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Innovation and Disruption in Education and   Learning: Some Perspectives from SiliconValley and Implications for the Nordi...
VC investments in US EdTech                              2
Longer Term Perspective on US VCEdTech Funding                                   3                                       3
Key Investors Helping Shape EdTech                                 4                                     4
Selected VC investments in EdTech   Well-known "Blue Chips VCs" with small number of education and learning investments: ...
US Education Landscape: SelectedDriversK-12 Sector: Need for Major Changes to Address Existing Problems Forerunners Sett...
EdTech Startup Dynamics                                         Many factors now                                          ...
Incubators With Major Focus on    EdTech        Imagine K12                         Silicon Valley. One of biggest and mos...
VC investments in EdTech--SelectedCompanies Minerva (project) -- $25 million in April, 2012 by        Desire2Learn -- $8...
NewSchools Venture Fund EdTech Map       Source: Michael Horn, Innosight and Anthony Kim, Ed Elements           (http://ww...
Education and Learning Markets: Large,Diverse and Complex                        GSV Advisors eLearning Estimates         ...
Market Segmentation Perspectives         Type of buyers                    Needs/Challenges                               ...
Education and Learning Markets:Opportunity Segments                         Users of Services: Students, Teachers, Adminis...
US and Global Education Landscape:Four Areas of Change and Opportunity         A few major areas that will see significant...
Learning Analytics: Area of Growing Interest                     Sophisticated                      Learning and          ...
MOOCs: "New Kids on the Block"                         cMOOCs Characteristics:                         About harnessing t...
Who is Doing What?                                                                                                    211 ...
Learning Management Systems ProvidersEducation-focused "Incumbents":   Blackboard                    Selected LMS Industr...
Other Major Players in Education:Google vs. Apple vs. MicrosoftDevices/HW                Services, SW & Content           ...
Cisco in Education and Learning                      Cisco-WebEx Integrated Communication and Collaboration Platform      ...
Media Companies: Growing Interest inEducation Sector Opportunities             Selected quotes of Joshua Kim, Inside Highe...
The Digital/Virtual Game Landscape  • Global Video Game Industry: Varying revenue estimates but    likely ca. $70-75 Bill ...
Implications for Nordic Entrepreneurs What are similarities and differences between US versus European and Nordic  educat...
Contact InformationEilif Trondsen, Ph.D.Strategic Business InsightsTelephone: +1 650 859 2665E-mail: etrondsen@sbi-i.comSk...
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Eilif Trondsen TTU EIA

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    1. 1. Innovation and Disruption in Education and Learning: Some Perspectives from SiliconValley and Implications for the Nordic region Tallinn University of Technology January 25, 2013 Eilif Trondsen, Ph.D. Director etrondsen@sbi-i.com www.strategicbusinessinsights.co m © 2012 by Strategic Business Insights. All rights reserved. 1
    2. 2. VC investments in US EdTech 2
    3. 3. Longer Term Perspective on US VCEdTech Funding 3 3
    4. 4. Key Investors Helping Shape EdTech 4 4
    5. 5. Selected VC investments in EdTech Well-known "Blue Chips VCs" with small number of education and learning investments:  Accel Partners -- Educreations, Mind Edutainment, and Knewton  Sequoia Capital -- Mindsnacks, TutorSpree, Inkling, and Piazza  Greylock Partners -- Edmodo, UniversityNow, Treehouse  Benchmark Capital -- Edmodo, Minerva, and Grockit  Khosla Ventures -- Littlebits  Kleiner Perkins -- Codecademy, Courserva and Chegg  Google Ventures -- Smarterer, and Stickery  Founders Fund (Peter Thiel) -- Quora and Knewton VCs and Investment Companies with small number of education and learning firms in their portfolio:  Union Square Ventures -- Edmodo  New Enterprise Associates -- Coursera  Andreessen Horowitz -- LearnSprout  Menlo Ventures -- Luminosity  University Venture Fund -- UniversityNow  WestRiver Capital -- 2U (ex 2Tor)  Ft Venture Capital -- Voxy  Felicis Ventures -- Piazza  CrunchFund -- Codecademy  Mission Ventures -- KidZui  [80 other VCs identified with small investments in education and learning companies][ 5
    6. 6. US Education Landscape: SelectedDriversK-12 Sector: Need for Major Changes to Address Existing Problems Forerunners Setting Examples Growing Perception of Significant Potential of Technology Greater Need for Student Centricity Growing Availability of Data for Design more Effective Learning . Recognized Need for Outcome Focus Need to Do More With Less HE Sector:  Growing Recognition of Needed Change in HE Also  Greater Potential Role of Technology and Online Learning  More Difficult Financial Environment Creating New Reality  Growing Interest in "New Models"  New Computing Models and Technology Solutions 6
    7. 7. EdTech Startup Dynamics Many factors now making startups easier Growing availability (incl. lower cost of of VC $s and investor tech services) Growing number of willingness to incubators (some invest in Edu focusing on EdTech) GrowingRecognition of new foundations money Buzz around EdTech available for opportunities EdTech EdTech EdTech Startups Startups that get funded Startups that dont get funded © 2012 by Strategic Business Insights. All rights reserved. 7
    8. 8. Incubators With Major Focus on EdTech Imagine K12 Silicon Valley. One of biggest and most notable incubators for EdTech SIIA Innovation Sponsors annual incubator program focused on EdTech. Incubator Program1 Participants must meet certain criteria 4.0 Schools Based in Louisiana, it helps entrepreneurs start schools or education-related businesses in Southeastern US StartL Emerged out of Stanford University to help students with startups--focused on digital innovations for learning Socratic Labs NYC-based accelerator will select cohort of 10 companies in January of 2013 Center for Educational Israel-based incubator established to help advance the Technology Incubator educational system in Israel Startup Weekend EDU National organization in US that supports local communities of entrepreneurship Learning Technologies NASA program to provide funding, tech tools and technology services for STEM-focused entrepreneurs Macmillan New Ventures In-house incubator for EdTech and company has already invested $100 million in acquiring startups Stanford Learning, Program at Stanford School of Education and provides Design and Technology support and assistance to budding EdTech entrepreneurs Source: 10 EdTech Incubators Aiming to Change Education1 Software and Information Industry Association Forever; TeachThought; October 2112; Strategic Business Insights 8
    9. 9. VC investments in EdTech--SelectedCompanies Minerva (project) -- $25 million in April, 2012 by  Desire2Learn -- $80 million in one round of funding in Benchmark Capital September 2012  "The Minerva Project is rethinking the role of an  Has been self-funded and profitable for many elite institution of higher learning” years and recently changed strategy to seek outside funding  Chegg -- $195 million since 2005 in 7 rounds of 2U -- $90.8 million over four rounds in 2009-2012; has funding; numerous investors a number of large investors  Started as online textbook rental company but  2U partners with universities to build, administer, rebranded as "social education platform” and now and market online degree programs ow positioned as "Your Academic Hub" Edmodo -- $40 million in three rounds in 2010-2012;  Knewton -- $54 million in four rounds starting in May has a number of large investors 2008; has number of marquee VCs as investors  Company intends to "… help educators harness  Adaptive Learning Platform that customizes the power of social media to customize the educational content based on student needs; also classroom for each and every learner.” provides test-prep courses Grockit -- $27.2 million in four rounds of funding started in July 2007; investors include GSV Capital, Benchmark Capita and Integral Capital Partners  Grockit has built a social learning test prep platform for license and direct-to-consumer products. 9
    10. 10. NewSchools Venture Fund EdTech Map Source: Michael Horn, Innosight and Anthony Kim, Ed Elements (http://www.newschools.org/entrepreneurs/edtechmap) 10
    11. 11. Education and Learning Markets: Large,Diverse and Complex GSV Advisors eLearning Estimates Legend Total $90.9B Higher Education Corporate GLOBAL K-12 $48.8B us $32.5B $25.5B $17.4B $16.6B $9.6B $5.4B 11
    12. 12. Market Segmentation Perspectives Type of buyers Needs/Challenges Schools and school districts vary greatly K-12 (public and private)* in size and budgets Higher Education Institutions Many HE have larger tech budgets but (HEI)** under pressure to reduce their costs Need flexible and on-demand training Industry offerings Growing budget pressures drive their Government purchasing Consumer Shorter sales cycle and growing needs * New York City Department of Education: 1,042,277 students; 1,700 schools; 75,000 Teachers and annual budget of $24 Billion Los Angles Unified School District: 707,627 students; 730 schools; 45,500 teachers; and annual budget of $7.3 Billion ** Almost 4,500 HE institutions in the US, with total enrollment of 18.2 million students; University of California has 10 campuses, with 235,000 students and California State University system has 23 campuses and 400,000 students 12
    13. 13. Education and Learning Markets:Opportunity Segments Users of Services: Students, Teachers, Administrators, Parents Video use in Pilots have demonstrated Internet Access Devices education may follow major cost explosive savings Resources and Applications consumer adoption Education Resources & Services Authoring, Editing, Disseminating Administrative & Content Management (Open & Proprietary) ● Scheduling personnel/HR Text processing ● Audio/video Digital textbooks ● Digital libraries ● Plant/facilities capture/edit ● Programming ● Tutoring systems ● Simulations management Platforms ● Blogs ● Wikis ● Augmented reality ● Interactive ● Procurement ● Attendance ● Instructional/course Visualizations ● Student records management Various federal Assessment and Reporting and state Analytics for initiatives Social Networking and Collaboration adaptive learning Public and Private Network-connected Clouds--software services, data libraries & repositories Source: National Educational Technology Plan, 2010; page 59; and Strategic Business Insights 13
    14. 14. US and Global Education Landscape:Four Areas of Change and Opportunity A few major areas that will see significant change and opportunity Data Mobile Social MOOC* * MOOC: Massive Open Online Courses 14
    15. 15. Learning Analytics: Area of Growing Interest Sophisticated Learning and Data Mining Technology Platforms Data Predictive Warehousing and Techniques Cloud Computing Next-Generation Learning Analytics Adaptive learning Personalized learning paths Instructor Dashboards 1 See Enhancing Teaching and Learning Through Educational Data Mining and Learning Analytics: An Issue Brief; by 15 Marie Bienkowski, Mingyu Feng and Barbara Means, Center for Technology in Learning, SRI International 15
    16. 16. MOOCs: "New Kids on the Block" cMOOCs Characteristics: About harnessing the capacity of participatory media to connect people and ideas Built around lateral, distributed structures, encouraging blog posts and extensive peer-to-peer discussion formats. About discovery and generating knowledge cMOOCs More experimental and user-driven than xMOOCs MOOCs xMOOCs Characteristics: xMOOCs MOOCs offered by Udacity, Coursera, edX and others "Exist at the intersection of Wall Street and Silicon Valley" More "top down" and instructor-driven and more based on traditional teaching model Typically little integration with external resources and media © 2012 by Strategic Business Insights. All rights reserved. 16
    17. 17. Who is Doing What? 211 courses offered by end of 2012, from 33 universities University of California, Berkeley, University of Texas (UT), Wellesley, and Georgetown are also part of edX. UT says "there will be degree and certificate and professional development and training programs for health care professionals." At end of 2012, Udacity was offering 19 courses In December 2012, Open University launched its FutureLearn MOOC platform together with 11 other UK educational institutionsTable source: The Crisis in Higher Education; by Nicholas Carr; Technology Review, MIT; September27, 2012http://www.technologyreview.com/featuredstory/429376/the-crisis-in-higher-education/ 17
    18. 18. Learning Management Systems ProvidersEducation-focused "Incumbents": Blackboard Selected LMS Industry Characteristics and Desire2Learn Developments: Pearson Moodle Incumbents: Sakai  Becoming more learner-centric and looking beyond managing learning logistics  Improving UI and usabilityEducation-focused "Emerging  Involved in growing M&A to beef up capabilities and Contenders": competitiveness Instructure Epsilen Emerging Contenders: Loudcloud  Taking advantage of new tools & tech Lore  Often more web- and cloud-based Schoology  More social media friendly Edmodo  More flexible  Testing new business modelsIndustry-Focused Players: Saba Industry-focused Players: SumTotal  Many LMS systems building up talent management WBT Systems capabilities (to serve broader HR functions) Skillsoft  Plateau acquired by SuccessFactors which in turn NetDimensions was acquired by SAP ElementK LearnShare 18 18
    19. 19. Other Major Players in Education:Google vs. Apple vs. MicrosoftDevices/HW Services, SW & Content Google in Education:Chromebook Chrome OS Gaining strength as player in education,Nexus 4 smartphone Android OS especially through its Google Apps for EdNexus 7 tablet Google Apps for Seems to see education sector as becomingNexus 10 Tablet + Education more important customer segment YouTube/YouTubeEDU More "open" philosophy compared to Apple  Google PlusDevices/HW Services, SW & Content Apple in Education:iPads iOS & Mac OS Has long had strong presence in educationMacs iTunes & iTunesU with its HW and SW productsLaptops iBooks Recent efforts to leverage the "Apple eco-iPhones + iAuthor system" in education more effectivelyiTouch Apple app store Many feel Apple has wasted opportunity byiPods not focusing more on its strengths in educationAppleTV sectorDevices/HWSurface (tablet) Services, SW & Content Microsoft in Education:Xbox Game Console + Microsoft 365 Has long had many education and learningRoundTable video- MS Office initiatives Windows OS (8 is But has never had "cache" of Apple and hasconferencing device radically new OS) been seen as more "enterprise focused" Kinect (for gesture- HW and/or SW design has lacked intuitive based navigation) appeal of Apple, in particular Xbox gaming Warming up to open source but still mainly Sharepoint server developing proprietary tech Others © 2012 by Strategic Business Insights. All rights reserved. 19
    20. 20. Cisco in Education and Learning Cisco-WebEx Integrated Communication and Collaboration Platform Cisco Telepresence High-end audio and video WebEx Social1 communications system Used by Duke University and Facebook-like, social network (behind firewall) designed University of South Carolina, for educational institutions with intuitive UI among others Enables easy asynchronous and real-time communication and collaboration Provides personalized dashboard, displaying calendar, activity stream, and "watch list" to help users keep track Cisco Video-Conferencing of posts and activities Cisco product line strengthened Platform integrates chat, audio, video, desktop sharing, by acquisition of Tandberg whiteboarding, and community-based sharing products Search capability Used by many universities Tries to address the problem of the current system being de-centralized, fragmented, confusing, highly dependent on email UI: User Interface 1 Product launched at EDUCAUSE annual conference in November 2012 © 2012 by Strategic Business Insights. All rights reserved. 20
    21. 21. Media Companies: Growing Interest inEducation Sector Opportunities Selected quotes of Joshua Kim, Inside Higher Ed, August 20, 2012, from his article about "Media Companies, Seeing Profit Slip, Push Into Education;" New York Times, August 20, 2012 "Discovery (the cable TV company), News Corp, NBCUniversal, and Walt Disney are media companies dipping into the education business" " Education is emerging as an answer [to challenges the Web has presented to current business models of media companies], largely because executives see a way to capitalize on the changes that technology is bringing to classrooms." "The current education business focus of these media companies appears to be the K-12 market, but how long will it be until these same media companies look for a slice of the $4.5 billion dollar higher education textbook market? Beyond textbooks, annual higher education spending is somewhere north of $475 billion a year." " The market for edutainment will much larger than we realize. Consumers will pay for learning experiences that retain the production values and narrative drive of the best games, movies, and television shows. The growth of open online learning will also open up a larger market for exclusive learning experiences. Media companies are well positioned to serve this high end." " I could see large media companies getting serious about the educational space via strategic  investments in edtech startups. It is possible to buy into the educational space at much lower multiples than in other technology sectors (say gaming) - opportunities abound." Content Tech Others starting to make moves into education/learning: Amazon, Netflix, and others Services 21
    22. 22. The Digital/Virtual Game Landscape • Global Video Game Industry: Varying revenue estimates but likely ca. $70-75 Bill in 2011 [US: Total of $17.5 Bill (down 8%): Content ($9.3 Bill); HW ($5.6 Bill) and Accessories ($2.6 Bill) According to Atos Group--a large British acct to NPD Group] consulting firm--Serious gaming industry is expected to reach revenues of Euro 10 Bill by 2012 • Forecasts vary: $81B by 2016 by DFCI* while Gartner estimates $115 Bill. by 2015 (driven mostly by mobile gaming) Types Intent  Videogames  Entertainment  MMORPGs*  "Serious Games"  Virtual Worlds**  Casual Games***  … Game-Based Learning Gamasutra** reported on study that estimated global MMORPG market would reach $8 Bill by end of 2010, up from $5 Bill According to Ambient Insight--a research and consulting in early 2009 firm focused on technology-based learning--the US Game-Based learning market reached $232 Mill in 2010. The company expects the market to grow to $413 Mill in According to Kzero*** the vast bulk of VW users 2012. are in the age brackets of 8-15 years of age. One of the largest VWs catering to this age group is Habbo Hotel of Finland (with average of 10 mill unique visitors monthly); Eve Online has over 400,000 subscribers in older age groups.* DFCI= DFC Intelligence (Video Games and Entertainment Industry research company); NDP Group: Marketing research group** Gaming media company; *** British marketing and research company that tracks virtual worlds trends; 22
    23. 23. Implications for Nordic Entrepreneurs What are similarities and differences between US versus European and Nordic education and learning sectors?  Very different structure and funding systems--and role of central vs local governments  Problems in education sector (much?) less severe than in US, resulting in lower perceived need for changes and tech?  Less receptive sector for for-profit startups in Ed sector in Europe/Nordics?  Much less "buzz" about EdTech in Europe/Nordics than in US, at least right now? Tech in Education:  Will also penetrate Ed sector in Nordics--but in different ways and with different speed? What will be major differences?  Much tougher to find adequate venture funding in Europe/Nordics  Smaller and more homogeneous markets make comparisons to Singapore more appropriate than to US?  Adoption of best practices can see more rapid adoption in Nordics  Training of teachers for EdTech can be faster and less painful than in US  Great opportunities to build Nordic EdTech Forum or Community of Interest 23
    24. 24. Contact InformationEilif Trondsen, Ph.D.Strategic Business InsightsTelephone: +1 650 859 2665E-mail: etrondsen@sbi-i.comSkype: etrondsenTwitter; eilifThttp://www.strategicbusinessinsights.com 24
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