Investors Poised to Exploit Education Market

investors

Reposted from The Nation:

Eric Hippeau, a partner with Lerer Ventures, the venture capital firm behind viral entertainment company BuzzFeed and several education start-ups, has argued, despite the opposition of “unions, public school bureaucracies, and parents,” the “education market is ripe for disruption.” His vision is the growing sentiment among investors. Education technology firms secured a record $1.25 billion in investments across 378 deals in 2013, while analysts predict that number will continue to surge this year. Since 2010, Moe has led what has been billed as the premiere education investment conference, which takes place annually in Scottsdale, Arizona. The first year attracted around 370 people and 55 presenting companies. This year, that number soared to over 2,000 with over 290 presenting companies and speeches by luminaries including former Governor Jeb Bush, Magic Johnson and Commerce Secretary Penny Pritzker. One of the largest start-ups, a Herndon, Virginia–based company called K12 Inc., a for-profit largely online charter chain, posted nearly $1 billion in annual revenue for its last fiscal year in August.

The tantalizing prospect of tapping into the K-12 market has drummed up new level of zeal from education reformers. Many are attempting to duplicate that success. “There’s a dramatic shift in how investors are thinking about this industry,” Fahad Hassan, an education entrepreneur with his own venture-backed start-up, told a meeting of entrepreneurs earlier this year.

The explosion of investor interest in education raises a number of questions, among them: What kind of influence will the for-profit education sector attempt to exert over education policy? And if school reform is crafted to maximize the potential for investor profit, will students benefit, as boosters claim – or will they suffer?

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