New developments in Educational Software market

February 4, 2010

I was intrigued by a recent article in the popular technology blog TechCrunch: “Israel’s Time to Know Aims to Revolutionize the Classroom” to think about new development in the educational software market. Time to Know had more raised than $60 mil in venture funding and became a sizable company with more than 300 employees without attracting much attention, so there must be similar companies out there that are targeting this huge market with new pioneering approaches.

The educational market has been abuzz with venture capital funding and PE-funded exits, such as the Bridgepoint Education and Rosetta Stone IPOs last year, and recent findings for ConnectEDU and Orbis Education.

These data points correlate well with recent macroeconomic trends: due to the economic recession, more people are seeking to go back to school, to learn new skills, the new administration has been showing a lot more support for K-12, school districts and community colleges, sectors that have traditionally been underfunded in terms of IT needs. As the number of students at all levels in the US grow (thanks to a healthy influx of foreign-born students) and strain the existing capacity, institutions are exploring ways to expand the enrollment and leverage technology to serve more students while cut down on costs.

However, as the market is so large, it is helpful to break it into separate sub sectors, and see where the hot spots are:

– Language Learning Software: This is Rosetta Stone’s backyard, but there are new web-based language learning start ups with interesting approach such as yappr.com, which lets people learn by watching and subtitling videos.

– Test Preparation Software and Tools: With the prevalence of standardized tests such as the SAT, GRE, GMAT, TOEFL, test preparation software has been a very profitable business for test preps companies such as Kaplan. However, there is an opportunity for

– K-12 classroom management and coursework management: This area is what Time to Know is trying to revolutionize. There are existing systems that are quite old and clunky. The main issue with this is that it would require lots of training and implementation to get such learn management system up and running, as it will involve students, teachers, IT staff and other staff. Developing course content that make full use of these systems will also take time and resources.

– K-12 school management systems: These are systems that help the “back-office” function of the K-12 school or school districts, typically, these have the following function:
– Course scheduling
– Room scheduling
– Student record management
– Library catalogs, library reservation system
– Messaging (especially emergency messaging)

– School IT management: These address the more technical aspect of managing IT systems at a school, with its set of unique challenges, such as
– Network Management
– Remote control
– Security
– Monitoring

– Educational Games: This is replete with websites offering free flash based educational games. However, there should eventually be new ideas, such as ways to build games into existing virtual world social networks, or ways to make the games more persistent and “grow” with the child.

– Online learning/training management platform, also called a Learning Management System (LMS): Blackboard is of course the heavy weight in this rather mature sector. I have yet to see new breakthrough development in this area, but I would love to see one soon.

– Online higher education management system: these are LMS systems that are tailored for higher education institutions and have unique set of features that support that market. ConnectEDU and 2tor.com fall into this category, and Orbis also fall under this, although it has a very specific vertical niche of nurse education.

– Lastly, I think there is an enormous market outside of the US, that is also very ripe for penetration by new ideas and revolutionary approaches. I will be very surprised if there are not more companies like Time to Know. Let us know if anyone is looking for investors or looking to expand to the United States, because OpenView Venture Partners invest globally and specialize in helping companies establish a foothold in the US market.

Chief Business Officer at UserTesting

Tien Anh joined UserTesting in 2015 after extensive financial and strategic experiences at OpenView, where he was an investor and advisor to a global portfolio of fast-growing enterprise SaaS companies. Until 2021, he led the Finance, IT, and Business Intelligence team as CFO of UserTesting. He currently leads initiatives for long term growth investments as Chief Business Officer at UserTesting.