In 2012, education technology firms attracted $1.1 billion from venture capitalists, angel investors, corporations, and private equity–an order of magnitude more than the industry was pulling in 2002. Startups Coursera and Udacity, which offer high-quality online college courses to the masses, have each received more than $20 million from investors. Big corporations are buying their way into the industry, with Rupert Murdoch’s News Corp. leading the way in 2010 by dropping $360 million to acquire ed-tech firm Wireless Generation and luring education superstar Joel Klein away from his gig as the head of New York City schools.
But will the rush of cash translate into a radically transformed education landscape? When this kind of money flowed into tech companies in other sectors of the economy, we saw radical improvements in everyday transactions, as well as some dramatic booms and busts. Think Amazon instead of the mall, iTunes instead of the record shop, Expedia instead of a travel agent. But also think Pets.com and Full Tilt Poker, where intense competition and bad politics squelched what looked like good bets. There has been a flowering of good ideas in online education, like hybrid learning, in which kids still head off to school every morning but receive the bulk of their instruction from an infinitely patient piece of software instead of a harried, overworked teacher. Yet education, particularly K-12, has remained mostly immune to the improving and empowering forces of the Internet, leaving millions of kids stuck in offline backwaters for six hours a day. Per-pupil spending on public education has more than doubled over the past three decades, while student performance has flatlined.
As the parent of a toddler, I’d love to start banking on my daughter’s virtual elementary school matriculation. I want more choices than just the neighborhood public school or an exorbitantly priced private school offering pretty much the same curriculum in nicer facilities. Personalized learning and highly specific feedback appeal to me as a parent. But while Wall Street’s interest in online education may bode well for entrepreneurs and students, bullish investors and parents would do well to listen to war stories from weary education policy wonks.