"Investors are funding a lot more companies, but are increasingly reluctant to risk large funding amounts." So says a white paper (PDF), "The 2012 Boom in Learning Technology Investment," from market research firm Ambient Insight. It has yet to publish the data that it used to create these summary points. (Ambient is planning to put out a "taxonomy" document next week that might help.) Its broad points, however, raise more questions than answers for us. For instance:
"In 2012, 163 (90%) of the 180 companies that received funding obtained less than ten thousand dollars." (p. 3)
Ten thousand dollars? Are there a couple of zeroes missing? Every deal in this spreadsheet complied by NewSchools Venture Fund on K-12 edtech venture funding in 2012 is worth well over $10K. Another source, CB Insights, has average seed/angel edtech deals in the ballpark of $640K. (Heck, not even the cheapest incubators give less than $10K--and there are quite a few around.)
Ambient CEO Tyson Greer tells us that: "One reason our numbers may seem low is because we only count what is directly related to instruction; therefore, we don’t include investments for administrative platforms or general purpose ERP platforms that are used for education purposes. So, yes we do define the sector narrowly."
It's either a definition tighter than a wetsuit or, we worry, Ambient may have missed for a few deals.
It is also unclear how the report's authors define the eight product categories by which it breaks down investment data. For instance, "Social Learning" and "Mobile Learning" are presented as different categories, although there are companies like StudyBlue that encompass both. "Game-based" and "Simulation-based" learning are presented as separate categories, despite the fact that there is often a very blurry line between the two.
In a later section, the report also states:
"Online courses that lack some form of accreditation...have never been successful in the history of eLearning...These new companies are having little impact on the traditional education industry." (p. 17)
The report glosses over informal online learning providers, like Lynda.com or Udemy, which appear to be sailing along pretty smoothly without worrying about accreditation and certificates.
We could go on and on like the Energizer bunny rabbit. The report does raise some good questions, particularly about the viability of the freemium model for edtech businesses. But it's difficult to look past the glaring assumptions and questionable statements. This may be one to skip.
