Educa&on  is  at  a  Crossroads  

2  

Cost Pressure

Personalized

Learning

Globalization

Accountability

Physical to Digital

Linear Knowledge Space

Random Knowledge Space

It is hard to innovate in the old knowledge space,

But learners today are in a new knowledge space.

EDUCATORS STILL PERSIST WITH THIS MYTH

Edtech  Market  Growing  Fast  

• 2012 U.S. eLearning: $32.5 billion • 2017 U.S. eLearning: $65.6 billion

15% annual growth expected in next 4 years

• 2012 Global eLearning: $90.9 billion • 2017 Global eLearning: $166.5 billion

23% annual growth expected in next 4 years

• K-12: $687.6 billion • Higher ed: $535.2 billion • Corporate/Government: $133.3 billion

Edtech now less than 5% of U.S. $1.3T education market

5  Source:  GSV  Advisors,  Educa&on  Sector  Factbook  2012  

 

Edtech  Market  Growing  Fast  -­‐  US  

6  

Edtech now less than 5% of U.S. education market

U.S.  Education  Spending   U.S.  eLearning  Spending  

2012-­‐2017  CAGR  

Education   eLearning  

Other   6%   —  

Corporate  /  Government   4%   5%  

Higher  Ed   5%   18%  

K-­‐12   4%   20%  

Total   5%   15%  

U.S.  $  Billion  

U.S.  $  Billion  

 $16.6      $39.0    

 $69.0      $48.8    

 $95.4    

 $149.0    

 $25.5    

 $32.1    

 $37.5    

$0  

$50  

$100  

$150  

$200  

$250  

2012   2015   2017  

$2,227  $2,626   $2,930  

$1,495  

$1,884  

$2,197    $356.6    

 $449.3    

 $524.0    

 $172.0    

 $284.2    

 $399.2    

$0  

$1,000  

$2,000  

$3,000  

$4,000  

$5,000  

$6,000  

2012   2015   2017  

Edtech  Market  Growing  Fast  -­‐  Global  

7  Source:  GSV  Advisors,  Educa&on  Sector  Factbook  2012  

 

Globally, edtech is growing at an even faster rate

Global  Education  Spending   Global  eLearning  Spending  

2012-­‐2017  CAGR  

Education   eLearning  

Other   18%   —  

Corporate  /  Government   8%   8%  

Higher  Ed   8%   25%  

K-­‐12   6%   33%  

Total   7%   23%  

U.S.  $  Billion  

U.S.  $  Billion  

VCs  and  Angels  Ramping  Up  Edtech  Investment  

8  Source:  TechCrunch,  based  on  CrunchBase  data  

 

Edtech VCs & Angels topped $500 million in Q1 2014

0  

20  

40  

60  

80  

100  

120  

140  

$0  

$100  

$200  

$300  

$400  

$500  

$600  

Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1  

Num

ber  of  Investment  Rounds  

VC  investment  Raised,  U.S.  $  m  

Later-­‐stage  VC  Early-­‐stage  VC  

Number  of  investment  rounds,  right  axis  

2009   2010   2011   2012   2013   2014  

Many  Recent  Edtech  Exits  

9  Source:  Capstone  Partners  

 

Leading  Acquirers  �  Pearson  Educa3on  

�  2013:  Learning  Cataly&cs;  ExamDesign  �  2012:  Global  English  ($90  million),  Embanet  Compass  ($650  million)    �  2011:  Connec&ons  Educa&on  ($400  million)  

�  Houghton  Mifflin  Harcourt  �  2013:  School  Chapters;  Tribal  Nova;  Choice  Solu&ons  

�  Rose<a  Stone  �  2013:  Lexia  Learning;    Livemocha  

�  McGraw  Hill  Educa3on  �  2014:  Engrade  �  2013:  ALEKS  �  2012:  Key  Curriculum  

�  MacMillan  New  Ventures  �  2013:  Late  Nite  Labs  

�  Desire2Learn  �  2013:    Knowillage;  Wiggio,    Degree  Compass    

�  Hobson’s  �  2013:  Na&onal  Transcript  �  2012:    Beat  the  GMAT  

�  Plato  Learning  �  2012:  Archipelago  Learning  ($300  million)  

�  Blackboard  �  2012:  Moodlerooms,  Netspot      

10  

Innovation Capital Available to Scale

Venture Capital (# of edtech companies in portfolio) –  Atlas (4), Bessemer (3), New Atlantic (3), Flybridge (1),

Spark (1), Catamount (1), NextView (1)

11  

…200 US private equity firms have made significant investments in education companies

Reference: Following the Money in Education: Private Equity and the New Education Economy Posted EquityForEducation, by Mitch Leventhal and Ina Tang

Boston

Accelerators: Key Role at the Seed Stage

Silicon  Valley  

13  

Philadelphia  Midwest  

New  York  City  Boston  

Washington,  D.C.  

Characteris&cs  of  an  Acquisi&ve  Industry  

End user market wants changes

End users can implement new products

Solution architecture is understood

Product review machinery exists

Market size is large

Established players have substantial turf to protect

There are growing players who also can acquire

There are aggressive attackers

Innovation opportunities both incremental & disruptive

Acquisition ecosystem (bankers etc. exist)

Early stage investors exist, follow-on capital identified

14  

•  Visualization of Data and Big Data •  OER Models for Sustainability •  Aggregation of Content •  Online Learning - MOOCs (here today gone tomorrow)?

Outlook for 2015

Innovation @ Penn GSE Bridging the Gap Between Theory and Practice

& Building an Education Innovation Ecosystem

Milken-Penn GSE

Education Business

Plan Competition

(EBPC)

Education Design

Studio, Inc. (EDSi)

Research: The Education Innovation Ecosystem

Athletes Career Change

Executive Program

Virtual Online

Teaching Program

M.S. Ed. for Education

Entrepreneurs

   Case Study: The Education Design Studio at the Graduate School of Education, University of Pennsylvania

•  Bring research to practice

•  Accelerate innovations in global education

•  Increase success rates for education-related start-up and early-stage ventures

Promoting Innovation in Education Enterprises

Academic Programs at GSE Masters in Education Entrepreneurship

�  Degree: M.S. Ed. in Education Entrepreneurship �  For: Recent graduates and working professionals with an

interest in fostering innovation in education, creating new schools or starting an education business

�  Format: 15 month executive part- time program, on campus and online

�  Coursework: 10 CU’s including a Capstone Project with practicum

�  Learn: Foundations of Education, Business Essentials, Entrepreneurial Management of Knowledge

�  Cohort #1: 21 students

Milken – Penn GSE Business Plan Competition

�  Incentivizing entrepreneurs to enter the education space

�  Idea generation, unbounded as well as problem specific

�  Screening and vetting of early stage education ventures and ideas

�  Access to funding for promising ventures

�  Connecting entrepreneurs with investors, educators, researchers, and business leaders

�  Organization of the market for education innovation

�  Connecting education research to practice

�  Providing a forum for conversation about the space

Dr. Barbara “Bobbi” Kurshan

Executive Director of Academic Innovation

& Senior Fellow in Education

Graduate School of Education

University of Pennsylvania

bkurshan@gse.upenn.edu