For 15 years, the University of Minnesota College of Education and Human Development researched the essential skills needed for preschool children to be ready for kindergarten. That research eventually became the framework for IGDIs, a university-funded set of early-literacy assessment materials.
Teachers could order free flashcards that measure students’ literacy skills and log in to a university website to manage the results. The university says 180,000 students have used IGDIs, which stands for Individual Growth and Development Indicators.
Now, this research project has a new identity: as a startup company, Early Learning Labs, launched this month.
Innovations in areas like science, engineering, and medicine commonly make the transition from academia to the market, benefiting from financial and intellectual resources and university patent offices. As technology increasingly brings venture capital and a startup culture into K-12 education, some universities are seeing a similar opportunity in that sector.
At the University of Minnesota, Twin Cities, the office for technology commercialization identified IGDIs a few years ago as a potentially marketable commodity, not just a free tool, if given the proper investment and business development.
As one of the university’s “internal business units,” or IBUs, Early Learning Labs received a $100,000 investment from the university, and underwent a 20-month internal business-development program. Once that period ended, the company became independent of the university. It is free to raise outside investment and develop new products.
“The problem became that teachers were downloading these tools, but [the tools] weren’t providing a full solution,” said Steve Johnson, the 26-year-old president of Early Learning Labs and a former intern in the office for technology commercialization. “The only way to provide a full solution is to increase the resources behind it.”
Research to Product
The IBU program at the University of Minnesota isn’t exclusive to education ventures, but its structure lends itself to the field, university officials said.
The amount of funding to take an idea from the research level to the product phase is fairly modest in education, compared with other areas, said Rick Huebsch, an associate director of the university’s office for technology commercialization.
Because of those relatively low costs, education startups like Early Learning Labs can become self-sustaining quickly and focus more on product development. Other areas, like science or medicine, require lengthy and costly approvals and tests to reach the same stage of development, Mr. Huebsch said.
Through various other arrangements, universities have become active in fostering education entrepreneurship.
The University of Pennsylvania, along with the Milken Family Foundation in Santa Monica, Calif., sponsors a business-plan competition for education with a cash prize. Stanford University’s StartX “incubator” program for its students has included education companies. But in both cases the universities do not get a stake in the companies.
A new doctor of education program at Johns Hopkins University will offer courses in entrepreneurship and include a program for startup companies and for small, established companies looking for acceleration. The school and its partner on the program, the Education Industry Association, are now raising funds for the incubator, and terms have not been determined, said Steven Pines, the executive director of the EIA, a Vienna, Va.-based trade group.
For years, research in education has found its way to the marketplace, but not necessarily through a formal business-development program. In 1998, for instance, Carnegie Mellon University founded Carnegie Learning, a publisher of middle school, high school, and postsecondary math curricula, based on 20 years of research at the university.
Other universities foster new companies by teaming with corporate sponsors that become investors or owners of technology developed at the schools. The MIT Media Lab, at the Massachusetts Institute of Technology, is one such program that spun off education companies and nonprofit ventures.
Last year, the University of Wisconsin-Madison launched the Center for Education Products and Services to license and market intellectual property created by faculty members, according to its website. But those products are not independent of the university.
CaseNEX, an online professional-development tool, was founded at the University of Virginia’s Curry School of Education.
Planting Seeds
Stanford is known for backing technology created at the university; many faculty members invest in student-driven products, most notably Google.
But Stanford’s support of education technology companies consists mostly of advising students who have market-ready ideas on how to build a business, and putting them in touch with potential investors, faculty members said.
“We like to think of what we do in this program as planting a lot of seeds and seeing what grows, rather than, ‘We are going to start a company,’ ” said Karin Forssell, the director of the learning, design, and technology program in Stanford’s graduate school of education.
Master’s projects from the school have gone on to become notable education companies, most recently Motion Math and Toontastic, both popular educational mobile applications for young students. But those companies operate independently of the university.
That’s why the University of Minnesota-Twin Cities initiative is unusual: It spins off independent companies with direct investment dollars from the university.
Proceeds the university earns from its stake in a company will go first to covering its costs and then be split among the inventors, related departments, and university funds, Mr. Huebsch said.
Scott McConnell, who led the IGDIs research along with two other professors and two research associates, is also a shareholder in Early Learning Labs and will serve as a senior adviser. University alumni also invest in the company and are shareholders, Mr. Johnson said.
With or without actual investment from a university, there are pros and cons to starting a company under the umbrella of higher education.
To start, there is far more credibility for a product that is backed by lengthy, intensive research, like Early Learning Labs, Mr. Huebsch said. And such a product already has thousands of users.
“Sometimes you have to actually produce a customer base, and sometimes doing that while part of a university is easier than starting up a company in a garage,” Mr. Huebsch said.
And as Mr. Pines, of the EIA, pointed out, universities are great environments for research and development.
“You already have faculty researchers in that environment that are doing the heavy lifting of product development,” he said.
Early Learning Labs’ first goal is to repackage the print materials into a more organized assessment tool and to beef up the reporting and tracking software. Eventually, the company will offer mobile applications, Mr. Johnson said.
Building those products with the intellectual capital of a university available, and with the patience that a university environment affords, is invaluable, Mr. Johnson said. Conversely, $100,000 isn’t a large amount of actual capital.
“There’s a lot of help you don’t have to pay for, but there’s not a lot of cash,” Mr. Huebsch said.
