It's a great time to be an EdTech startup

Faith Merino · April 18, 2014 · Short URL:

The funding landscape bloomed in 2013 as $616M was poured into EdTech startups

We’re still in the early days of figuring out how to boost learning with technology. K-12 school districts across the country are giving students iPads and Macbooks, but there remain questions about how to appropriately incorporate those devices into the lesson plan. There also remain questions about how effective these tools are in bolstering the learning process.

A study presented last week at the annual conference of the American Educational Research Association in Philadelphia found that students’ reading comprehension was higher when they read traditional print books over e-books—not because the digital format itself is somehow lacking. The paper’s authors, West Chester University professors Heather Ruetschlin Schugar and Jordan T. Schugar, found that too often with e-book apps, kids were skipping over the text altogether to play with the distracting interactive games and features.

The takeaway from this is that technology in the classroom isn’t a bad thing, but it’s not inherently helpful either. It might be more appealing to students, but for the wrong reasons, and more research is needed to determine its efficacy.

That said, there are tons of EdTech startups that are utilizing the latest research into learning methods and doing amazing things with technology. Knewton is using algorithms to personalize education to individual students’ learning patterns and pace. ClassDojo is using avatars to give kids a visual understanding of character development and their own behavior. ExitTicket is using smartphones to allow students to respond to lessons and questions in-class so that teachers can see which ones are struggling, without putting them on display by making them speak in front of the class.

And schools are finding unique ways to implement technology in the classroom to facilitate learning and support teachers. Rocketship Education, a network of charter schools in the Bay Area, use a daily “Learning Lab” period in which individual students work on computers to complete lower-order tasks, like quizzes and remediation. Rocketship schools use programs like DreamBox Learning, TenMarks, ST Math, Equatia, Compass Learning, Accelerated Reader, and even Rosetta Stone for English language learners.

The result: some 90% of students entering Rocketship schools in the bottom two quintiles of achievement move up to the basic level or above within one year. Additionally, Rocketship schools can actually hire fewer teachers, which means they have more money to invest in students and the teachers they already have (by paying them a higher salary than they’d earn in a regular public school).

The flourishing of education technology has led to a veritable boom in EdTech funding. In 2013, EdTech startups raised $616 million across 115 deals, according to the National Venture Capital Association. Compare that to 2008, when startups raised $260 million across 55 deals.

Who is leading the investments? In 2013, Technology Crossover Ventures poured the most money into EdTech with $51 million in a single round raised by online language instruction company OpenEnglish that totaled $65 million. An undisclosed firm invested $41.6 million across 19 rounds, and Accel Partners rounded out the top three with $28.8 million across two rounds.

Other firms investing in EdTech include the Foundry Group with $21 million in one round, Sequoia Capital with $15.34 million across two rounds, University Ventures and Bertelsmann Digital Media Investments with $15.12 million each, Learn Capital Venture Partners with $14.22 million across six rounds, and more.

What does this mean? It means it’s a great time to be an EdTech startup.

Want to get more insight into the future of EdTech? Join us at Vator Splash Oakland May 6-7 for our Future of EdTech panel, which will include info and insights from Imagine K-12 founder and partner Tim Brady, angel investor and board member for NewSchools Seed Fund Wayee Chu, NewSchools Principal Shauntel Poulson, serial entrepreneur and founder/CEO of Versal Gregor Freund, and Rocketship Education manager of school model innovation Caryn Voskuil. 


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Principal at NewSchools Venture Fund investing in seed stage education technology startups.