A recent $16 million investment in Civitas Learning has put the spotlight on Central Texas’ growing educational technology sector, which is seeing established companies expand and new startups get off the ground.
In Austin, the players range from Compass Learning, which has 245 employees and is one of the country’s leading developers of software for primary and secondary schools, to Querium, a 10-person upstart that recently raised $800,000 to expand its software service, which helps high school and college students learn math and science skills.
For now, education technology is still a small niche in Austin, with fewer than a couple dozen companies developing new software and services. But entrepreneurs say the sector has good growth potential in Austin.
Civitas, which announced its funding last week, sells software designed to help college students make better educational decisions, with the goal of increasing graduation rates. The venture capital infusion from investors including New York-based Rethink Learning will allow the company to nearly double its 100-person workforce this year. It’s currently hiring engineers, data scientists and sales and support workers.
When Charles Thornburgh founded Civitas four years ago, he chose Austin over San Francisco for the company’s headquarters.
“It was about the alchemy – great schools, including (Austin Community College) and UT-Austin; the state government; the talent; the funding environment and the startup ecosystem. It’s that combination that makes it possible for us to build an ed-tech hub here,” said Thornburgh, who was formerly a senior executive at test preparation giant Kaplan Inc., where he spent nine years as an in-house entrepreneur. Before that, he founded Testtakers.com, an education technology startup that was acquired by Kaplan in 2002.
For companies in expansion mode, it’s a good time to raise money. After years of little interest from venture capitalists, money is flowing into education technology.
“Education is one of the last industries to be touched by Internet technology, and we’re seeing a lot of catch-up,” Betsy Corcoran, CEO of EdSurge, an industry news service and research firm, told The New York Times this month. “We’re starting to see more classical investors – the Kleiner Perkinses, the Andreessen Horowitzes, the Sequoias – pay more attention to the marketplace than before.”
Venture and equity financing poured $1.87 billion into education technology companies last year, a 55 percent increase from the previous year, according to a report from CB Insights, a venture capital database. The investment is the largest in a single year since CB Insights began tracking the industry in 2009.
Querium founder Kent Fuka said the University of Texas has been instrumental in getting his company off the ground.
“It’s a huge advantage to get access to world-class people in education and computer science,” Fuka said. “And if you’re doing something that’s aligned to particular subjects, such as building chemistry or math online education products, you can tap into faculty, graduate students and current students. It’s really easy to find people who can write questions and can develop content.”
In addition, Querium has hired veterans of Austin’s video gaming industry. “We’re trying to make our products fun and engaging for students because if they won’t use it, it can’t help them,” Fuka said. “We’ve been able to get some veteran game developers who have experience in building 3D video games. Austin has a neat combination of talent in game development, video production, artificial intelligence and educational publishing. When you add in the university, that’s a terrific kind of cauldron.”
The diversity of Austin’s workforce is what helped lure Compass Learning here from San Diego eight years ago. The company employs former educators, software engineers and a digital media production team that creates courses with sound, animation and video.
Filming for Compass Learning’s software, which is used by 2 million students in more than 10,000 schools, takes place in a green-screen studio in the company’s basement, with local actors taking on a variety of roles.
“The appeal was not only the technical talent, but the creative talent as well,” said Eileen Shihadeh, Compass Learning’s vice president of marketing and product development. “That combination makes it a really good spot for us.”
A look at some of the educational technology companies in Austin:
Civitas Learning: Sells a software service that helps students select degrees and courses, helps faculty and advisers identify at-risk students and helps administrators identify which investments are working. Founded in 2011, the company has raised $29 million and has 100 employees.
Compass Learning: One of the country’s leading developers of software for primary and secondary schools. Its products are used by 2 million students in more than 10,000 schools. The company, which was acquired by Marlin Equity Partners for $32 million in 2010, has 245 employees.
Enspire: Provides online business simulations and leadership development programs to customers including Southwest Airlines and the American Heart Association. The company, which is self-funded, was founded in 2001 and has 40 employees.
Thinkwell: Publishes online video-based textbooks for core curriculum in college and high school. Founded in 1997, the company has raised $20 million and has 30 employees.
Sapling Learning: Owned by publishing giant Macmillan, sells online homework and curriculum for college and high school students and instructors in science, engineering, economics and math fields. The company has 230 employees and its software is used by more than 500,000 students.
SubjectMatter: Sells an online platform that lets students schedule meetings and communicate online with tutors as well as academic advisers, teachers and admissions and financial aid staff. Founded in 2012, the company has raised about $1.2 million and has eight employees.
Querium: Sells software that software helps high school and college students master math and science skills by acting as a tutor and grading assistant. Founded in 2013, Querium has raised $800,000 and has 10 employees.
Source: American-Statesman research