A boom time for education start-ups

March 18, 2012, The Chronical of Higher Education

Despite recession investors see technology companies’ ‘Internet moment’

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.

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