The most wanted educational startups

1. Codecademy.com offers game-based online courses that teach people of all ages and experience levels how to code

2. Coursera.org Founded by Stanford computer science professors, Coursera provides access to courses from top-tier universities for free. 

3. Lore.com Formerly known as Coursekit, this company got its start in late 2011. Since then, it has raised over $24 million to fund its goal: to become a real competitor to education management platform Blackboard, partly by incorporating a wealth of social features into the site

4/ Udacity.com Former Stanford professor and Google VP and researcher Sebastian Thrun launched this online education venture earlier this year. Udacity hopes to bring high-quality university classes to as many students as possible, free of charge. How does it make money? If students want certifications for the skills they’ve learned, they can pay to take a test at one of the company’s testing centers. 

5. Clever.com - has built up a successful business model over the past year. The company helps educational institutions develop apps for managing student information by making it easier to access student data from Student Information Systems. Since launching, the company has earned more than $3 million in funding and has doubled the number of schools it works with from 1,000 to 2,000

6. Coursera wants to bring classes from top-tier universities to the Web for free.  On the platform, students can sign up for classes on everything from business and technology to sociology and literature. Students can’t earn degrees through the site, but a student could use it as a credential that opens up new opportunities. The startup has said that it plans to  match employers with people who have performed well in classes on its platform

7. Voxy.com

There are a lot of companies out there vying for supremacy in the online language-learning market

8. knewton.com/

9. Udemy.com is unique because it allows anyone to take or build an online course, not just colleges and universities. Instructors can implement videos, PowerPoints, zip files, audio files, and PDFs to create a course and share it with the world. The site offers courses on technology, business, music, art, languages, math, science, games, sports, and more.

The basic premise is to crowdsource education.

• TutorVista – started by offering online tutoring to Western students using tutors in India. All you can eat for $99/month or so. They burned millions on search engine marketing and were able to build a business that generated eight figure revenue — nice but not enough to IPO on. So they pivoted and opened education centers in India and were acquired for $213 million by Pearson. A $200+ million acquisition in India is unheard of.
• Tutor.com – started a decade ago to offer online tutoring to the masses. Never went mainstream, even after 5 rounds of funding. They’ve built a niche business that survives through deals they’ve struck with various government bodies — libraries, schools, etc.
• GlobalScholar – started by the CEO of Drugstore.com, tried initially to do a direct to consumer play. Realized it wasn’t working and bought an electronic gradebook company that works with schools and was sold to Scantron that has great distribution with schools.

VENTURE CAPITAL MAGNET

Fans of the project respond that the files are safer in the database than scattered about school districts. Plus, they say, the potential upside is enormous, with the power to transform classrooms across the U.S.

Does Johnny have trouble converting decimals to fractions? The database will have recorded that - and may have recorded as well that he finds textbooks boring, adores animation and plays baseball after school. Personalized learning software can use that data to serve up a tailor-made math lesson, perhaps an animated game that uses baseball statistics to teach decimals.

Johnny's teacher can watch his development on a "dashboard" that uses bright graphics to map each of her students' progress on dozens, even hundreds, of discrete skills.

"You can start to see what's effective for each particular student," said Adria Moersen, a high school teacher in Colorado who has tested some of the new products.

The sector is undeniably hot; technology startups aimed at K-12 schools attracted more than $425 million in venture capital last year, according to the NewSchools Venture Fund, a nonprofit that focuses on the sector. The investment company GSV Advisors tracked 84 deals in the sector last year, up from 15 in 2007.

In addition to its $100 million investment in the database, the Gates Foundation has pledged $70 million in grants to schools and companies to develop personalized learning tools.

New products regularly come to market, but both educators and entrepreneurs say adoption has been slow because of technical hurdles.

WARNING SYSTEMS TO FORESTALL DROPOUTS?

Schools tend to store different bits of student information in different databases, often with different operating systems. That makes it clunky to integrate new learning apps into classrooms.

At the Rocketship chain of charter schools, for instance, administrators must manually update at least five databases to keep their education software running smoothly when a child transfers from one teacher to another, said Charlie Bufalino, a Rocketship executive.

The extra steps add expense, which limits how many apps a school can buy. And because the data is so fragmented, the private companies don't always get a robust picture of each student's academic performance, much less their personal characteristics.

The new database aims to wipe away those obstacles by integrating all student information - including data that may previously have been stored in paper files or teacher gradebooks - in a single, flexible platform.

Education technology companies can use the same platform to design their software, so their programs will hook into a rich trove of student data if a district or state authorizes access.

That prospect has some companies dreaming big.

Larry Berger, an executive at Amplify Education, says the data could be mined to develop "early warning systems." Perhaps it will turn out, for instance, that most high school dropouts began to struggle with math at age 8. If so, all future 8-year-olds fitting that pattern could be identified and given extra help.

Companies with access to the database will also be able to identify struggling teachers and pinpoint which concepts their students are failing to master. One startup that could benefit: BloomBoard, which sells schools professional development plans customized to each teacher.

The new database "is a godsend for us," said Jason Lange, the chief executive of BloomBoard. "It allows us to collect more data faster, quicker and cheaper."

Whether all this data, and all the programs that use it, will transform education is another question. Most data-driven software has only been tested on a small scale; results are often mixed.

Though he is bullish on the sector, Michael Moe, the chief investment officer at GSV Capital, cautions that there is as yet no proof the new technology will produce "game-changing outcomes" for students - or, for that matter, sterling profits for investors.

There are lots of opportunities, especially if you take a long term view of it and want to build something meaningful for the next 25 years. However, don’t make the following mistakes:

• Don’t believe that building a better product will make you successful. Delivering something for cheaper will. Even if that cheaper thing is lower quality. This is usually repugnant to most well-educated entrepreneurs.
• Don’t start in developed, western countries because that’s where large, Internet businesses have been built. Asia is a much better education market if you want to target consumers.
• Don’t take VC funding because the growth curve in your education business will not live up to VC expectations early on. Take angel money from people who want to make a difference in education. Then take private equity money once you’ve figured out how to get to $10 million in revenue on your own. Even better, don’t take any PE money and grow it on cash flows. Successful education businesses are often not capital constrained.
• Don’t target suburban or urban, middle class users with disposable income. You’ll build a niche business that can’t go mainstream.

Others are more skeptical still.

"The hype in the tech press is that education is an engineering problem that can be fixed by technology," said Frank Catalano of Intrinsic Strategy, a consulting firm focused on education and technology. "To my mind, that's a very naive and destructive view."