K-12 Education Tech Startups Face Challenges, Tough Competition

The U.S. education sector has become the nation’s second-biggest sector after healthcare. The value of education industry is estimated at nearly $1.5 trillion — roughly 10% of the U.S. Gross Domestic Product, according to GSV Asset Management and Candlestick Research.

Education technology startups are eyeing opportunities to attract dollars from the K-12 and higher education sectors, but it’s not an easy road for fledgling companies with new ideas.

At a Sept. 17 K-12 education technology event hosted by MIT/Stanford Venture Lab (VLAB), education technology startup MasteryConnect pointed out that huge and established corporations in the education industry have been creating problems for K-12 education technology startups, Lauren Hepler writes in Silicon Valley Business Journal. These corporations have historically limited market openings for smaller competitors.

Higher education startups have already found that elite universities and their tightly knit communities of academics are certainly not an inviting field for cost-cutting, potentially job-threatening startups. But K-12 education is an even more complex animal, governed by larger teachers’ union and a web of state, local and federal funding and regulations.

MasteryConnect is an education tech startup that sees the looming implementation of government Common Core standards for reading and math in elementary, middle and high schools as an unparalleled opportunity for startups in the field. The company offers cloud-based software tools to help teachers and parents understand the new standards in each state.

Earlier this year, Bill Gates, arguably the world’s best-known education advocate, talked kindergarten through 12th grade education with startups at SXSW.  Gates, who is Microsoft founder and philanthropist, said the Common Core could be a game changer.

At the VLAB event held at Stanford, panel moderator Tina Barseghian, editor of KQED education blog MindShift, said analysts continue to seek “the Facebook of education.” However, panelists questioned the notion of whether Silicon Valley’s history of startups upending antiquated industries can be translated to a nuanced field like education. The answer to that question, and the broader issue of how U.S. schools adequately prepare students for in-demand jobs, remain unclear. But startups are still gunning for market position.

New K-12 education technology startups must contend with corporate conglomerates that continue to dominate the K-12 market.

“There was one word that kept me and my co-founders up at night,” Hewitt said at the VLAB event as he clicked to a presentation slide emblazoned with a Monopoly-style logo that read “Oligopoly” He explained that a “marriage to textbooks” sold to schools by companies like Pearson and McGraw-Hill has for years blocked new entrants from providing educational alternatives.

According to Hewitt, the new Common Core standards have the potential to change that. The standards are not rigid and rather ideally designed to evolve as students learn, necessitating new evaluation tools.

But Karen Lien, a director and partner at Palo Alto K-12 startup accelerator Imagine K12, said still the hurdle remains. “Teachers are demanding the tools they’re aware of,” she said.

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