Ki Mae Heussner at GigaOM reports on an open online course on entrepreneurship in education called Ed Startup 101. During the course, Fred Wilson, a managing partner at Union Square Ventures, gave a little insight into how venture capitalists view opportunities in education technology. Union Square Ventures has invested in education social network Edmodo, Skillshare, Codecademy, and Duolingo.
VC Wilson said that education’s, notorious reputation for bureaucracy and long sales cycles have traditionally turned off VC’s (full video available here). But as startups have attempted new models that skip over institutional buyers to target teachers and students, investors have steadily warmed to the sector, including K-12 education. The blog cites data from GSV Advisors, a Chicago-based investment firm that specializes in education, which says that transactions in K-12 education climbed from just $13 million in 2005 to $389 million in 2011. Funding has been so strong that some have already started asking the inevitable question about whether an ed tech bubble is brewing.
Takeaways from the video
Consumer tech offers plenty of models for freemium ed tech startups –The venture capitalist gave several examples in which consumer startups with a free service eventually found a path to profitability after years of venture backing, including Dropbox and Twitter. In those examples, he said, venture capital played a key role in helping them reach the scale that would make a freemium model work. As the ed tech market expands, he expects models of all kinds – from those supported by advertising to those with enterprise licensing models – to emerge. Both Dropbox and Twitter are problematic to an enterprise network.
- Someone, PLEASE give me a long-term educational reason to give students on-network access to Twitter that outweighs the distraction and cheating factors.
- Dropbox is a potential data theft tool if allowed. We have seen 600 – 800 Mb of Dropbox space on user shares, then they complain when they can’t save their work to the network. Dropbox’s network behavior is annoying. Dropbox wants to check in with the mother-ship thousands of times a day. On our network, we block file sharing with the content filter. When a user installs a Dropbox client on their workstation (don’t get me going about local admins) we have seen 60,000 attempts to connect to the Dropbox mother-ship over the course of a week. Dropbox could improve their product by throttling their checking in – the longer it doesn’t connect throttle down their phone homes.
Sell to the learner first, not the institution
Mr. Wilson says that ed tech firms should bypass traditional education sales channels. “We should compete with the existing education system as opposed to sell to it,” Wilson said. He thinks that entrepreneurs can make faster progress by bringing their tools straight to the learners and the teachers providing instruction. That’s the way Edmodo has gained its strong traction and the approach Codecademy has taken with its after-school program targeting students in schools without computer science instruction. As students and teachers adopt new platforms, Wilson said, the institutions will come around.
Gee I don’t know, sell to the end-user and then force the entire enterprise to change to accommodate a new toy, how very Apple of him. But VC’s don’t have to do the work. Maybe if he had to make AppleTV work on a network or get iMac‘s to regularly log in to Active Directory.
Vendor exclusivity is a bad thing
As more companies turn their attention to online learning and digital education, Wilson said universities shouldn’t standardize with just one vendor but support the range of tools that faculty members choose. Exclusivity, he said, makes vendors “fat and happy” and less incentivized to innovate. “I don’t think there’s any benefit anyone would get by standardizing on one platform,” he said.
I agree with him here, the perfect example is Blackboard. They don’t seem to want to make our life easier. The restoration process is stupid. Bring on Moodle.
Other areas of opportunity in ed tech
The VC says that his firm also thinks there are ed tech opportunities include:
- Credentialing (Grades) Now that plenty of platforms offer courses and instruction, the next step is figuring out whether students are actually mastering the skills and knowledge that they’re setting out to learn.
- He also said he thinks there are opportunities in peer-to-peer platforms, which leverage online communities to reduce the cost of creating curriculum and learning content,
- Vertically focused startups, such as those similar to Codecademy and Duolingo.
rb-
It’s not only my opinion that the freemium model is a bait and switch scam. It sucks users into a product and then does a switch at some time in the future to a pay model. But that is a VC’s take on Ed Tech, what is yours?
Related articles
- Most ed-tech startups suck (venturebeat.com)
Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.