The EdTech Failings of Silicon Valley

Christopher Nyren:

In the last three month period, EdTech attracted $690 million of venture capital, reaching $4 billion of total private investment for the year, up two thirds from the previous year and quadruple two years prior.

This was the trendline for EdTech venture capital investment at the end of 2000.

After the dotCom crash, it would be another decade until 2012 when EdTech would again draw in $1 billion of total private investment, repeating in 2013 and likely again in 2014, with nearly $600 million raised in Q1 2014 alone. The leanest post-Bubble years of 2002 – 2005 would see less than $100mm of annual venture capital inflow, with 2005′s haul perhaps just $50 million, a pathetic 3.5% CAGR from the $30 million of total private investment generated 15 years prior in 1990 at the industry’s dawn.

While the Internet Bubble and its burst were extreme events, the 1997-2001 period does present several interesting parallels with the current market, with capital flowing freely across all sectors (from K-12 through “MOOCs”) and a diverse range of investors, from mission aligned super angels including the co-founders of the leading technology companies (e.g., Microsoft, Oracle, Netscape, AOL), education funds like New Schools Venture Fund (founded then by Jim Barksdale and Steve Case) and the venture funds of ”Silicon Valley” (not to mention “Silicon Alley” and Boston) that are still leading the tech markets today (i.e., KPCB, Accel, Bessemer, Charles River Ventures, Warburg, Maveron, Sequoia, etc). Only the individual names involved differ from then: Paul Allen then and Bill Gates today; Jim Barksdale then and Marc Andreessen today; John Doerr then…and, well, John Doerr still again.