Industry Focus: Funding change in education

Education is certainly an industry prime for innovation, disruption and change. However, education is a different beast, with a denser set of stakeholders and a complicated definition of success. According to CNBC, $1.3 trillion is spent on education annually. Let’s face it, giving every child an iPad and pumping billions into the system won’t improve test scores. However, the education industry is huge and diverse; technology has just started to spark widespread change; and entrepreneurs (and now venture capitalists) are determined to make a big impact.

Numerous articles have been written about how to best integrate technology successfully into education. Last week, The New York Times wrote about it here. There are many academic and social arguments associated with how technology should be used in education. One thing is for sure, changes are happening and technology is part of that change.

Until recently, venture capitalists haven’t looked as favorably at education, which is notorious for its bureaucracy and long sales cycles. However, venture investment in “Ed Tech” companies has more than doubled in the last two years alone. Here’s a historical look at VC investment in the industry:

Venture Capital Investment in EdTech Companies

Venture capital has played a key role in helping edtech startups reach the scale that would make a low cost model work.  We’ve seen this in one of our investments, StraighterLine.  The company has perfected the technology behind distance / online education which allows them to charge $99/course, a clear and dynamic differentiator in the very crowded for-profit education space.  Technology can be applied in so many ways within the industry — from creating educational apps (like HealthTeacher) to taking college courses online (like StraighterLine and Advanced Academics).

Chrysalis has invested steadily in education over the years, eight companies and over $40 million.  Here’s our education portfolio, past and present:

Advanced Academics – Oklahoma City, OK
Compliance & Ethics Learning Solutions (CELS) – Chicago, IL
MindLeaders – Columbus, OH
Regent Education – Frederick, MD
StraighterLine – Baltimore, MD
TechSkills – Austin, TX

So far, this has been a good sector for us – and we believe the best lies ahead, as the need for innovation in education has never been stronger.