The False Gods of Education Technology Investment

By trying to reinvent education technology in its own image, Silicon Valley is in the process of creating false gods.

Education technology should be reinvented in the image of global learners and good pedagogy. Yet this is far from the case today.

Over the past three years the volume of deals in the EdTech space has gone up dramatically, while the amount per deal has decreased. A significant part of the problem has been led by investors for whom EdTech is something they’re looking to add to their existing portfolio, rather than establishing a dedicated EdTech investment practice. Their investment thesis is more often than not one based on volume and other common tech drivers rather than any identification of appropriate fit for learners.

Take a look at the 10 most significant EdTech financing rounds from 2013.

The majority of these investments are in companies that define themselves, in large part, as supplemental or self-directed education. While these companies and their products have mass appeal, they have no proven learning model. These are not narrowly defined brands, ones what are well suited to individual learners in a particular place with defined learning outcomes on their educational journey. They are not companies whose models lend themselves to proper measurement of the user’s learning outcomes.

Don’t get us wrong—we’re not saying these were not venture-ready companies. What we are saying is that for true education transformation to occur, it is critical that the investment thesis broadens. What’s missing is more of an openness to investing in sustainable companies that help all learners. The solution lies in shifting the conversation to what works best for these learners as well as for the systems that serve them.

The investments in Remind101 ($18.5M to date) and Edmodo ($47.5 M to date) are almost in the right direction, but stop short of being truly transformative for education. Their focus is on slight incremental improvement with anecdotal proof of effectiveness.

Yes, these products are used by a good number of people and they do they solve a narrow pain point for a major player in the education system—the teacher. We should all support anything that helps reallocate and refocus teachers’ time, but investments such as these need to be matched with investments in pedagogy, personalization, curriculum mapping, and more. In other words, the much harder stuff of the education world. This is the part of the recipe that takes effort to perfect, capital to build, time and trust for the market to adopt.

So what do we think is an example of an investment really the right direction? Just today it was announced that Google Capital has invested $40 million in the learning analytics company, Renaissance Learning, at a $1 billion valuation. This is an investment that actually helps active teaching with the impact directly felt by the students. Real-time teaching and learning for the win.

The very highly-regarded education theorist, Simon Breakspear, said just last week in Toronto: “In education, we need to change the what works conversation to a what is working for whom, when and where conversation.”

This article was co-written by Krista Jones, an engineer, entrepreneur, and mentor who has worked in both large public companies and in startups. She currently leads the education technology cluster at MaRS.

Image: CB Insights