ETS Tests the Waters of Investing in Education Technology Startups

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ETS Tests the Waters of Investing in Education Technology Startups

By Tony Wan     Feb 5, 2019

ETS Tests the Waters of Investing in Education Technology Startups

The world’s biggest private nonprofit test maker is dipping its toes into the world of education technology investments.

ETS (short for Educational Testing Service) recently invested in two startups—Knack and NurseDash—in partnership with Village Capital, an early-stage venture capital firm that aims to support social-impact entrepreneurs. Each company received $75,000 from Village Capital and $50,000 from ETS.

At a time when startups are raising megarounds, those amounts may seem like a paltry figure. But according to ETS, this marks the first time in its 72-year history that it has invested directly in education startups outside of its core business line, says Scott Weaver, its chief strategy officer, in a prepared statement.

ETS is best known for offering assessments like the GRE and TOEFL exams. It also administers tests on behalf of other organizations including College Board, which contracts with ETS to deliver the SAT and Advanced Placement tests. And ETS contracts with OECD, which creates the global education assessment benchmark test known as PISA.

With more than $1.3 billion in revenues in 2017, ETS claims to be the largest assessment provider in the world, involved in delivering more than 50 million tests across over 180 countries every year.

Knack and NurseDash aren’t the first edtech deals for ETS, however. It bought Edusoft, an English language-learning tool, in 2011 and purchased assessment provider Questar for $127.5 million in 2017.

What’s different now, says ETS’ Director of Enterprise Growth Amy Tevere, is that those pair of acquisitions “were strategically oriented and closely connected to our core business.” The recent investments in Knack and NurseDash, she explains, is part of the group’s efforts to reach beyond and partner with startups in other educational markets.

These deals may just be the start of further investments down the road. “In recent years we’ve wanted to look at some inorganic growth opportunities, and so we’ve looked at accelerators to get in touch with what entrepreneurs and startups are working on,” she tells EdSurge. ETS’ investment focus, she adds, is on “working with lifelong learners on their various educational journeys, and looking at where the market is going to help solve their problems.”

One of these problems that ETS has identified—and invested in—has been popular among the edtech industry and its investors: Knack, based in Tampa, Fla. offers an online marketplace that connects tutor with students. Houston-based NurseDash is tackling a more niche market, offering a platform that connects nurses and medical facilities. Its goal is to help hospitals find nurses on demand, and to provide clinicians with more flexibility over their shifts.

These two companies were identified through a competition that Village Capital has organized since 2009. The pair bested ten other education startups that were part of the Education US: 2018 challenge, which is Village Capital’s fourth U.S.-based program for seed-stage startups in education.

The four-month program is unique in that it offers participating startups a series of industry-specific mentorship and workshops, and each company picks among their peers the two that will win the investments. To date, Village Capital has invested in more than 102 deals through this peer-selected model—including 14 edtech startups—and claims more than 90 percent of its overall portfolio companies are still around.

In addition to partnering with Village Capital to make this pair of investments, ETS has also provided financial support to LearnLaunch, a Boston-based accelerator program that provides funding and mentorship to early-stage edtech startups.

Yet ETS is not the only three-letter testmaker to make edtech investments. ACT, best known for its eponymous college-admissions test that many consider an alternative (or competitor) to the SAT, has been aggressively pursuing edtech deals. Since 2015 it has invested in or acquired more than a dozen educational organizations, including an edtech venture capital firm.

   

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