Palo Alto Weekly

News - April 20, 2012

Imagining the future of education

New breed of investors pursues tech's potential to transform the classroom

by Chris Kenrick

They are young, tech-savvy and affluent, many with successful startups under their belts.

A growing number of Palo Alto-area entrepreneurs have turned their attention to the power of technology to transform education — "ed-tech," they call it.

In venues around town, from Stanford University to the airy offices of ed-tech "incubator" Imagine K12, they're coaching and funding a dizzying array of technology products aimed at students, teachers, parents and schools.

"We look at the issues facing K-12 today — if you go into a public school it feels like stepping back in time," said Imagine K12 partner Tim Brady, himself the product of suburban Detroit public schools, Stanford's electrical engineering department and the Harvard Business School.

"We don't claim to have all the answers, but we think we can help."

Brady — who was among the first four employees of Yahoo!, where he stayed for eight years — sorts K-12's most nagging issues into what he calls "three buckets": inequality, international competitiveness and declining budgets.

Admitting inequality is the toughest, he still believes technology can help in all three areas by making teachers and administrators more efficient, freeing up time for them "to do what they love, are good at and are trained for."

Brady and his two partners, startup veterans and investors Alan Louie and Geoff Ralston, provide seed funding from their own pockets, strategic advice, networking and introductions to potential investors for 10 selected ed-tech startups for up to four months at a time.

A main goal is to help startups win their next round of funding. Of the 10 young companies that graduated in the first batch last September, five have garnered further investment and all are still alive, Brady said.

Now finishing up with its second group, Imagine K12 has posted a May 4 deadline for online applications for its third batch of ed-tech entrepreneurs.

"We're trying to pull engineering talent into the ed-tech space," Brady said in an interview in Imagine K12's central Palo Alto office, lined with whiteboards full of scrawled diagrams, lists and strategies.

"By doing so, we're trying to excite investors because investors get excited about smart people who can execute on good ideas and get that ball rolling. It's a bit of a chicken-and-egg thing: There hasn't been funding because there hasn't been great tech talent.

"We'd love to see this kind of investing-engineering talent ecosystem evolve where it becomes a healthy, attractive place to invest dollars that will result in positive change for our K-12 system."

The world has changed since the rough climate for educating investing in the 1980s and 1990s, Brady said.

A fast-growing number of teachers are digital natives — welcoming technology into their classrooms — and the Internet makes it possible to market products directly to them and to parents. Though they don't control school purse strings, teachers can pilot new products and spread the word about things that work, he said.

"Teachers are extremely active on Twitter — it's a very strong community — so the ability to get a product at least tested in a classroom has changed," he said.

"The world is flat now, and you'll find parents less accepting of mediocre outcomes and willing to put money behind alternatives."

Another big change is the ease of entry.

Advances such as cloud computing have driven down the cost of a startup — where launching Yahoo! cost $1 million, entrepreneurs could do the same thing today for $50,000, Brady said.

The lower costs have attracted a new breed of angel investors, people willing to put their personal funds into startups.

One such "angel" is Jessie Arora, a veteran of Google and several education nonprofits who has backed several ed-tech startups, including Remind101, Motion Math and MindSnacks. The startups all involve learning games or communication tools for education.

About 90 percent of the vast $650 billion education market is tied up in paying teachers and running schools, but there's a growing slice for technology, Arora said.

"It's early on, and investors probably shouldn't really be looking for the next Facebook in the education space yet, but there's potential," she said.

For now, she said, "the overall focus is on the social impact and the social return on investment. The potential to make money is there, but the trajectory is longer."

Imagine K12's current batch of companies includes Remind101, which enables teachers to communicate safely with students outside the classroom, as well as startups in the areas of special-education communication (Goalbook); teacher observation (BloomBoard); tutoring (TutorCloud); math and grammar games (BrainNook); data collection (Eduvant); teacher productivity (ClassConnect); recording and uploading lessons (Educreations) and behavior management (Class Dojo).

Staff Writer Chris Kenrick can be emailed at ckenrick@paweekly.com.

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