A Boom Time for Education Start-Ups

Harsh economic realities mean trouble for college leaders. But where administrators perceive an impending crisis, investors increasingly see opportunity.

In recent years, venture capitalists have poured millions into education-technology start-ups, trying to cash in on a market they see as ripe for a digital makeover. And lately, those wagers have been getting bigger.

Investments in education-technology companies nationwide tripled in the last decade, shooting up to $429-million in 2011 from $146-million in 2002, according to the Na­tional Venture Capital Association. The boom really took off in 2009, when venture capitalists pushed $150-million more into education-technology firms than they did in the previous year, even as the economy sank into recession.

"The investing community believes that the Internet is hitting edu­cation, that education is having its Internet moment," said Jose Ferreira, founder of the interactive-learning company Knewton. Last year Mr. Ferreira's company scored a $33-million investment of its own in one of the biggest deals of the year.

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THE CHRONICLE OF HIGHER EDUCATION

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