What Investors See in a ‘Highly Fragmented and Under-Teched’ Early Childhood Education Market

With widespread lockdowns and closures last year, the critical role that schools and child care centers play in supporting children may never have been clearer. As it turns out, society is not as productive when working parents don’t have child care. That fact is not lost on investors who foresee greater demand for early-education programs … Read more

Edtech Investment Around the World in 2020 [Infographic]

Investment in education technology over the past year shattered previous records. And some surprising new patterns have emerged in certain parts of the world. Brought to you by AWS Edstart, the edtech startup accelerator program. Learn more here, and apply to become a member or get involved today. See where the dollars are flowing, and … Read more

GSV Ventures Raises $180M Fund in Search of Global Edtech Opportunities

With an investment fund, a conference and a constellation of advisory services, GSV may be the closest thing to an omnipresent brand in education investing. But even after over a decade of making and facilitating deals, the Chicago-based firm still sees other untapped opportunities and areas for growth. Specifically, across the ocean. “We’ve been spending … Read more

Longtime Edtech Investor Reach Capital Raises $165M for Third Fund

Investments in U.S. education technology startups reached a record $2.2 billion in 2020. Across the globe, that figure surpassed $16 billion, marking a 32-fold increase from 2010. Few investors have watched, and fueled, the growth of the edtech industry as closely and consistently as Reach Capital, one of a handful of venture firms that has … Read more

Public Edtech Companies Have Been Rare. These SPACs Will Change That.

Publicly traded education technology companies are rare. Soon, there will be one fewer after tech training provider Pluralsight gets taken private later this year. That leaves 2U, Chegg and Stride (formerly known as K12 Inc.) as the remaining trio of prominent edtech companies on the U.S. public market. But this contraction may not last long, … Read more

A Record Year Amid a Pandemic: US Edtech Raises $2.2 Billion in 2020

A most disruptive year to schools and society proved lucrative for the education industry, particularly for those raising private capital. In 2020, U.S. education technology startups raised over $2.2 billion in venture and private equity capital across 130 deals, according to the EdSurge edtech funding database. That’s a nearly 30 percent increase from the $1.7 … Read more

Crises and Capital: The Top Edtech Business Stories of 2020

“Never let a good crisis go to waste,” so the saying goes. The education industry didn’t. In fact, many capitalized on it in 2020. School closures have forced people to not only rely more on digital tools in the short term, but also reimagine what education can be once it’s safe to return. If anything, … Read more

2020: The Year Of the Edtech Paradox

In many ways, 2020 has been THE year of edtech. Technology experienced a meaningful surge in adoption by schools, districts and parents. The industry saw large capital inflows and more edtech “unicorns” than in any other prior year. Mergers and acquisitions are booming. Edtech funds closed larger funds, and top-notch venture capital investors including a16z, Lightspeed and Union Square Ventures have developed investment theses on education. Yet, 2020 also saw an acceleration of inequities in education. The divide in access to digital tools, systemic racial gaps and biases, increased learning and opportunity disparities and rising poverty have all affected learners from under-priviledged backgrounds. As an edtech investor, 2020 was a great year. As an impact investor focused on building a more equitable future, 2020 was devastating. As a mother, 2020 was unsettling.Can we solve this fundamental paradox and have it all—growth and impact—so that opportunities for all learners grow alongside the edtech industry? I remain an optimist and believe that the answer is yes. However, we need to rethink three fundamental assumptions in edtech: For whom? By whom? To what end?Edtech for Whom?Many edtech investors subscribe to the trickle-down theory and point to Apple and Tesla as examples. Start with a niche product sold to an elite segment of early adaptors. Next, develop products for aspirational consumers to adopt. Costs decrease. Mass adoption occurs over time. Applying this concept to edtech, the belief is that a “trickle-down effect” solution will initially widen gaps, but as it scales it will benefit many (if not all) in the long run. In light of the pandemic, I would argue that we can’t afford to wait for years or decades for this trickle-down effect to happen, and risk leaving generations of learners behind. Instead, we need to re-center edtech on the curb-cut effect theory. As an edtech investor, 2020 was a great year. As an impact investor … 2020 was devastating. As a mother, 2020 was unsettling.In real life, curb cuts on sidewalks are intentionally designed for people with disabilities. Yet, they also benefit many others, including parents with strollers, travelers with rolling luggage, or even skateboarders. In edtech, “curb-cut effect” solutions can close gaps from the start for learners who are most left behind. They also carry positive externalities: They not only benefit the under-served targeted group, they serve many other learners.There are many curb-cut effect opportunities in education. Take dual-language learning as an example. It has been shown that dual-language learning leads to developmental gains for English language learners (ELLs). What is less well known is that it also benefits native English speakers who score higher on tests and socio-emotional competencies when enrolled in dual-language classrooms. At this point, nearly one out of four learners in the U.S. is raised in a family where English is not the primary language spoken at home, and this number continues to grow. However, there are few edtech tools, like Duolingo, Ellevation or Genius Plaza, focused on dual language learning, and we need more. This will help ELLs, and all learners.Another example is reskilling and upskilling. A number of organizations are developing offerings for underserved groups looking to find jobs in the current challenging economic environment. Guild Education’s Next Chapter, SkillUp and LearnIn have launched innovative solutions for laid-off employees. Career Karma offers navigation guidance into tech jobs, and assigns learners into small affinity peer mentorship groups (also referred to as “squads”), such as moms or veterans. Those solutions squarely serve those transitioning jobs and careers. More broadly, they support a re-imagination of adult learning and education-to-career pathways for all, with greater attention on outcomes and communities of support.Edtech by Whom?To bring more curb-cut edtech solutions, it is essential that the teams building them have lived the experiences of people whom they are trying to help. The good news is that edtech is leading the venture industry on both gender, racial and ethnic representation, and many edtech startups are led by former educators. Yet, there is still meaningful room for greater diversity in line with learners and educators’ demographics.We are encouraged by the work of incubators and accelerators like 4.0 Schools, Camelback or Founder Gym, as well as new accelerators and crowdfunding platforms focused on diverse founders, such as A16Z’s Talent x Opportunity Fund, BlckVC, LatinX Incubator and Reunion. Impact investment funds focused on diversity include Harlem Capital, ImpactAmerica, Juvo Ventures and Zeal Capital. There are also new charitable grant pools emerging from Google’s Black Founder’s Fund, Liberated Capital and The Power Fund.Some edtech startups like MathTalk are taking it one step further. They are not only led by a diverse team, but they also involve the community in the process of designing solutions. There are many opportunities for companies to be more intentional in designing with and for underserved learners and communities. Edtech to What End?Based on a survey of over 500 schools and district leaders responsible for making edtech adoption decisions, half admitted that research and evidence plays no role in their decision-making. While it is troubling that edtech is scaling without more rigor, education research also needs to evolve toward what works for whom, with an increasing focus on underserved groups aligned with curb-cut effects.The field of academia, especially as it pertains to edtech research, lacks diversity. Black males, Black females, and Hispanic males each account for 2 percent of full-time professors, while Hispanic females, American Indian/Alaska Native individuals represent less than 1 percent each. But we see promise in research and policy centers focused on equity in education, such as The Children’s Equity Project, the National Black Children Development Institute, and plans for a Center for Research on African American Children and Families.The pandemic has shined a spotlight on our interdependence and the promise of edtech in 2020. We look forward to 2021 to be the year of inclusive, effective and human-centered edtech that delivers on both growth and impact.Author acknowledgement: Thank you to Geo Kane of Emerson Collective and Ira Hillman of Einhorn Collaborative for the rich discussions on curb-cut effects in education.This op-ed is part of a series of year-end reflections EdSurge is publishing as 2020 concludes.

New U Venture Partners Gets a New Partner, Name and Investment Scope

New U Venture Partners is getting a new partner. And along with that comes a new name and a broader investment thesis.The education technology investment firm first launched in January 2020 as a partnership between Western Governors University and EPIC Ventures, and raised over $52 million for its first fund. So far it has made eight investments, mostly in adult and workforce training programs such as coding bootcamp Kenzie Academy and APDS, which provides educational services for incarcerated learners.In early May, EPIC Ventures transitioned from being a subadvisor that helped manage the fund to a consultant role, says Andre Bennin, managing partner of New U Venture Partners. That necessitated bringing in another person to help him run the show.The first person he called? Maia Sharpley.Juvo Ventures co-founder and managing partner Maia SharpleySharpley was most recently a partner at Learn Capital (and the only woman on its core investment team). She joined in 2018 after serving as an executive at different education organizations including Kaplan, Charter Schools USA and the New York City Department of Education, where she worked under then-chancellor Joel Klein. At Kaplan, she managed its online higher-ed business and its edtech startup accelerator, and started a scholarship fund for undocumented students.With Sharpley’s experience and connections, the firm is also expanding its investment focus to pursue opportunities in K-12 and across the globe. To signal that change, Benin says a new name was also necessary—one less tied to colleges and higher education, as “New U” suggested.They came up with Juvo Ventures, after the Latin word for helping and supporting.Through her work at Learn Capital, which is among the most active investors in the edtech industry, Sharpley was a board observer on six of the firm’s portfolio companies. “Her coming onboard brings the missing piece of the puzzle with her expertise in K-12 and early childhood,” says Bennin.Sharpley, who is now co-founder and managing partner at Juvo, says it will also look at overseas markets, although this effort will not be focused on the usual suspects in China and India, which are already home to many highly-funded edtech startups.Juvo is still investing out of the original $52 million that was raised, and is in the process of raising a bigger fund. For now, it will continue to invest between $1 million and $5 million in companies raising Series A and later stages, as was the case when it was operating under the old brand.Asked about her decision to join Bennin, Sharpley says “it wasn’t about leaving Learn, but about going toward Juvo… Being able to start something new and build it from scratch was what really excited me. It lets me scratch that entrepreneurial itch.”Juvo Ventures co-founder and managing partner Andre BenninWith Sharpley and Bennin at the helm, Juvo Ventures joins the ranks of new minority-led venture capital funds to emerge in the education sector this year. Zeal Capital Partners, which has committed to making diversity core to its investment thesis and activities, launched last month. Juvo does not have such an explicit mandate, though Bennin says that “the makeup of our team will lead to decisions that will help underserved founders.”Western Governors University, which remains the biggest investor in Juvo Ventures, signed off on the changes. “Talent is equally distributed, but opportunity is not. That is true for learners, and it’s also true for entrepreneurs, many of whom have been overlooked by venture funders because they don’t have the traditional profile,” said WGU president Scott Pulsipher in a statement.Wary of ‘Potemkin Village’ ValuationsSpurred by the adoption of digital tools as schools closed and students are learning at home, the edtech industry this year has been flush with private capital, new and old. Established edtech investors are raising new funds—sometimes two at once. A surge in new users, accompanied by revenue, has helped companies raise more money—even those that already hit “unicorn” valuations. That in turn has attracted new funders who were once wary of the education market.Through October 2020, education and workforce-development companies across the world have raised $10.3 billion in venture capital across 505 deals, according to a report based on Pitchbook data. Those numbers already dwarf full-year totals from previous years.An influx of new capital is always welcome by venture capitalists. But having seen bad bets in the past, Sharpley says she is concerned about the “frothier valuations” that have accompanied some of the deals they’ve seen. “You have to fundamentally understand the different sub-sectors of education, understand how they are regulated. Business models matter. Unit economics matter.”“There may be some Potemkin Villages out there, and you have to look under the hood to make sure that you’re not overpaying,” adds Bennin, who previously led investment activities for Strada Education Network. Sharpley says she’s personally interested in the early-childhood market, which has been in the spotlight and is increasingly garnering public support, but where many service providers are struggling to stay afloat. Venture-backed startups in this vertical have had to downsize and close shop shortly after the pandemic hit.One of the problems may be a misalignment between investors’ expectations and the market reality. “Early childhood is heavily underinvested, but I think we really need to understand and explore what business models work,” she says. While a handful of companies are thriving, she notes, “for the most part the business models that generate the returns that venture capitalists prefer—they’re not quite there.”