In Education Technology, Startups With Big Impact Tend to Be Rather Simple
After years of meager investment, early-stage education technology has seen a boom time in the past three years. There was $1.1 billion worth of funding for ed tech in 2012, up from a guesstimated $150 million circa 2008 and 2009, before the category was broken out by major venture capital indexes.
And now, some of those bets are starting to bloom. The lesson plan and homework sharing site Edmodo has 32 million users. The positive behavior rewards site ClassDojo — which essentially allows teachers to give students virtual gold stars — has 20 million registered users.
Remind101, a service that helps teachers send text messages to students and parents (but doesn’t allow minors to reply to their teachers), has 10 million teachers on board and helps transmit 65 million messages per month. The online studying service StudyBlue, which helps students quiz themselves on class material by making flash cards that they can access from their phones, has 5 million users and 200 million flash cards created.
What do these services have in common? They all start out free, and they go straight to students and teachers without requiring buy-in from administrators and districts. They are mostly, but not all, aimed at K-12 education.
And they are all relatively simple technology.
There are some ed tech companies in a very different mold — like the nearly 30-year-old Renaissance Learning, the assessment and analytics provider that was just valued at $1 billion and has an average cost of $5 per student per year with 18 million student users. Declara is a young startup that promises a semantically sophisticated continuing education platform for teachers, with millions of dollars worth of deals for deployment in education systems in places like Australia and companies like Genentech.
And of course there are the MOOC (massive open online course) companies and Khan Academy, which are reaching a broad audience through educational content, mostly through video.
But the new breakout education technology startup stars, by volume, come straight from the consumer app model — get a bunch of users now, maybe do a “freemium” model later. They are texting-for-teachers, Facebook-for-classrooms, online stickers and flash cards. They are really quite basic.
“I don’t think technology is the answer. I think teachers are the answer, and we’re here to make them more efficient,” said Remind101 CEO Brett Kopf.
“I think it’s fair to say that there’s a whole lot of incremental innovation going on, and not all that much radical stuff,” said Geoff Ralston, who runs Imagine K12, the education-focused startup accelerator, where both Remind101 and ClassDojo participated in the first session two and a half years ago.
“There’s a lot of conservatism built in the system, and for good reason,” Ralston added. “Who wants to hear about your kid, ‘We’re going to try something radically different in the classroom, maybe he’ll have to repeat the fifth grade, but that’s okay’? I think it’s going to be a slow-boil revolution, but eventually technology will be a natural major component of how kids and grownups learn.”
Betsy Corcoran, who runs the ed tech media outlet EdSurge, had a slightly different view. “The thing that’s incredibly important in schools is: First, that the technology work; second, that the technology work; and third, that the technology work.”
This simplicity is a virtue, Corcoran said. “It makes sense, and it’s really healthy, to see early products that are working well and optimized for the needs of the classroom.” Further, the real innovation is in dealing with a complex environment, with limited broadband access in schools, students bringing their own devices, and some families not having their own devices. And ed tech companies have to make something that works for all of them. “The constraints are actually kind of weirdly different than what you encounter in the consumer world,” Corcoran said.
The startups that have momentum today have their eyes on where they could go next. Kopf says the Remind101 roadmap includes collecting payments and digital signatures. ClassDojo wants to address the existential question of youth character development.
But even if education is a bit of a different beast, just like any other “eyeballs first”-style consumer startup like Snapchat or Twitter, growing users brings no assurance of sustainable long-term business viability. But later-stage investors are starting to place their ed tech bets.
“I do think you’re starting to see real investor confidence — John Doerr is a pretty great vote of confidence,” said Ralston, referring to Kleiner Perkins investor Doerr, the Google and Amazon investor who recently joined the board of Remind101 as part of a $15 million Series B round.
Edmodo, which is a bit older, having been founded back in 2008, has raised $40 million, mainly from ed tech focused investors not otherwise focused on ed tech, including NEA, Greylock Partners, Benchmark and Union Square Ventures.
And ClassDojo actually has significant funding too, which it hadn’t yet disclosed. The company raised an $8.5 million Series A round from Shasta Ventures, General Catalyst, SoftTech VC, Yuri Milner, Paul Graham and SV Angel, CEO Sam Chaudhary told Re/code.
So perhaps boring is actually good. “The most successful ed tech companies among students, teachers and institutions often get ignored by the mainstream media due to a misplaced focus on ‘world-changing innovation’ instead of effectiveness,” said StudyBlue CEO Becky Splitt.