First Quarter In the World of EdTech

Last month, I wrote about the dramatic increase in EdTech investments from VC firms.  To recap, the average amount invested in EdTech companies between 2002-2011 was $260 million per year. That figure surged over $1 billion in the last two years.

TechCrunch wrote an article detailing the state of EdTech. Amazingly, EdTech firms have raised over $500 million in just the first quarter of 2014.  This chart does a great job of showing the trend within the space.

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The article also suggests that the Common Core Standards Initiative has increased venture investments.  Due to the high adoption rate among state school boards, my guess is venture capital firms have realized that if one of these startups can gain momentum in their market, they could also easily spread across the 44 states that have adopted Common Core.  The problem is, schools and even higher education institutions have always been slow in the adoption of technology. School districts have little incentive to innovate and try new things because there is virtually no competition. Most public school students don’t have the option of going to another school, so the school districts are never in danger of losing their customers. Worse yet, school funding is usually limited and getting support for riskier ventures is never easy. For this reason, I have always been more interested in educational startups without these barriers. In my opinion, companies like Udemy and Tynker will be the ones that revolutionize education and disrupt the industry.

The year started off with a bang for educational technology. I’m excited to see what other game changing technologies will emerge in the next few months.

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