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Does Ed Tech Funding Boom Signal An Oncoming Bubble?
Lynda.com, an online source for tutorials in web design, photography and business applications has announced that it secured $103 million in the latest round of funding from Accel Partners and Spectrum Equity. The company, which has been in business for more than 17 years, has in that time trained more than 2 million individual students. [...]
Lynda.com, an online source for tutorials in web design, photography and business applications has announced that it secured $103 million in the latest round of funding from Accel Partners and Spectrum Equity. The company, which has been in business for more than 17 years, has in that time trained more than 2 million individual students. The money will be used to fuel its international expansion, the company statement said.
Lynda.com is not the only company in the online educational technology sector that has completed a successful funding round in recent months. Both Coursera and Udacity also published press releases about bringing in additional money from venture capital firms. In the past 18 months, it appears that dollars have been more freely available to the startups in the sector, as many believe that with the expansion in federal government spending, the earning potential in the ed-tech industry is very great.
According to InformationWeek, investments in ed-tech have gone up more than 300% in the last ten years, and some are seeing the parallels between the current infatuation with the industry and the heady early days of the 90′s dot-com boom. So loud have these concerns become, that CB Insight, the venture capital database which collects funding data from venture capital firms, titled the latest edition of its report on the state of the industry “There is no ed tech bubble.”
Audrey Watters, a journalist specializing in education topics, believes one of forces behind the VC investment in ed tech is the Common Core Standards, the U.S. education initiative to standardize curriculum across the states.
The CCS don’t just specify math and language arts requirements, Watters wrote in a email to InformationWeek. “[They] also demand schools move towards computer-based assessment.”
Watters pointed out that adoption of technology was part of the the requirement imposed by the CCS, as all academic materials –digital and not – used by the states deploying CCS must conform to the standards and the standards also encourage the use of digital assessment tools. In Watters’ words, that presents an unprecedented opportunity for ed-tech companies as the states look to upgrade their books, software and other tools.
Watters also disputed the characterization that investors were “breathless” about ed tech. “I think there’s still a fair amount of uncertainty about whether or not any of these edu startups will actually be profitable,” she wrote.
Watters is also concerned that a lot of VCs, “particularly those who do not have a lot of experience in enterprise ed tech,” were basing their investment choices on consumer tech metrics, such as number of sign-ups.
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