The Ed-Tech Industry Matrix

New Year's Updates

Mon, 01 Jan 2018 10:10:00 +0000

I’ve made some changes to this site, most obviously updating the header image. Thanks to Bryan Mathers. (Why a pigeon? You can read more here.)

Those who look closely will also note that I have also changed the copyright information. No longer is there a Creative Commons license on Hack Education material. This really doesn’t change much, I promise. It just means you have to ask my permission before republishing my work. If you do wish to reprint my writing, please contact me directly.

Annotations, Blocked

Wed, 26 Apr 2017 08:49:00 +0000

I have added a script to my websites today that will block annotations – namely those from Genius and those from Hypothes.is. I have been meaning to do this for a while now, so it’s mostly a project that comes as I procrastinate doing something else rather than one that comes in response to any recent event.

I took comments of my websites in 2013 because I was sick of having to wade through threats of sexualized violence in order to host conversations on my ideas.

My blog. My rules. No comments.

I’ve made this position fairly well known – if you have something to say in response, go ahead and write your own blog post on your own damn site. So I find the idea that someone would use a service like Hypothes.is to annotate my work on my websites particularly frustrating. I don’t want comments – not in the margins and not at the foot of an article. Mostly, I don’t want to have to moderate them. I have neither the time nor the emotional bandwidth. And if I don’t want to moderate comments, that means I definitely do not want comments to appear here (or that appear to be here) that are outside my control or even my sight.

This isn’t simply about trolls and bigots threatening me (although yes, that is a huge part of it); it’s about extracting value from my work and shifting it to another (for-profit) company which then gets to control (and monetize) the conversation.

Blocking annotation tools does not stop you from annotating my work. I’m a fan of marginalia; I am. Blocking annotations stops you from writing in the margins here on this website.

2015 Ed-Tech Funding

Mon, 28 Dec 2015 18:38:00 +0000

I’ve updated the Google spreadsheet detailing the year’s investments and acquisitions in education companies one final time. And I’ve exported the data (in JSON format) too; it can be found in this project’s repo on GitHub.

According to my calculations, these are the startups that raised the most money in ed-tech in 2015:

Social Finance ($1 billion)
Earnest ($275 million)
HotChalk ($230 million)
Social Finance ($200 million)
TutorGroup ($200 million)
Lynda.com ($186 million)
Hujang.com ($157 million)
Udacity ($105 million)
17zuoye and AltSchool (tied with $100 million each)
Xioazhan Jiaoyu ($84 million)
General Assembly ($70 million)
Udemy ($65 million)
Yuantiku ($60 million)
Civitas Learning ($60 million)
NetDragon Education ($52.5 million)
Genshuixue and Varsity Tutors (tied with $50 million each)
Coursera ($49.5 million)
Knewton ($47.25 million)
Ortbotix and Duolingo (tied with $45 million each)
LittleBits ($44.2 million)

Total ed-tech investment for 2015: $4,347,226,000-ish.

I’ve already written a few thousand words analyzing “The Business of Ed-Tech,” but I have a few more thoughts about this particular project.

Note: I’m going to start next year with a new GitHub repo and website where I’ll track on ed-tech funding: the appropriately titled funding.hackeducation.com. I have a better sense of what I did well and what I did poorly this year.

Next year, I’ll track a little bit more data, including the countries of the companies raising money. I also plan to have a one or two word category description for each company (eg “test prep,” “tutoring,” “student loans,” and other things investors seem to love). I’ll also indicate if the company’s products are marketed to schools, teachers, students (and parents), or other businesses. I’ll indicate if the company is pitched at the K–12, post-secondary, corporate training level. And I’ll list the total each company has raised. Hopefully this will become a lot more useful of a project once the data collection gets better.

For what it’s worth, I’m not going to use Google for next year’s project. It’s not been reliable once the size of the file has grown. I’ll (likely) use Excel. I will continue to make JSON files available, and I’ll probably post a CSV regularly as well.

Ed-Tech Funding: November 2015

Fri, 27 Nov 2015 18:38:00 +0000

For almost the final time this year, I’ve updated the Google Spreadsheet where I’m tracking on this year’s startup investments, acquisitions, mergers, and IPOs. JSON files containing the data are in this project’s repo on GitHub. Previous updates – for Q1, Q2, and Q3 – are available via matrix.hackeducation.com.

This month saw some pretty sizable funding rounds, bringing November’s total investment to $1,041,575,000 (second only to October which brought in $1,427,150,000). That’s changed the investment leaderboard quite a bit since I updated things last month:

Social Finance $1,200,000,000
Earnest $275,000,000
HotChalk $230,000,000
TutorGroup $200,000,000
Lynda.com $186,000,000
Hujang.com $157,000,000
Udacity $105,000,000
17zuoye $100,000,000
AltSchool $100,000,000
Civitas Learning $76,000,000

Ed-Tech Funding: The Halloween Edition

Sat, 31 Oct 2015 18:38:00 +0000

Once again, I’ve updated the Google Spreadsheet where I’m tracking on this year’s startup investments, acquisitions, mergers, and IPOs. JSON files containing the data are in this project’s repo on GitHub. Previous updates – for Q1, Q2, and Q3 – are available via matrix.hackeducation.com.

This month – well, the end of September too – saw some pretty sizable investments, so here’s the updated list of the biggest funding rounds so far this year:

Social Finance $1,200,000,000
Lynda.com $186,000,000
Hujang.com $157,000,000
17zuoye $100,000,000
AltSchool $100,000,000
Civitas Learning $76,000,000
General Assembly $70,000,000
Udemy $65,000,000
Coursera $61,100,000
Yuantiku $60,000,000

The Chronicle of Higher Education published a story this week listing the higher ed companies which have received the most funding. I think their story was flawed – it included 2U, for example, but as it IPO’d last year, I’m not clear why it was on the list. Here’s my guess at the startups – and this includes those who sell to K–12 not just to universities – that have raised the most investment (and that have not been acquired or filed for IPO):

Social Finance $1,598,000,000
Hujang.com $187,000,000 *
D2L $165,000,000
Pluralsight $162,500,000
Coursera $146,100,000
17zuoye $135,000,000
AltSchool $133,000,000
Open English $120,250,000
General Assembly $119,500,000
Kaltura $116,100,000

* This is a guess at the total raised. According to the news report, it plans to file for an IPO soon, so perhaps it's ineligible for my list anyway.

Ed-Tech Funding: The Year So Far (Sorta)

Wed, 30 Sep 2015 18:38:00 +0000

I’ve just updated the spreadsheet that I’ve created to track which startups have raised money (from which investors) this year. As I was doing so and writing up this blog post, news broke that Social Finance, a student loan refinancing company, has raised $1 billion – that’s not included in these calculations. And it totally screws up what my analysis. Oh well.

(JSON files with the data – for funding, acquisitions, and mergers – are available via GitHub. Previous updates – for Q1 and Q2 – are available via matrix.hackeducation.com.)

By my accounting, it appears as though funding has dropped off* (dramatically) in the last few months – in dollar figures and deal count:

January: $358 million across 24 deals
February: $430 million across 25 deals
March : $118 million across 16 deals
April: $127 million across 19 deals
May: $179 million across 18 deals
June: $250 million across 21 deals
July: $132 million across 20 deals
August: $77 million across 10 deals
September: $55 million across 12 deals
(Total: $1.7 billion)

* except that whole SoFi round, of course

I don’t want to read too much into the decline. Some of it is my bookkeeping, no doubt – September’s numbers don’t include anything from this week, for example, because I haven't written this week's news roundup. (Sorry. I suck.)

Some of the dip (if there is a dip) could be, as investment analysis firm CB Insights noted earlier this month, that ed-tech startups are taking longer to get to their Series A rounds. Some of it could be the result of the recent slowdown in the Chinese economy (there was heavy investment in Chinese ed-tech startups during the first half of the year).

It’s worth pointing out too that the totals for each month are skewed by a handful of record-setting Series B and beyond rounds. (Like, say, SoFi's billion-dollar round.)

The biggest ed-tech investments so far* this year:

Social Finance $200 million*
Lynda.com $186 million
AltSchool $100 million
17zuoye $100 million
Udemy $65 million
Yuantiku $60 million
NetDragon Education $52.5 million
Genshuixue $50 million
Coursera $49.5 million
Duolingo $45 million
Orbotix $45 million
LittleBits $44.2 million
Instructure $40 million
BrightBytes $33 million

Some "trends" based on these investments: “online learning” platforms that focus on “jobs skills”; learning-to-code via hardware; the privatization of student loans and elementary school. Beyond these big deals, other trends: tutoring, test prep. Stay innovative, ed-tech.

Ed-Tech Funding: The Year (The Data) So Far

Fri, 31 Jul 2015 18:38:00 +0000

Earlier this summer, the tech blog Techcrunch pronounced that “Investors Rethink EdTech As Dealflow Declines.” No one likes tech blog gaffes more than other tech blogs, so there’s been a lot of crowing in the last few weeks as the investment figures from the first half of 2015 have been calculated. It looks like Techcrunch was wrong. According to investment analysis firm CB Insights at least, “Funding To VC-Backed Education Technology Startups Soars 96%.” Investments in ed-tech are at a record high, Inside Higher Ed and Education Week (among others) have observed. Whee.

This week, Edsurge published its report on ed-tech investments in the first half of the year. According to its figures, there were some $1.6 billion in deals from January to June.

Edsurge rightly notes that there are substantial discrepancies between its calculations and those of its competitors.

The Numbers
Source	Deals	Dollars
Crunchbase	111*	$686 million
CB Insights	127	$1.4 billion
Ambient Insights	262	$2.5 billion
Edsurge	161	$1.6 billion
Hack Education	142	$1.5 billion

* thru May 2015

As Edsurge points out, much of this difference stems from the various definitions of “what counts” as ed-tech. (Is SoFi ed-tech? Is AltSchool? Does Fifty Three's funding round count since it says it plans to use the money to enter the education market?) Some of the difference too comes from the challenges in tracking on this data – despite rules requiring investments be made public via an SEC filing, investors and entrepreneurs are not always very forthcoming about their funding. Furthermore, Crunchbase, which is a crowdsourced database, is full of errors – incorrectly applied keywords, for example, that put startups in the education category when they shouldn’t be.

To me, the interesting question isn’t really “what is the correct number?” I’m also not particularly interested in whether it’s a record-breaking six months or not in terms of the dollar size. Record-breaking investment does not mean ed-tech is awesome or innovative. It means there are investors who think they can get rich(er)... or maybe at least see a nice return.

Instead I want to know who’s getting the dollars – new startups or established companies? Much of this year’s record numbers are a result of several whopping investments in Series B and beyond rounds – rounds whose size isn’t really in line with the “typical” funding. (Over half the funding rounds I’ve tracked so far this year were $3 million or less.)

According to my calculations, here are the largest investments of 2015 (that is, those greater than $40 million):

Social Finance $200 million
Lynda.com $186 million
17zuoye $100 million
AltSchool $100 million
Udemy $65 million
Yuantiku $60 million
NetDragon $52.5 million
Genshuixue $50 million
Orbotix $45 million
Duolingo $45 million
LittleBits $44.2 million
Instructure $40 million

As this list indicates and as many industry observers have noticed as well, there is immense investor interest in Chinese ed-tech companies.

Of course, venture capital funding is just one side of the investment equation. On the other side: the anticipated return on investment. By my count, there have been over 60 acquisitions in ed-tech so far this year. Again, some of these are pretty notable: LinkedIn buying Lynda.com; NetDragon buying Promethean; Houghton Mifflin Harcourt buying Scholastic’s ed-tech business; Pearson selling The Financial Times. Rarely are the dollar figures disclosed in these deals, but they're important deals to watch nonetheless.

The steady drumbeat of acquisitions, along with some of these sizable funding rounds for established startups, suggests that the ed-tech startup world is consolidating. (I really hate the description that it’s “maturing.” FFS, ed-tech is over a century old. It's already mature; investors just don't like the shape it's taken until the last five or so years.)

When we think about the consolidation of the industry, we should reflect on it in terms of politics and power, not just finances and funding. Which investors and investment firms are intertwined most closely with education policy and with the call for education reform?

I’ve updated the Google Spreadsheet where I’m tracking on investments, acquisitions, and mergers. I have also made the data available in JSON format:

See, it’s not enough to read someone else’s report and trust that they’ve got it right; you should be able to crunch the data yourself. You can find all of this in a GitHub repo, which you’re welcome to contribute to or fork.

(This is the first year I’ve tracked on this, and next year I do plan on adding more fields so that it’s easier to see if the money is going to K–12, higher education, corporate training, and the like. I’d also like to track which investors are funding startups with diverse founders. Other suggestions welcome.)

Ed-Tech Startup Funding (The Year So Far)

Fri, 01 May 2015 20:35:00 +0000

I’ve updated the spreadsheet where I’m tracking on this year's ed-tech investment. Here are JSON files for startup funding (broken down by investors), acquisitions, and mergers.

It’s only been a month since I reviewed Q1 2015’s ed-tech investment data, but with the acquisition of Lynda.com by LinkedIn this month, I thought all this was worth revisiting – particularly since the crack reporters at Pando wondered if that would “kill the ed tech space.”

For what it’s worth – according to my record-keeping at least, investment was up just slightly in April over March. (But both are down from January and February when massive investments in Lynda.com ($186 million), SoFi ($200 million), and 17zuoye ($100 million) certainly skewed the numbers).

Perhaps the most interesting story to watch this year is the growing number of acquisitions – big deals not just in terms of the dollar figures but in terms of the brands involved. In April, LinkedIn bought Lynda.com for $1,500,000,000, and Houghton Mifflin Harcourt paid $575,000,000 for most of Scholastic’s ed-tech business. These are the largest acquisitions of the year, topping Rakuten's acquisition of Overdrive for $410,000,000 and Pluralsight's acquisition of Code School for $36,000,000.

Among 2015’s Biggest Ed-Tech Investments So Far:

Social Finance ($200,000,000)
Lynda.com ($186,000,000)
17zuoye ($100,000,000)
Yuantiku ($60,000,000)
NetDragon Education ($52,500,000)
Genshuixue ($50,000,000)
Instructure ($40,000,000)
FiftyThree ($30,000,000)
GuideSpark ($22,200,000)
XueXiBao ($20,000,000)

(As you can see half of the top funding rounds so far this year have gone to Chinese online education companies.)

Among 2015’s Most Active Investors So Far:

Kapor Capital
500 Startups
Deborah Quazzo
Great Oaks Ventures
New Schools Venture Fund

Download the data, and devise your own analysis. The GitHub repository is here.

Ed-Tech Startup Funding (Q1 2015)

Fri, 03 Apr 2015 20:35:00 +0000

I’m trying to keep better track of who’s investing in education technology startups this year – if nothing else, it’ll make it easier to write my year-in-review series, come December. Lots of other publications do the same, but their reports often cost money; and I want the data to not only be openly available, but also fully crunchable. (My battle against the PDF continues.)

As we’ve reached April, I’ve updated my spreadsheet with investment and acquisition data from the first quarter of 2015. This is also available in JSON. (If you find any errors or omissions, please submit a pull request or file an issue on the GitHub repo).

(Some of the) Biggest Investments Q1:

Social Finance ($200,000,000)
Lynda.com ($186,000,000)
17zuoye ($100,000,000)
NetDragon Education ($52,500,000)
Genshuixue ($50,000,000)

(Some of the) Biggest Acquisitions Q1:

Rakuten’s acquisition of Overdrive ($410,000,000)
Pluralsight’s acquisition of Code School ($36,000,000)
Terms for almost all the acquisitions were “undisclosed”

(Some of the) Most Active Investors Q1:

Kapor Capital
500 Startups
Great Oaks Ventures
NewSchools Venture Fund

A couple of other observations:

It’s tricky to decide “what counts” as an education technology startup. Social Finance, for example, which offers private student loans, doesn’t make Ambient Insight’s list of ed-tech investments this quarter. SoFi raised $200,000,000, which makes it the biggest investment according to my figures; Lynda.com is, according to Ambient Insight. I’m not sure if FiftyThree made Ambient Insight’s list either. The company raised $30,000,000 this quarter so that it could enter the education market.
According to the data tracked by Ambient Insight, “in the first quarter of 2015, $451.7 million went to learning technology companies operating in China; this was 40% of the total investment that went to companies around the globe.” I need to track more closely on this, as I missed tracking on most of these big funding rounds. (Once I find out investment details, I’ll add them to my spreadsheet.) But on my list too, 3 of the top 5 funding rounds went to Chinese education technology companies.
Roughly half the investment rounds (34) this quarter fell between $1,000,000 and $9,000,000. 11 were between $500,000 and $999,999.
It’s interesting to see who’s not investing in education (or at least, which of the big name venture funds didn’t make any ed-tech investments this past quarter).
Some of the most popular areas for ed-tech investment this quarter: (corporate) skills training, career planning, language learning.

Who's Investing in Ed-Tech? (2015)

Thu, 05 Feb 2015 23:00:00 +0000

Note: Kin has this very smart work-hack where he takes email inquiries – particularly those that he receives again and again and again – and turns them into blog posts. Then, instead of responding to each at length, he can respond with a link to said blog post. I received an email from the Educator Writers Assocation’s Mikhail Zinshteyn, asking about the shape of ed-tech investment, and I decided to answer it here, because I think it’s a question that others have as well.

The question:

I’m hoping I could have you school me on the cottage industry of education market investors and forecasters. GSV Advisors comes to mind, mostly because of its annual summit in partnership with Arizona State University.

Do you know anything about GSV Advisors, as in whether they’re a good reader of Silicon Valley education trends and if they put out material that shines a light on the for-profit K–12, higher-ed education market? And if not them, who else could guide reporters through this black box of education investment?

And finally, who’s monitoring what these firms are peddling and whether anything they’re offering is useful for teachers and students?

In 2012, I wrote an article “Who’s Investing in Ed-Tech?” It remains one of the most popular posts on Hack Education, even though it’s several years old now. It explains a bit how venture capital works, and it lists some of the best known investors in education technology, along with a few of the companies they’ve funded. No doubt its popularity reflects how often folks query “who’s investing in ed-tech?”

Who’s Investing Now?

In 2014, the most active investors in education technology were: NewSchools Venture Fund, 500 Startups, Learn Capital, LearnLaunchX, Kapor Capital, GSV Capital, TechStars, Andreessen Horowitz, the Bill & Melinda Gates Foundation, and Deborah Quazzo.

(From April of last year, here’s the list of the most active ed-tech investors since 2009.)

I’m not sure that the activity of investors necessarily reflects their influence in dictating the conversation about the direction of education or ed-tech. Who shapes the story about the direction of ed-tech? Is it investors? Is it “the market”? Is it the publications that write about ed-tech?

It’s probably worth noting that many of those listed above are also investors in Edsurge, a publication that is probably the most active in narrating the current ed-tech investment and implementation story. Among the investors in Edsurge include the Women’s Venture Capital Fund, Dale Dougherty (of MAKE Magazine), Catamount Ventures, Steve Blank, Lynda Weinman (founder of Lynda.com), GSV Capital, NewSchools Venture Fund, John Katzman (founder of 2U, the Princeton Review, and Noodle), Learn Capital, The Washington Post Company (owner of the for-profit Kaplan), Allen & Company, and Nancy Peretsman.

Edsurge maintains a vast database on ed-tech products (as does Common Sense Media – like Edsurge, this is Gates Foundation-funded).

Edsurge also publishes a regular report on ed-tech investment and market analysis ($). Other sources for investment data: Crunchbase (free), CB Insights ($), Mattermark ($), and the US Securities & Exchange Commission (free).

I’ve also started tracking on ed-tech investments here. The data there is available in a spreadsheet as well as in JSON (the former updated weekly, the latter monthly).

Investment Strategies

Some venture capital firms make their investment theses really clear, publishing blog posts and reports detailing the trends they’re watching and funding. Examples: NewSchools Venture Fund’s blog and University Ventures’s “letter.”

Some individual investors also blog or (god help us) “tweet storm.” Examples: Albert Wenger from Union Square Ventures and Frank Bonsal III from New Markets Venture Partners.

But it’s hard to tell sometimes if investors write about what they’re seeing or what they hope to see (in order for their investments to be successful).

The Politics of Ed-Tech Investing

Education technology investment is closely aligned with education reform efforts. As such, ed-tech investment shouldn’t simply be read in terms of the “business of ed-tech” but is also connected to the “politics of ed-tech.”

A few notable examples of this:

GSV’s founder Deborah Quazzo is on the board of the Chicago Public Schools. Since she joined the board, her investment portfolio companies have seen an additional $2.9 million in business from the district.

Ted Mitchell, the CEO of NewSchools Venture Fund, is now the Under Secretary at the US Department of Education. (His replacement at NSVF: Stacey Childress, formerly with the Bill & Melinda Gates Foundation.) One of NSVF’s donors is David Welch, who bankrolled the Students Matter group that led the legal charge against California’s teacher tenure laws. One of the student plaintiffs in the case was the daughter of a Rocketship employee. Rocketship, a chain of charter schools, is part of NSVF’s investment portfolio. A non-profit organization investing in both charter schools and ed-tech startups, NSVF recently announced it was spinning off its investment wing for the latter into a separate for-profit endeavor.

On a different note, Kapor Capital’s investment strategy is built around “positive social impact.” That really shapes what sorts of ed-tech the firm seeks to support. The company’s co-founder Freada Kapor Klein is also the founder of the Level Playing Field Institute, which “is committed to eliminating the barriers faced by underrepresented people of color in STEM and fostering their untapped talent for the advancement of our nation.” The mission of the LPFI bleeds into a lot of Kapor Capital’s investments. (It is the only VC firm that I would recommend to those looking for ed-tech investment. Confession: Freada and Mitch are two of my favorite people in technology.)

The Stories and The Money that Tells Them

Stories about the future of education and education technology are often crafted by those investing in those very futures. They’re repeated and amplified by those who are invested – in different ways – in the story.

We see this in Bill Gates’ promotion of Khan Academy, for example – a story that was swept up into powerful TED talks and from there into the larger public (media) discourse. We see this in hype about MOOCs (ditto for the TED talk, media talk distribution). We see this in the work of the Clayton Christensen Institute for Disruptive Innovation, which takes a specific stand – shocking, I know – on disruptive innovation and education technology.

We should recognize, of course, that all of this ed-tech investment and all of this ed-tech storytelling doesn’t necessarily come from “industry outsiders” or upstarts. The investment firm Learn Capital, for example, once boasted Pearson as its largest limited partner (a link to the boast now 404’s). Big, established education industry players eat little ed-tech startups. That's how venture capital works.

So we do need to pay attention to who and how these stories of ed-tech funding and ed-tech disruption get told, knowing that these stories feed investment bankers and multinational corporations.

I’d say one of the most powerful storytellers for Silicon Valley’s vision of the future is Marc Andreessen. I can’t tell you what he’s said lately on Twitter because he’s blocked me. But he’s been known to be a proponent of a more automated future, for example. Robots replacing workers. And he’s had a lot to say about the problems he sees with public education: "I wouldn’t want to back a business that’s selling to public schools or characterized by public financing, unions, or government-run institutions. Those institutions are incredibly hostile to change," he told EdSurge in 2011. His firm is an investor in AltSchool, (Rap) Genius, Kno, and Udacity, for what it’s worth.

Of course, I think it’s also worth pointing out that Andreessen was an undergraduate at a public university, the University of Illinois Urbana Champaign, when he took the idea of a web browser – something that the university had developed as Mosaic – and spun the idea into a for-profit company (Netscape). And his partner, Ben Horowitz, is the son of David Horowitz, who campaigned throughout the last few decades against the “liberal indoctrination” of higher education’s liberal professoriate.

All this history matters, when we talk about the present and the future of (public) education.

And when we ask “who’s investing in ed-tech?” that means too that we can’t simply look at the dollar flow. We must consider ideology flow as well. We can’t uncritically trust those who say they’re telling the story of twenty-first-century ed-tech investment. We can’t do so without looking at who’s subsidizing their particular narrative and without questioning why the story of funding and “usefulness” looks a certain way – why it’s focused on venture capital, for example and why it’s focused on startups and how it casts innovation as something that happens outside of education institutions.

Whose story of the future of ed-tech is represented by funding dollars? Whose voice is lost by the flood of dollars into education?