
Enthusiasm to change education from an old-school, paper-based model that most adults are familiar with from their time in school, to a dynamic, personalized experience for kids is fueling innovative ideas and attracting a lot of money.
Both in policy and in practice, education leaders are calling for student access to useful tools and skills. At the same time, entrepreneurs and investors see a market ripe for penetration, in the same way that technology upended models for offering news, music, and retail purchasing.
“Education feels like the last frontier of the internet,” said Trace Urdan, a research analyst for Wells Fargo focusing on education markets. “Investors are excited for what they see as the inevitable transformation of education through technology and the use of the internet as a distributive tool in that process.”
The challenges to becoming a profitable and sustainable education business are formidable. Education is highly political and funding ebbs and flows in cycles that can be unpredictable. It’s a bureaucratic, slow-moving system, especially when public funding is involved. Purchasing power is dispersed across various levels of the system, from individual classrooms all the way up to the federal office. These are all challenges to any one business breaking into what has become a market dominated by three big textbook publishers with large, on-the-ground sales forces: Pearson, McGraw-Hill and Houghton Mifflin Harcourt.
“Technology alone can’t solve the politics,” Urdan said. “There’s this sense among tech investors that the politics and all this other process stuff will fall away the way that it has in some other consumer markets.” Urdan thinks that’s a naïve view, but he admits that the education market has changed since the dot-com boom and bust and that perhaps the time is ripe for innovative technology to lasting in-roads with schools.