Seed Money Drying Up For Education-Related Businesses

By Mark Walsh

Just over a year ago, anyone armed with an idea for improving education and a business plan could get a lot of money from venture capitalists, or so it seemed in the supercharged economy.

Now, that well has all but dried up. Venture investments in education businesses have declined steadily since a peak of just over $1 billion for the first quarter of 2000. In the second quarter of this year, the figure had fallen to $247 million, with none of that going to businesses focused on K-12 education, according to Eduventures.com.

"What we saw last year was a record amount of venture capital going into education," said Thomas S. Evans, a director and senior analyst with the Boston-based research firm, whose figures are widely respected in the industry. "But if you dug behind the headlines, there was a steady...