Pearson Bets on Adaptive Learning (Again) With $25M Acquisition of Smart...

Mergers and Acquisitions

Pearson Bets on Adaptive Learning (Again) With $25M Acquisition of Smart Sparrow

By Tony Wan     Jan 22, 2020

Pearson Bets on Adaptive Learning (Again) With $25M Acquisition of Smart Sparrow

Smart Sparrow, which provides course-authoring tools for faculty and instructional designers to build adaptive courseware, has found a new home in a much bigger nest.

Last week, Pearson announced it paid $25 million to acquire Smart Sparrow’s technology, in a move that the publisher says will bolster the digital infrastructure that will soon support all its future higher-education offerings.

The deal marks the latest in a series of acquisitions involving digital courseware, the industry parlance for online products that leverage data and technology to personalize the course instruction and feedback that each student receives. One such provider, Acrobatiq, was acquired in 2018. The following year, Knewton was bought in a deal that has become a poster child for education technology hype.

Founded in 2011, Smart Sparrow had raised about $23.5 million in venture capital. As part of the deal, most of its staff will join Pearson. Neither party disclosed how many people will make that transition, or the current headcount at Smart Sparrow.

Already, the Sydney, Australia-based company has pulled back on its social media presence. Its accounts on Facebook and Twitter are no longer active, as an education industry analyst noticed.

One person who will not make the move is Dror Ben-Naim, the founder and CEO of Smart Sparrow. He and a small team will remain with Smart Sparrow, which is not technically being acquired by Pearson. Instead, Smart Sparrow will continue as its own independent entity for at least a little longer, largely to provide customer support.

That’s because the deal coincides with another momentous event on the company’s horizon—one that Ben-Naim says his team and customers have been preparing for.

Smart Sparrow’s current platform is built on Adobe Flash, the technology that supports interactive elements in web browsers. Flash will be sunsetted on Dec. 31, 2020, and the platform will likely shutter before then, says Ben-Naim, who adds that he and a small staff will help customers transition and move their content to another platform.

Ben-Naim declined to disclose how many customers currently use Smart Sparrow. On its website, the company claims it has more than 700 institutional customers across the K-12, higher education and corporate learning space.

In recent years, Ben-Naim says his team has been building the next iteration of its adaptive course-creation tool. Called Aero, the platform has been in the works since 2017. And though Aero has not been publicly released or announced, that was the technology that attracted Pearson, he adds.

Pearson officials did not respond in time for the story. In its statement, the publisher said Smart Sparrow’s technology will support its capabilities in adaptive learning and add more interactive and immersive features for its digital books.

Birds of a Feather

Smart Sparrow traces its origins to 2004, to the University of New South Wales in Australia, where Ben-Naim, then a Ph.D. student and teaching assistant, began building his own homegrown adaptive tutoring technologies. That effort laid the groundwork for the company’s course-authoring tools, which offered instructors more control over the sequence of content and feedback that students encounter as they work through the materials. In other words, they can dictate and tweak the rules that defined the adaptive learning experience.

By putting educators in the driver’s seat, Smart Sparrow offered a different approach from other tools whose adaptive pathways were determined by preset algorithms that faculty couldn’t understand or control (leading some to describe them as a “black box.”)

That approach caught the attention of one of the biggest funders in the education technology industry. In 2014, the Gates Foundation awarded the company a $4.5 million grant as part of a challenge to develop digital courseware tools. That money went to support the establishment of the Inspark Teaching Network, an online platform for sharing digital science courses created by the company and Arizona State University (ASU).

Smart Sparrow is also a partner in other grant-funded work, including an active project that received $2.5 million last year from the U.S. Department of Education to improve access to open-licensed educational materials, or OER. Ben-Naim says the acquisition by Pearson could “affect the plan,” which was to build OER content on Smart Sparrow. He says conversations are underway with Ariel Anbar, an ASU professor who is leading the project, to explore how the deal may impact the effort.

Anbar has been building courses on Smart Sparrow since 2011, and currently leads a team at ASU that has built virtual field trips, astronomy courses and other interactive science lessons on its platform. He says he has not had any discussions with Pearson about its plans for Smart Sparrow’s technology but is optimistic about reaching a suitable arrangement.

The acquisition “validates the things we’ve been doing for a while,” Anbar tells EdSurge. “We’re enthusiasts about the technology, and we’re excited that Pearson sees what we see. At least that’s what it looks like.”

Smart Sparrow also had plans to use its technology to support other education endeavors. ACT, the group best known for its assessment used in college admissions, invested $7.5 million in 2018. At the time, Ben-Naim told EdSurge: “It is our intention to come up with a few projects and products with ACT that will shift their strategic direction in the next two to five years.”

ACT spokesperson Ed Colby said in an email that the organization has “collaborated with Smart Sparrow in different areas” but did not specify which efforts. Ben-Naim said there were ideas that ultimately did not materialize.

Pearson’s Adaptive Ambitions

Despite financial support from high-profile backers, the company’s efforts to expand its customer base proceeded at a modest clip. And as Smart Sparrow continued development work on Aero, Ben-Naim said Pearson became more interested in supporting the startup’s longer-term vision for the tool, which “boils down to empowering faculty and giving them pedagogical ownership over how instructional experience happens in adaptive systems.”

In its statement, Pearson said the Smart Sparrow technology would support its “Global Learning Platform,” a cloud-based technical infrastructure for its digital products. In an interview last year, Pearson’s outgoing CEO John Fallon described the Global Learning Platform as “the adaptive-learning engine of the company.”

Developing adaptive learning capabilities has been an ongoing effort for Pearson—dating back to nearly a decade, when it invested in Knewton in hopes of using the startup’s technology for its digital products. That did not pan out, leading the publisher to say it would rely on an “in-house” team to create its adaptive learning technology.

Already, some of Pearson’s digital courseware, including its Revel line of products, are hosted on the Global Learning Platform. The plan is to move all of its higher-ed offerings, including digital textbooks, onto it by the end of 2020.

Last year, Pearson resumed investing in and acquiring education technology companies after putting these activities on pause. But despite its investments in digital products, the publisher has been slow to reap returns in its bottom line. In an update on its 2019 full-year performance, Pearson reported a 12 percent decline in its overall U.S. higher education courseware business. Digital products contributed 63 percent of this business last year, versus 55 percent in 2018.

Losses from declining print sales have outpaced gains in digital revenue, which will likely remain the case in the near term. For its 2020 forecast, Pearson says to “expect trends seen in 2019 in US Higher Education Courseware to continue with heavy declines in print partially offset by modest growth in digital as more products are added to the [Global Learning Platform].”

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