Edtech Business

NYC Keeps Its Edtech Accelerator Revving With New Funders and Markets

By Tony Wan     Oct 5, 2017

NYC Keeps Its Edtech Accelerator Revving With New Funders and Markets

New York City never sleeps and, apparently, neither does its effort to galvanize the education technology startup ecosystem. Today, the Big Apple’s edtech accelerator—a collaborative effort by New York University, venture capital firm Rethink Education, and StartEd, an industry network—announced the next dozen startups for its three-month program.

The twelve companies aim to tackle a broad range of issues, from kindergarten readiness to helping employers learn about the compliance rules relevant to their work. Each participant will receive $20,000 in equity investment upfront for the 3-month program, which includes a series of workshops on business and customer development, along with pitching and fundraising tips.

Roughly 500 companies applied, claims Jonathan Harber, a managing director at StartEd. They whittled down that list to 37 finalists before picking the 12.

Dubbed the NYU Steinhardt Edtech Accelerator powered by StartEd, the program will culminate in a demo day during NY EdTech Week in December, a multi-day conference that draws financiers and other entrepreneurs across the industry.

After the program, Rethink Education, an education-focused venture fund based outside of New York, can choose to invest an additional $150,000 in these companies. This capital comes from a $15 million seed fund, launched in tandem by Rethink and Southern New Hampshire University this past March.

“What we’re looking for is evidence of product-market fit,” Michelle Dervan, a principal at Rethink Education, tells EdSurge. “Ideally we’d like to see recurring revenue and repeatability in the sales process. Dervan will serve as a mentor to the companies throughout the program.

What distinguishes this early-stage accelerator from others, says Harber, is a “partnership with a local university, and for us to bring entrepreneurship education to its students.” The participating companies will tap researchers and students at NYU’s Steinhardt School of Culture, Education, and Human Development for help. “There’s an opportunity to connect [NYU] students with jobs and internships at the companies in the program,” says Jonathan Harber, StartED’s managing partner, who is also teaching a graduate-level seminar at NYU on the subject.

At a time when other education technology accelerators are taking a rest, the New York edtech community is doggedly keeping these programs running. The edtech industry reached peak accelerator in 2015, when at least 14 such programs dotted the map. Yet due to a lack of funding and shifts in strategic priorities, that number is closer to 10 today. (Imagine K12 has been absorbed into Y Combinator. Intel has hit pause on its edtech accelerator. And Co.lab’s funding has dried up.)

Yet the markets appear to be rewarding entrepreneurs who tough it out, observes Harber. “Something that’s fundamentally shifted in the last decade are the private equity firms and their interest in edtech companies,” he says. “That’s in part because there’s growth in the companies that scale. Now we’re talking about unicorns in edtech,” Harber adds, referring those that reach $1 billion in valuation.

Harber can point to recent examples of education companies now owned by private equity firms: iParadigms (the company behind Turnitin, bought by Insight Venture Partners in 2014), Renaissance Learning (sold to Heller & Friedman in 2014), PowerSchool (bought by Vista Equity partners in 2015) and Frontline Education (acquired by Thoma Bravo this year). Other encouraging signs include companies like 2U and Instructure that have gone public.

Those companies weren’t built overnight—in fact, some have been around for nearly two decades. Yet windfall rewards patient investors and companies, says Harber.

His fellow StartEd managing partner, Jeanne Allen, believes the current political environment offers an opportune moment. Better known for her outspoken role as CEO of the Center for Education Reform, Allen sees the federal education department’s deliberate restraint (and in some cases, undoing of regulations) as a blessing for education businesses.

“The Trump Administration’s promised flexibility is now a reality and they take pride in telling people that they don’t have the answers,” she states via email. “The [Education] Secretary’s reluctance to regulate...means more opportunity to innovate, more opportunity to develop new approaches to old challenges.”

Letting states and districts make decisions “opens up enormous opportunity for all developers of products and services to engage with people making decisions closer to the kids,” Allen adds. She recognizes this will require entrepreneurs to develop a “fragmented strategy” tailored to the needs of each potential buyer.

“What entrepreneurs need to know, however, before engaging productively, is precisely who does what and how states, cities and towns may differ,” she adds. “Personalization is where education is going and so, too, is the work all around it.”

Half of the 12 startups in this StartED cohort are led by women, a fact that the organizers are particularly proud of. Here’s a brief rundown of the dozen companies selected:

  • Cognitive ToyBox, which is developing a suite of educational games and apps focused on kindergarten readiness;
  • Compliance World, an online community where experts can inform you whether your company is complying with industry laws and regulations;
  • Core Labs, which aims to help organizations build and cultivate professional working networks;
  • Invibed, a provider of financial education platform that offers lessons, financial plans and one-on-one coaching;
  • KiraKira3D, an online community focused on engaging kids (especially girls) in design, STEM activities and 3D modeling;
  • Localized, which helps universities provide career and alumni services that are tailored to students and companies in regions across the world;
  • MedAux, an education and messaging system for physicians, nurses and their patients;
  • MoxieReader, which offers an independent reading tracker for use at home and in schools;
  • Quartolio, which boasts using AI technology to help connect and curate data and insights in published research and journals;
  • SecondAccent, an assessment and coaching platform that helps English learners work on their accents;
  • Student Opportunity Center, a platform that helps connect students to real-world learning opportunities and experiences such as conferences, publications and internships;
  • Wonda VR, which offers publishers a tool to create interactive content for Samsung Gear VR and Google Cardboard.

Edtech Business

NYC Keeps Its Edtech Accelerator Revving With New Funders and Markets

By Tony Wan     Oct 5, 2017

NYC Keeps Its Edtech Accelerator Revving With New Funders and Markets

New York City never sleeps and, apparently, neither does its effort to galvanize the education technology startup ecosystem. Today, the Big Apple’s edtech accelerator—a collaborative effort by New York University, venture capital firm Rethink Education, and StartEd, an industry network—announced the next dozen startups for its three-month program.

The twelve companies aim to tackle a broad range of issues, from kindergarten readiness to helping employers learn about the compliance rules relevant to their work. Each participant will receive $20,000 in equity investment upfront for the 3-month program, which includes a series of workshops on business and customer development, along with pitching and fundraising tips.

Roughly 500 companies applied, claims Jonathan Harber, a managing director at StartEd. They whittled down that list to 37 finalists before picking the 12.

Dubbed the NYU Steinhardt Edtech Accelerator powered by StartEd, the program will culminate in a demo day during NY EdTech Week in December, a multi-day conference that draws financiers and other entrepreneurs across the industry.

After the program, Rethink Education, an education-focused venture fund based outside of New York, can choose to invest an additional $150,000 in these companies. This capital comes from a $15 million seed fund, launched in tandem by Rethink and Southern New Hampshire University this past March.

“What we’re looking for is evidence of product-market fit,” Michelle Dervan, a principal at Rethink Education, tells EdSurge. “Ideally we’d like to see recurring revenue and repeatability in the sales process. Dervan will serve as a mentor to the companies throughout the program.

What distinguishes this early-stage accelerator from others, says Harber, is a “partnership with a local university, and for us to bring entrepreneurship education to its students.” The participating companies will tap researchers and students at NYU’s Steinhardt School of Culture, Education, and Human Development for help. “There’s an opportunity to connect [NYU] students with jobs and internships at the companies in the program,” says Jonathan Harber, StartED’s managing partner, who is also teaching a graduate-level seminar at NYU on the subject.

At a time when other education technology accelerators are taking a rest, the New York edtech community is doggedly keeping these programs running. The edtech industry reached peak accelerator in 2015, when at least 14 such programs dotted the map. Yet due to a lack of funding and shifts in strategic priorities, that number is closer to 10 today. (Imagine K12 has been absorbed into Y Combinator. Intel has hit pause on its edtech accelerator. And Co.lab’s funding has dried up.)

Yet the markets appear to be rewarding entrepreneurs who tough it out, observes Harber. “Something that’s fundamentally shifted in the last decade are the private equity firms and their interest in edtech companies,” he says. “That’s in part because there’s growth in the companies that scale. Now we’re talking about unicorns in edtech,” Harber adds, referring those that reach $1 billion in valuation.

Harber can point to recent examples of education companies now owned by private equity firms: iParadigms (the company behind Turnitin, bought by Insight Venture Partners in 2014), Renaissance Learning (sold to Heller & Friedman in 2014), PowerSchool (bought by Vista Equity partners in 2015) and Frontline Education (acquired by Thoma Bravo this year). Other encouraging signs include companies like 2U and Instructure that have gone public.

Those companies weren’t built overnight—in fact, some have been around for nearly two decades. Yet windfall rewards patient investors and companies, says Harber.

His fellow StartEd managing partner, Jeanne Allen, believes the current political environment offers an opportune moment. Better known for her outspoken role as CEO of the Center for Education Reform, Allen sees the federal education department’s deliberate restraint (and in some cases, undoing of regulations) as a blessing for education businesses.

“The Trump Administration’s promised flexibility is now a reality and they take pride in telling people that they don’t have the answers,” she states via email. “The [Education] Secretary’s reluctance to regulate...means more opportunity to innovate, more opportunity to develop new approaches to old challenges.”

Letting states and districts make decisions “opens up enormous opportunity for all developers of products and services to engage with people making decisions closer to the kids,” Allen adds. She recognizes this will require entrepreneurs to develop a “fragmented strategy” tailored to the needs of each potential buyer.

“What entrepreneurs need to know, however, before engaging productively, is precisely who does what and how states, cities and towns may differ,” she adds. “Personalization is where education is going and so, too, is the work all around it.”

Half of the 12 startups in this StartED cohort are led by women, a fact that the organizers are particularly proud of. Here’s a brief rundown of the dozen companies selected:

  • Cognitive ToyBox, which is developing a suite of educational games and apps focused on kindergarten readiness;
  • Compliance World, an online community where experts can inform you whether your company is complying with industry laws and regulations;
  • Core Labs, which aims to help organizations build and cultivate professional working networks;
  • Invibed, a provider of financial education platform that offers lessons, financial plans and one-on-one coaching;
  • KiraKira3D, an online community focused on engaging kids (especially girls) in design, STEM activities and 3D modeling;
  • Localized, which helps universities provide career and alumni services that are tailored to students and companies in regions across the world;
  • MedAux, an education and messaging system for physicians, nurses and their patients;
  • MoxieReader, which offers an independent reading tracker for use at home and in schools;
  • Quartolio, which boasts using AI technology to help connect and curate data and insights in published research and journals;
  • SecondAccent, an assessment and coaching platform that helps English learners work on their accents;
  • Student Opportunity Center, a platform that helps connect students to real-world learning opportunities and experiences such as conferences, publications and internships;
  • Wonda VR, which offers publishers a tool to create interactive content for Samsung Gear VR and Google Cardboard.
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