Ed Tech Startups Transform Learning

A slew of startups are turning education as we know it upside down, using technology to make it more effective and more accessible.

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“I think education is probably the largest, most important, and most screwed up part of the American society and economy,” said venture capital investor John Doerr, a partner at Kleiner Perkins and board member of startup Coursera. “So it’s very well positioned for improvement so I’m excited about the entrepreneurs — their plains, their innovations — to move this important field forward.”

Investors like Doerr are fueling the field with a flood of capital. Venture investments in “Ed Tech” companies have more than doubled in the last two years alone, to $189 million in the second quarter of 2012, up from $82 million in the first quarter of 2010, according to the National Venture Capital Association. The number of deals has grown from 12 to 27 in that same period. (Read More: Tech Startups Take on Higher Ed.)

Coursera, which Doerr has invested in, brings free Ivy League education to the masses. The startup offers free online courses from professors at 33 top Universities, including Princeton and Stanford. (Read More:Coursera CEO:Company to Offer 100 Free Online University Classes.)

In less than six months after its launch, the web platform has drawn 1.3 million students to take an online class. The network of students helps each other with their coursework, grading papers and the line. And after students finish a course they can buy a certificate of completion and connect with job placement services. Universities have the option of offering courses for credit — for a fee.

While Coursera and other startups like Udacity are focused on delivering University-style lectures with technology, some other startups like Knewton, are using technology to change the education itself. (Read More: Internet May Be the Key to Managing College Costs.)

Knewton delivers what it calls “adaptive learning,” by customizing coursework with digital algorithms. Partly owned by textbook publisher Pearson, Knewton collects data from millions of students on how they learn and perform on digital textbooks, then uses that to tailor its educational materials. Knewton has raised more than any other Ed Tech startup — $54 million — from investors including Peter Thiel.

Jose Ferreira, Knewton’s CEO said, “What we can do is figure out exactly what you know … down to the atomic concept. We know what you know. We know when you’re going to fail at your homework tonight. We know how you learn best, like if you learn math best in the morning at 8:32 a.m.”

Knewton has a number of different business models, including charging for access to test prep materials for the LSAT.

John Doerr points out that $1.3 trillion is spent on education annually, which means huge potential opportunity for startups and students.

“These new technologies can really accelerate the learnings of students from pre-school all the way to post-college graduate education," he said. "So it’s important, it’s big, and entrepreneurs can make a high impact in this large market.”

—By CNBC's Julia Boorstin

This blog post is part of NBC News’ Education Nationinitiative, engaging the country in a solutions-focused conversation about the state of education in America.

Sector Watch - Education and Training Services:

  • Corinthian Colleges Inc.
  • DeVry, Inc.
  • ITT Educational Services Inc.
  • Apollo Group Inc.
  • School Specialty Inc.
  • Scholastic Corp
  • Capella Education Company
  • Career Education Corp.
  • Strayer Education Inc
  • Education Management Corp

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