Top Ed-Tech Trends of 2010

Investment in Education Technology

This post first appeared on Hack Education on December 11, 2010

We spent a tremendous amount of money on education this year -- over $1330 billion in the United States alone. The majority of this was government expenditure -- some $1080 billion -- and most of the funding came from the local level. But with budget crises and calls for reform, not to mention an explosion in affordable technologies, there have been plenty of opportunities this year for the private sector in ed-tech.

Nonetheless, there's still a certain wariness about education technology in terms of investment and entrepreneurship, as education is stigmatized as a frustrating, bureaucratic institution -- a hard market to crack and a hard place to make money. So little venture capital money has flowed into the education sector, in fact, the National Venture Capital Association does not list it as a category of investment that it tracks.

I can't help but think that that will change, and that we may be at a pivotal point in no small part because of the $360 million deal that occurred in late November this year, when Rupert Murdoch's News Corp acquired a 90% share of the ed-tech company Wireless Generation (a move that closely followed former NYC Schools Chancellor Joel Klein joining News Corp).

Some have scoffed ("ha -- MySpace") and some have panicked ("OMG -- FOX News") to see News Corp enter this space, but there are ways we can read the acquisition as good news. (No, really.) It could be an inflection point for ed-tech, as it's a sign that there are sizable exits to be had may be a boon. And in turn, more attention and interest from smart entrepreneurs and investors. Indeed, as Nextup Research points out in a recent report on ed-tech investments, "'Smart money' is coming into this market like never before. The guys that are always early and usually right like Kleiner Perkins, Sequoia, Benchmark and Andreessen Horowitz, are stepping up big in this space."

Here are a few of the other notable ed-tech investments and acquisitions from 2010:

Tabula Digita -- $4.7 million -- Pearson, Intel, Ascend
DreamBox (acquired) -- $10 million -- Reed Hastings (The Charter School Growth Fund), NeXtAdvisors
Grockit -- $7 million -- Atlas, Benchmark, Integral
ePals -- $6.8 million -- Microsoft
eduFire (acquired) -- Camelback Education Group
MoodleRooms -- $7.2 million -- Kaplan Ventures
Schoology -- $1.3 million -- Meakem Becker Ventures
CourseRank (acquired) -- Chegg
Cramster (acquired) -- Chegg
Wimba (acquired) -- Blackboard
Elluminate (acquired) -- Blackboard
LearnBoost -- $1 million -- Bessemer, Charles River, RRE, Atlas
Inkling -- $1 million -- Sequoia, Kapor, Sherpalo, Felicis
Chegg -- $75 million -- Ace Limited, Kleiner Perkins, Insight
Kno -- $46 million -- Andreessen Horowitz, SV Bank, TriplePoint
Edmodo -- Union Ventures

In addition to these investments, other technology and media companies have also undertaken or expanded their ed-tech initiatives, and a number of philanthropic organizations have earmarked funds for ed-tech. The Gates Foundation, for example, announced a $20 million fund for education technology aimed at improving college graduate rates. And the Google Project 10^100 funded a 3 education projects this year, including Khan Academy.