Harsh economic realities mean trouble for college leaders. But where administrators perceive an impending crisis, investors increasingly see opportunity.
In recent years, venture capitalists have poured millions into education-technology start-ups, trying to cash in on a market they see as ripe for a digital makeover. And lately, those wagers have been getting bigger.
Investments in education-technology companies nationwide tripled in the last decade, shooting up to $429-million in 2011 from $146-million in 2002, according to the National Venture Capital Association. The boom really took off in 2009, when venture capitalists pushed $150-million more into education-technology firms than they did in the previous year, even as the economy sank into recession.
“The investing community believes that the Internet is hitting education, that education is having its Internet moment,” said Jose Ferreira, founder of the interactive-learning company Knewton. Last year Mr. Ferreira’s company scored a $33-million investment of its own in one of the biggest deals of the year.