This is the second part of my much-abbreviated look at the stories that were told about education technology in 2018 – and in this case, the people who funded the storytellers.

When I first started working as a tech reporter, I assumed – naively – that venture capitalists were smart people who did thorough research before funding a company. They are, after all, typically investing someone else’s money. One should be conscientious, as such. Right? I assumed that they looked to see if the company could do what it promised – financially, technologically. I assumed they checked to see if the idea was sound, the founders trustworthy.


One of the best books I read this year was Bad Blood by WSJ journalist John Carreyou. It chronicles the rise and fall of Theranos, a company that promised to revolutionize the medical industry by running a complete slate of tests using only a drop of blood (rather than the more voluminous quantity of blood that can be rather frightening to have drawn). Its founder, Elizabeth Holmes, dropped out of Stanford to start the company when she was just 19. With a media blitz that included a popular TED Talk, Holmes steered the company to a valuation of nearly $9 billion, raising over $700 million in funding. There was just one problem: it was all a deception. The technology did not work. And the phony test results put people’s lives at risk.

In June, Holmes and her boyfriend were indicted on a number of charges, including conspiracy and wire fraud, and they could face time in prison. (I bet they won’t.)

John Warner made the connection between Theranos and ed-tech in an op-ed published on Inside Higher Ed, noting the parallels between the claims about companies poised to revolutionize education, often made by those without much experience or expertise in teaching and learning and the claims that Holmes and her company made – claims that those with experience and expertise (biologists and chemists and medical engineers, for example) knew simply weren’t true.

Nevertheless Holmes was able to tap into a network of powerful, wealthy conservatives, including George Schultz and Henry Kissinger and others connected to the Hoover Institution at Stanford. Networks matter. They matter to who gets funded more than any of those naive ideas I had about the key being good ideas or good businesses or good people. Reporting in May, John Carreyou noted that among those who’d lost the most money by investing in Theranos were the Walton Family, Betsy DeVos, Rupert Murdoch, and Carlos Slim – all also major (conservative) funders of charter schools and ed-tech.

Bad blood indeed. It runs pretty thick.

Follow the Money

But hey, it was another record-setting year for ed-tech investment. Here’s the year by the numbers:

  • Investment dollars: $4.46 billion
  • Number of investment deals: 187
  • Average investment size: $26 million / Median investment size: $5.2 million
  • Number of acquisitions: 109
  • Number of spinoffs: 1
  • Number of mergers: 9
  • Number of IPOs: 4
  • Number added to the “ed-tech dead pool”: 10

All that money. All that activity.

A closer look reveals a lot of illness too, a lot of exploitation, a number of criminal convictions, and a lot of uncertainty about the shape of the future of education.

The Biggest Investments of 2018

The companies that raised the most money this year:

  • BYJU’s (tutoring): $540 million
  • VIPKID (tutoring): $500 million
  • Zuoyebang (tutoring): $350 million
  • Yuanfudao (tutoring): $250 million
  • 17zuoye (tutoring): $200 million
  • (music education): $150 million
  • DreamBox Learning (adaptive learning): $130 million
  • Zhangmen (tutoring): $120 million
  • Connexeo (school administration software): $110 million
  • DadaABC (English language learning): $100 million
  • Knowbox (tutoring): $100 million

(You can see the complete list of investments here.)

As far as I can tell, these are now the most well-funded ed-tech startups (that is, those education companies which have not gone public):

  • SoFi (student loans): $2.16 billion
  • VIPKID (tutoring): $825 million
  • CommonBond (student loans): $803.6 million
  • BYJUs (tutoring): $784 million
  • (English language learning): $608.9 million
  • Zuoyebang (tutoring): $585 million
  • 17zuoye (tutoring): $585 million
  • EverFi (“critical skills” training): $251 million
  • Yuanfudao (tutoring) –- $244.2 million
  • Coursera (online education): $210.1 million
  • Knewton (adaptive learning): $182.3 million
  • Age of Learning (educational apps): $181.5 million
  • DreamBox Learning (adaptive learning): $175.6 million
  • Udemy (skills training): $173 million
  • AltSchool (private school; learning management system): $172.9 million
  • D2L (learning management system): $165 million
  • Udacity (skills training): $160 million

All great investments, I'm sure.

Notable Investment Trends

The most well-funded types of education company this year were those who offered tutoring. Tutoring, to be clear, here mostly means test prep.

It’s worth noting, I think, that tutoring as the preferential method of instruction is deeply intertwined with the long history of computer-assisted instruction and “intelligent tutoring systems.” Tutoring is the cornerstone of technological fantasies about “personalized learning.” You’ll often hear its advocates invoke Benjamin Bloom’s 1984 study on “the 2 Sigma Problem” and claim that one-on-one tutoring is radically effective at improving student outcomes. The results of Bloom’s investigation are a little suspect; or at least, they’ve never been replicated. But before the 1980s and since, many education technologists have been convinced that tutoring is the best form of instruction – far, far surpassing “traditional” classroom instruction – and that the only way that we can reach the goal of one tutor per child is to use the computer as the tutor.

Investors in tutoring companies this year included Warbug Pincus, Goldman Sachs, Learn Capital, Y Combinator, the Omidyar Network, Sequoia Capital, TAL Education, Tencent, Google, and of course, the Chan Zuckerberg Initiative.

Not all of these tutoring companies rely on AI or adaptive teaching, although that is a big selling point of some of them. Many of them take advantage of the “gig economy,” using low-wage freelance workers (many of whom are teachers working a second job) as tutors. It’s “flexible, interactive, and fun” sponsored content on Edsurge wants its readers to know.

Of the twenty some-odd tutoring companies that raised funding this year, ten were Chinese. As you can see from the list above, these accounted for some of the largest funding rounds of 2018, and Chinese tutoring companies are now some of the most well-funded education startups.

Chinese tutoring company TAL Education also invested in Edsurge this year – so watch its message about “personalized learning” and tutoring – a message backed by the Chan Zuckerberg Initiative too – grow much louder, with little recognition of how tutoring exacerbates educational inequalities.

Bad Investments and Unhealthy Markets

The record level of investment dollars belies the health of the education sector. 2018 saw the lowest number of deals in recent history, as larger companies gained multi-multi-million dollar rounds. Although the number of acquisitions appeared strong, many of those were deals by private equity, which is often a sign that a disastrous restructuring is poised to take place. (One of the most active acquirers this year was the private equity firm Francisco Partners, which bought Discovery Education, Renaissance Learning, and MyON.)

Neither Pearson nor Blackboard, companies that were quite active in gobbling up startups a year or so ago, bought a single company this year. Microsoft bought three companies in 2018. ACT and TurnItIn both bought two. (You can see the complete list of acquisitions here.)

Perhaps the biggest acquisition of the year was Edmodo. Well, it wasn’t big financially. It was big as in bad. China’s NetDragon paid $137.5 million for Edmodo – only about $15 million of which was cash. Not a great outcome for a company that had raised over $77 million in venture funding and had been lauded as the future of social learning. “EdTech fails to pay, again,” The Financial Times chuckled.

Why, it was just a few years ago that Pearson sold off The Financial Times, wasn’t it, in the hopes that a restructured company could make ed-tech pay. How quickly we forget…

The industry’s fixation on “the future of learning” certainly seems to prevent many people from taking a good look at the past. And my, isn’t it always fun to revisit some of ed-tech’s darlings of yore.

In 2017, for example, Edsurge informed its readers that “MissionU Says It Can Replace Traditional College With a One-Year Program.” One year later, in May of this year, Edsurge informed its readers that MissionU would cease operations. (You can see a list of all the companies that joined the ed-tech “deadpool” here.) In 2012, Wired Magazine proclaimed that Udacity “could change higher learning forever.” Techcrunch asserted that Udacity would “end college as we know it.” Udacity’s founder Sebastian Thrun predicted that “in 50 years, there will be only 10 institutions in the world delivering higher education and Udacity has a shot at being one of them.” This year, Udacity ended its money-back guarantee. It upped the price of its “nanodegrees.” (Its MOOC competitor edX also announced this year that many of its courses would no longer be free.) Udacity laid off about a quarter of its staff mid-year. And its CEO stepped down.

Vive la MOOC révolution.

The Privatization of Education

Speaking of MOOCs, Phil Hill astutely observed earlier this year that many MOOCs and for-profit companies were altering their products and services so as to become online program management providers: “If At First You Don’t Succeed, Try To Be An OPM.”

The growing reliance on OPMs is part of a larger trend of outsourcing and privatization – and certainly not all of this occurs online, as the “coding bootcamp” trend underscores. (Among the coding bootcamps raising money this year: Trilogy Education, which raised $50 million, and Galvanize, which raised $25 million. Among the startups that closed their doors this year: coding bootcamp Learners Guild.)

The original OPM is probably the learning management system. Watch everyone (AltSchool, Summit Learning) try to become LMSes.

Another recommendation for a 2018 book on how corporations are reshaping public education to suit their needs: The University of Nike by Joshua Hunt.

Ed-Tech and IT Authoritarianism

If I were writing my usual, lengthy series on the year’s “trends,” I certainly would have devoted one article to the connection between ed-tech and “IT authoritarianism.” I did make a brief nod to this when I wrote an article analyzing Edsurge’s latest round of funding – a round that included two Chinese investors, test prep company TAL Education and

China is hardly the only country we should keep an eye on here. It’s hardly the only country willing to surveil, track, and punish students. The US excels at this too, no doubt. We have children in cages, and ICE monitoring schools.

The connections between tech and authoritarianism became a lot more obvious this year, I’d hope.

Perhaps the murder of Washington Post contributor Jamal Khashoggi doesn’t seem like a “business of education technology” story. But it matters.

The murder of Khashoggi is a story that is deeply connected to many of the people in the tech and VC industries. It shows how little those in Silicon Valley care for democracy. Silicon Valley has overtly courted Saudi wealth – it has a “Saudi Arabia Problem,” as NYT op-ed writer Anand Giridharadas put it. “Technology companies can no longer turn a blind eye to the human rights abuses of one of their largest investors,” he argued. (MIT, on the other hand, says it’s too lucrative to sever ties.)

At least one major investment vehicle, SoftBank’s Vision Fund – worth about $100 billion – is funded in part by Saudi money. The fund has backed high profile startups like Uber and Doordash and Slack, among others. Among its ed-tech investments: WeWork, SoFi, and perhaps soon Zuoyebang.

When the Saudi Crown Prince Mohammed bin Salman toured the US this year, he hung out with Mark Zuckerberg, Jeff Bezos, and Sergey Brin and others. Among those involved in bin Salman’s $500 billion “smart city” project, Neom, venture capitalist Marc Andreessen and former Uber CEO Travis Kalanick.

“Smart cities” are authoritarian cities. “Smart cities” are public spaces and public institutions, privatized. The data analysis and surveillance that are at the core of “smart cities” will surely include education data. “Smart cities” will be facilitated by ed-tech, thru the ed-tech industry. This is the future of learning that plenty of folks are hawking.

They’ll tell us they’re doing it for our own good.

The Business of Education Philanthropy

Charity is no substitute for justice withheld, as St. Augustine famously stated. And philanthropy is no substitute for not paying your taxes. But billionaires – tech billionaires and otherwise – all seem convinced that through their philanthropic efforts they can reshape education, reshape how education is funded and what is taught.

Two of the world’s richest men – Mark Zuckerberg and Bill Gates – were joined by more of the world’s richest men to that end this year. Jack Ma, China’s richest man, announced this fall he was retiring from Alibaba to focus on educational philanthropy. (Alibaba is already active politically in the US, this spring joining ALEC, the right-wing organization that “ghost-writes” state legislation to benefit its corporate members.) Jeff Bezos, the world’s richest man, announced this fall that he was creating a $2 billion fund to address homelessness and to start a chain of “Montessori-inspired” preschools. Like Amazon, but for preschool – “the child will be the customer,” Bezos wrote in his statement.

Bezos was hardly the only person interested in investing in early childhood education. As Rachel Cohen argued in response to his announcement, “preschool is a particularly appealing area for those who like conceptualizing problems in terms of market potential.” The child will be the customer; the child will be the investment, if you will.

Startups providing preschool-related ed-tech services were also popular investments, raising money this year from the likes of the Omidyar Network, Andreessen Horowitz, and the Chan Zuckerberg Initiative. Wonderschool, for example, took in $22 million in funding; Brightwheel took in $21 million.

Other areas of investment for Chan Zuckerberg Initiative in 2018 – that is, in addition to tutoring and preschool management software: career placement software, English language learning software, and financial aid management software. (The one ed-tech spinoff this year was the Summit Learning management system, which spun out of the Summit Public Schools charter chain – but not too far out of CZI.) CZI also made a number of grants, which Chalkbeat, a CZI grant recipient itself, helped to identify – the venture philanthropy company remains quite opaque about where its dollars goes.

The lovely thing about these philanthropists is how they fund education journalism to tell the stories they want folks to hear. It’s only later that those journalists say “oh damn, looks like that reform didn’t work out, eh?” But the great thing about being a billionaire tech philanthropist, I guess, is never having to say you’re sorry. Or rather, you never have to actually mean it.

I mean, who’s gonna hold you accountable?!

Audrey Watters


Hack Education

The History of the Future of Education Technology

Back to Archives