Adam suggests building depth into the team, formalizing operations, and making sure processes don’t live solely in one person’s head. It’s about institutionalizing value.
In his experience overseeing more than 20 acquisitions, the companies that command premium prices are those that have “real business engines” beneath the founder’s charisma—solid teams, recurring revenue, and scalable operations.
So when evaluating a founder-led company, Adam advises looking past the pitch and asking: Is this person running a company—or carrying it?
AI is here—and it’s not knocking politely. For investors, this means navigating a double-edged sword. As Adam Stedham puts it, parts of the learning and development (L&D) industry are experiencing “tremendous efficiency gains” powered by AI. That’s investor-speak for: margins are getting better, but revenue might be shrinking.
Content creation, for instance, once the golden goose of many L&D companies, is rapidly becoming commoditized thanks to generative AI tools like ChatGPT and Synthesia. “Lower revenues, lower cost, higher margins,” Adam summarizes. Great for operational efficiency, not so great for topline growth.
But don’t write off the sector just yet. According to Adam, “The worst thing that could ever happen to us was status quo.” L&D thrives on disruption—and AI is disruption incarnate. The bigger the change, the bigger the need for retraining, reskilling, and knowledge transfer. In other words, AI isn’t just replacing old processes; it’s creating a whole new class of demand for education and enablement.
So, where should investors look? Adam has a two-pronged approach. First, companies directly enabling the transition—those offering training for new tech systems, like past implementations of ERP systems. Think of them as the consultants and translators of the AI revolution.
Second, those building tools or services targeted at industries already marked for AI-driven transformation. If you’re investing, Adam suggests asking: Is this company helping others adapt to disruption, or waiting to be disrupted themselves?
AI might be an existential threat to some legacy L&D models—but for investors willing to follow the knowledge transfer, it’s also the biggest opportunity in decades.
If you’ve ever wondered why SaaS companies command jaw-dropping valuations while service firms quietly plug away with modest multiples, Adam Stedham has a simple answer: stickiness.
“The biggest difference is the moat,” Adam explains. Tech companies—especially those with embedded platforms—are harder to rip out. That means their revenue is stickier, and sticky revenue is investor catnip. “Services companies can be more easily replaced than technology companies,” he says. Less friction means less defensibility, which translates into lower perceived value.
And that’s the valuation gap in a nutshell: for the same amount of revenue, tech companies typically earn higher multiples than service-based businesses. It’s not always fair, but it is predictable.
Still, Adam isn’t pitching a binary worldview. The real sweet spot? “Technology-enabled services.” These hybrids combine the scalability of service delivery with the retention benefits of tech. You get implementation power and operational leverage—without losing the moat.
That’s particularly appealing in sectors like L&D, where adoption and usage don’t happen magically after the software demo. “You get the stickiness of the technology and the ability to scale the revenue,” Adam notes.
While some founders are eager to tout their 99% ARR model to juice their multiple, Adam sees a stronger case for balance. The lesson here: don’t be afraid of services—just make sure your tech does more than sit on a shelf.
In the race to look good on paper, some EdTech companies are running straight into a wall. Adam Stedham flags one of the biggest culprits: an obsession with revenue per employee. “We’re a victim of our own mental models,” he warns. It’s the kind of thinking that leads founders—and their investors—down a dangerous path.
By pushing for leaner teams to boost revenue per headcount, companies may earn a prettier multiple, but they risk gutting their operational resilience. After all, software doesn’t implement itself, and support tickets don’t magically resolve overnight.
This mindset is often driven by legacy valuation frameworks and overly simplistic metrics that favor optics over outcomes. The result? Investments that look great during the pitch—but fall flat when things get real.
For Adam, the smart money plays the long game. He’s not anti-metric—but he’s all about context. A high revenue-per-employee figure might dazzle a pitch deck, but if it comes at the cost of customer success, product adoption, or long-term retention, it’s a pyrrhic victory.
Instead, he encourages investors to look deeper: Are you building a sustainable business engine, or just gaming the spreadsheet? The best investment strategies, in Adam’s experience, optimize for durability—not just quarterly performance.
In other words, channel your inner Warren Buffett: only invest in companies you’d want to hold if the market shut down for ten years.
Building a company that blends tech and services sounds great on paper—until you try to run one. According to Adam Stedham, it takes a rare breed of leader to pull it off. “Some people are wired to run a tech company,” he says. “Others are wired to run a services company.” Both require distinct muscles—operationally, culturally, and strategically.
The problem? Very few leaders can flex both.
In a mixed-model EdTech business—where ARR meets hands-on implementation—success hinges on knowing when to think like a product manager and when to act like a services operator. That balance is hard to find, and harder to teach.
Adam makes it clear: Investors need to look beyond business models and into the C-suite. Is the leadership team adaptable enough to handle hybrid complexity? Can they scale software without neglecting service delivery—or vice versa?
It’s not just a question of background, but of mindset. The best leaders in this space understand the value of multimodality not just in learning—but in leadership itself.
For investors, the takeaway is simple: Don't just bet on the product. Bet on the person who knows how to operate two playbooks at once—and still sleep at night.
If you’ve tried raising capital in EdTech lately, you know it’s no picnic. According to Adam Stedham, the capital flow has slowed—and startups are feeling the squeeze. “There are people trying to raise money... and they’re struggling,” he notes. Many are now forced to pivot toward strategic exits after exhausting fundraising options.
It’s not all doom and gloom, though. Adam is quick to point out that there are still standout companies bucking the trend—those growing 20–30% annually despite market headwinds. “They’re maintaining their trajectory,” he says, “despite all of the disruption that is happening.”
For investors with capital on hand, that makes now a surprisingly attractive time to act. Distress breeds opportunity—if you know where to look.
So, when does the tide turn? Adam isn’t calling the bottom—but he’s optimistic. “I think [capital flow] will start to go up as things bottom out,” he says. Translation: we’re not out of the woods yet, but the trail ahead is looking a little less rocky.
The key to navigating the next phase? Focus on businesses that are not only surviving but adapting—those with durable models, steady growth, and a clear role in the post-AI learning economy. The timing might be tricky, but as Adam’s track record shows, the real value often lies in getting in before the rebound.
To wrap things up, Phill Miller fired off a series of quick questions. Adam Stedham kept it concise—but revealing:
