Horse Race

VCs Are Picking Their Horses, Let the EdTech Race Begin

Editor’s Note: first published on edcetera – straight talk on edtech.

In today’s post, let’s have a look at funding and money in education technology. I can hardly imagine a better month for that topic than April 2012. This past month has been remarkable when it comes to money talk, with more than $110 million invested in education companies.

I’m sure that I even miss some nice deals on my list, but let’s concentrate on the most recognized deals and the different segments that angel investors and VCs are investing their money in these days.

Minerva, 2tor, Coursera, StraighterLine

We saw $25 million invested in the much discussed Minerva University by Benchmark Capital, a project that aims to come to life in the university year of 2014 as a fully online elite university. Both the money of “only” $25 million, at least so far, as well as the timeframe of launching in 2014 are ambitious. That said Minerva CEO Ben Nelson managed to attract some big supporters for the project, former Harvard President and U.S Secretary of the Treasury Larry Summers to be precise. I guess we have to wait at least a few months until the news are going to be more precise.

2tor scored another $26 million from all current investors + $10 million revolving credit line from Comerica Bank for their startup which focuses on exclusive partnerships with top tier universities and provides those with custom solutions to bring individual programs online. If you would like to learn more about 2tor I invite you to watch my talk with their CEO Chip Paucek in which we discuss their approach more in depth as well as why an education startup might need more than $100 million in funding.

Stanford computer science professors Daphne Koller and Andrew Ng attracted $16 million for their startups Coursera, which will offer university classes online for free, also in partnership with top schools. From the few information we have so far, the business looks pretty similar to what 2tor does, expect for their business model of course. But it would be very unlikely that one gets backed with $16 million in funding without at least having an idea about how to make money. I hope that I’ll be able to tell you more about Coursera and their plans to change higher education after my talk with the founders on Friday.

It has also been a fine month for StraighterLine; the startup got backed with $10 million. Whereas the two previous startups both focus on partnerships with top schools, StraighterLine positions itself at the complete opposite end of the scale with its offering of low-cost, subscription-based general ed courses for college students.

From the three examples above we can clearly see that industry of higher education is an attractive market to invest in.

Schoology, Treehouse, LearnZillion, Boundless, Voxy

Schoology announced that they raised $6 million in Series B funding for their online learning and collaboration platform that allows teachers to organize lessons more easily and to collaborate with their students. Schoology is far from being the only player in that space, look for instance at companies like Edmodo or Coursekit and of course the 800 pound gorilla Blackboard. However, that’s an established market and traditional investors such as VC companies still like to invest in that space.

Moving on to the popular how-to & coding space, we saw $4.75 million being invested inTreehouse. On the platform, people learn how to develop websites, apps, and launch startups by watching video, doing quizzes and being awarded with badges.

Free video platform LearnZillion received $2.4 million. The company targets grades 3-9 and the content available on the platform align with the Common Core standards. Online educational video is still and has probably become even more attractive thanks to the hugely covered and successful Khan Academy. Let’s say as long as you don’t need to make money with your videos, but there are other more philanthropic ways open to these startups.

Education startup Boundless is in the very interesting but also highly controversial market of e-textbooks. The startup closed an $8 million Series A round for its approach to provide students with a more open solutions to traditional textbooks. We know little about Boundless yet, as the company hasn’t launched its platform, but it already got sued by publishers for potential copyright violations.

My last example for today is a startup in the mobile space called Voxy, which received another $2.3 million in funding. Voxy focuses on the Latino and Portuguese population in the U.S. and helps these groups to learn English through its mobile applications.

What I find especially remarkable are the investments from Benchmark Capital and Kleiner Perkins. These VC firms used to invest in other technology verticals, but now join more education-focused players like LearnCapital to pick their own horses in the race.

If you want to learn more about alternatives to VC and angel funding in the ed space, Christopher Dawson and I had a talk about crowdfunding and teacherpreneurs in last week’s review:ed.

Picture License Attribution Some rights reserved by Claudio Gennari …”Cogli l’attimo ferma il tempo”

Kirsten Winkler is the founder and editor of EDUKWEST. She also writes about Social Media, Digital Society and Startups at