Revenue from online courses for K-12 jumped 320 percent from the year before, in part because the definition of “online course” has expanded. “We used to think of ‘online course’ as a stand-alone offered course like MOOCs (Massive Online Open Courses), but now companies have really broadened to include any digital curriculum that can even be integrated within the classroom and with face-to-face work,” said Karen Billings, vice president of the Education Technology Industry Network. “This reconceptualization could be a fundamental shift for the K-12 market.”
The testing and assessment market, which raked in $2.5 billion during the reported year, was the single largest category of any segment. The assessment market increased so quickly because of the growth of test-friendly Common Core standards a few years back when this data was being collected, Billings explained. She added that—given President Barack Obama’s recent push to limit testing in schools—the segment may soon see a testing pushback that will hurt revenue down the road.
Revenue for management systems—such as Blackboard Learn—grew 40 percent, putting it back at levels last seen in 2010. The growth is consistent with more ed-tech products across the board, but the pre-’10 dip in this particular area happened in part because “nobody wants to call their product a ‘learning management system,’ because that doesn’t sound exciting,” Billings said. “So if a product is mainly [a learning management system] but also offers some content, they’ll try to put it in a ‘content’ category instead.”
More schools buying ed-tech products means that more investors are pouring money into related startups. According to industry group EdSurge, American ed-tech companies raised a total of $1.36 billion last year, up from $1.2 billion in 2013. For K-12 alone, investment grew 32 percent last year to roughly $642 million. Continuing that trend, K-12 investment had already totaled $679 million in the first half of this year alone.
Shifting school policies have made it easier to partner with ed-tech companies, which has in turn lured more investors in. That certainly wasn’t the case a decade ago, says Tony Wan, the managing editor of EdSurge. In the past, schools initiated a lengthy “request for proposal” process and evaluated many different companies’ offerings before making a decision—a process that could take anywhere from six months to two years, which is “a lifetime for most startups,” Wan said.
Now, schools are allowing companies to directly demo their products for three or six months at a time before committing. That means startups are able to get their products in the classroom much more quickly.
For example, New York’s Department of Education has a unit called the Innovation Zone, or iZone, that acts as a middleman to match schools with ed-tech companies, depending on the needs of both, for these short-term trials. There are similar examples across the country, from a partnership between California’s Silicon Valley Education Foundation with the New Schools Venture Fund, to an organization called Leap Innovations that works with schools in Chicago.