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Ed-tech startups raise $500 million this year

99 new companies raised over $500 million in the first quarter of 2014
Students use ed-tech startup Edmodo to communicate with teachers and classmates through a closed social network.
Students use ed-tech startup Edmodo to communicate with teachers and classmates through a closed social network.

Education technology-focused startups are experiencing their biggest boom ever, with 99 new companies raising over $500 million in the first quarter of 2014. This is up from just 20 companies that raised $64 million in 2009, according to startup activity database CrunchBase.

The surge means school administrators will have more innovative options for digital content and platforms.“Teachers are looking for tools that will make their lives easier and enable them to increase learning outcomes in their classroom,” says Crystal Hutter, CEO of the startup Edmodo. “I think it’s a movement that started in the classroom, and the industry responded.”

Edmodo, a free social media platform, is one of the largest and fastest-growing members of the ed-tech startup generation. Teachers use it to create private networks where students communicate, share digital content, hand in assignments and take tests. Two former school IT staffers created Edmodo in 2008. Today, over 34 million teachers and students have joined, and 90 of the 100 largest U.S. districts use it in their classrooms, Hutter says.

Aiding the digital transition

Some 83 percent of districts say that more than half of their print instructional materials will be replaced by digital content in the next three years, according to the Consortium for School Networking’s second annual K12 IT Leadership Survey, released in March.

“Students are highly engaged with technology in every other part of their life, so it makes sense to bring tech to schools,” says Seppy Basili, vice president of K12 programs at Kaplan Test Prep. “Superintendents want a product to be delivered efficiently and affordably across their school system, and ed-tech has the promise of doing that.”

Basili also is a mentor in the Kaplan EdTech Accelerator program, a three-month intensive course that helps startup founders refine their products and meet investors. The 10 companies involved in the first session last summer have raised about $15 million so far, Basili says.

One, called Newsela, hosts a website that provides news stories at different reading levels to align with the Common Core’s emphasis on non-fiction reading. Another, called Mathify, transforms traditional math problems into interactive activities and games.

Similar programs that help education startups get off the ground are offered by organizations Imagine K12 and NewSchools Venture Fund.

The Common Core has also made it easier for ed-tech startups to develop programs for a national audience, Basili says. More than 60 percent of K8 teachers and 46 percent of high school teachers say Common Core alignment is the most important factor when selecting digital tools, according to a recent Bill & Melinda Gates Foundation survey.

Administrators can gauge a startup’s quality and reliability by pilot testing a product before purchasing it for the entire district, Basili says. School leaders also must offer plenty of professional development to ensure teachers know how to use new technologies to improve student learning, Hutter says. “At the end of the day, it needs to be adopted in the classroom,” she says.