How 2 first-time founders bootstrapped a coding school and landed an $18.75M exit

When it came to selling their coding school, co-founders Jake Hadden and Max McChesney didn’t rush it.

After launching DigitalCrafts in 2015, they had conversations with several potential buyers through the years before officially going to market in January 2020 — a time when several key competitors were getting scooped up at higher-than-normal valuations.

But instead of sprinting to sell and capitalize on these favorable market conditions, they stayed patient and focused on finding the right buyer.

“I was pretty surprised that our key banker didn’t give up on the effort, because their fee was 100% contingent on us selling,” Hadden said. “There were ups and downs throughout the process, but in the end we found the right home for DigitalCrafts.”

Around March 2021, they connected with Perdoceo Education Corporation, which ultimately acquired DigitalCrafts five months later for $18.8 million.

What set DigitalCrafts apart from other coding schools

Hadden and McChesney graduated from the University of Georgia in 2010.

Hadden, with a degree in banking and finance, worked in management consulting before running an innovation accelerator.

“Through working in those roles, I realized I have a passion for helping other people achieve their goals,” he told CourseReport. “That’s what drew me towards my partner Max and this particular educational model.”

McChesney had worked at a couple of startups and founded Expat Assistants in 2013. The outsourcing service connected U.S. businesses with American professionals who lived in Latin America, offering “domestic talent at offshore prices,” McChesney described on LinkedIn.

In 2014, McChesney decided to expand his coding knowledge and attended a coding school. There, he became a big believer in the accelerated learning model — but “saw an opportunity in Atlanta for a program with a different approach to culture, curriculum, and duration,” Hadden explained to CourseReport.

The co-founders decided to establish the school in Atlanta for a few reasons. It was their home, so they had an established network of friends, family and investors. Hadden also noted Atlanta’s exploding demand for tech jobs, and, unlike tech hubs like Silicon Valley, the cost of living was relatively low.

At the time, they stood out from other web development schools already popping up in the area because they taught different programming languages. DigitalCrafts taught Javascript and PHP, while other training programs focused on Ruby and Ruby on Rails. The idea was that graduates would face less job competition. They also decided to make the bootcamp longer than the popular eight- and 12-week programs.

After launching courses in Atlanta and online in 2015, DigitalCrafts opened its second campus in Houston in fall 2016.

As DigitalCrafts grew, Hadden said their biggest challenge was being first-time founders and people managers. “We tried our best to learn quickly, but we were honestly just doing the best we could each and every day,” he said.

For example, they built a team without considering its culture — “which led to a bad culture,” Hadden said. “We lost a few key team members.”

Initially, they assigned a team member to help build the company’s culture with a $5,000 annual budget. The effort evolved into hiring a head of people, who began hosting a three-day annual retreat with team members flying into Atlanta for workshops and team activities.

“One of the best decisions we made was to actively invest in our company culture,” Hadden said. “The company became much more to everyone once we started investing in our culture and people. It was a blast to be a part of the team during those final years.”

DigitalCrafts remained bootstrapped, and by 2019, it was named one of the fastest growing education companies by Inc. 500.

By 2020, DigitalCrafts planned to open its third campus in Tampa, but COVID cancelled the first classes, and they ultimately had to scrap plans.

But even with this setback, DigitalCrafts projected $7 million in revenue in 2021. By then, they’d grown to around 25 full-time and 35 part-time employees and had trained more than 1,200 aspiring software engineers.

Patience pays: Finding the right buyer for DigitalCrafts

Hadden and McChesney became interested in selling DigitalCrafts when a number of its key competitors got acquired within a short period of time around 2019 and 2020.

At the time, the pandemic fueled a spike in online learning — which DigitalCrafts offered in addition to its in-person component — and there was a big hiring boom in tech, so it made sense these bootcamps were in demand.

Hadden had built a strong relationship with two investment bankers who were focused on education and ed-tech companies over the past few years. They had introduced the co-founders to several interested buyers, but nothing came of those conversations.

It was January 2020 when they decided to officially go to market with investment banking firm Macquarie Capital. But they wouldn’t sell for another year and a half.

“As soon as we started the journey, COVID struck,” Hadden said.

Despite these bumps, Macquarie stuck with DigitalCrafts and helped them find the right buyer: Perdoceo Education Corporation, an education company that provides accredited online and hybrid postsecondary education through for-profit institutions, including Colorado Technical University and the American InterContinental University System.

Hadden and McChesney hadn’t been familiar with the company, but they were drawn to its operating model, which was different from other interested parties.

“They operate like a holding company,” Hadden explained. “For example, they take all the hard work off your plate — legal, accounting, finances, compliance, marketing — and let the experts (us in this case) really focus on growing a great business with an exceptional offering. We didn’t have to change our company name, logo, branding or let anyone go at the time of the deal.”

With the biggest hurdle out of the way — finding the right buyer — DigitalCrafts was acquired on Aug. 2, 2021 for an initial $16.3 million cash and a payment of up to $2.5 million in early 2024, according to the buyer’s SEC filing. That works out to a sale multiple of 2.7x projected revenue.

Hadden and McChesney were incentivized to stay on for 2 to 2.5 years after the transaction. Hadden ultimately stepped away in July 2023 and McChesney followed in March 2024.

Hadden went on to launch Engineer Up, which provides ServiceNow consulting and full-stack software engineering for companies.

McChesney took a year off to travel and spend time with his family, then began writing a historical novel.

“I’m thoroughly enjoying the opportunity to explore my more creative side,” he shared.

Hadden encouraged founders who might be interested in selling to start building relationships with advisors and bankers and having conversations with potential buyers early. It was these relationships and conversations — and the co-founders’ patience — that ultimately led them toward an 8-figure sale.