Money & Finance Opinion

Mark it a Ten: Tech Acquirers Enter the World of Education

By Tom Segal — October 11, 2013 3 min read
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The big news coming out of yesterday was the acquisition on TenMarks by Amazon. TenMarks is a web-based adaptive math program often used to complement math concepts taught by teachers. It offers integrated math practice, instruction assessment, and intervention to improve student outcomes.

While deal terms have not been announced publicly, TenMarks has served over three million students and has been used in well regarded charter networks such as School of One and Rocketship Education. It seems that the pair will be teaming up to build educational applications and content for teachers, parents, and students across multiple platforms.

From the press release:

Amazon and TenMarks share the same passion for student learning. TenMarks's award-winning math programs have been used by tens of thousands of schools and Amazon engages with millions of students around the world through our Kindle ecosystem," said Dave Limp, Vice President, Amazon Kindle. "Together, Amazon and TenMarks intend to develop rich educational content and applications, across multiple platforms, that we think teachers, parents and students will love."

Ed-Tech acquirers have historically been broken into three main buckets: media companies (think Discovery), education conglomerates (think Pearson), and private equity firms (think Vista Equity Partners). While many in the ed-venture world have long believed that a fourth bucket, technology companies, was sure to enter the fray at some point, the transition has been slow to happen. Now that Amazon has broken through the mold, a new era of ed-tech players may (hopefully) be taking shape.

Google is an obvious name that comes to mind. With its suite of applications known to the world as Google Apps increasingly gaining a footing within K-12 across the globe, Google is already a major education player, even if these pieces were not built with the sector initially in mind. And while Google is yet to make a concerted push into ed-tech venture acquisition, they do seem to care an awful lot about the future of education, led by my old pal Jamie Casap. Google recently partnered with EdX, one of the leading MOOC providers, and also offers summits around the world to showcase its value in the world of education. Of course, with Google Glass on the way, a stronger focus on education-facing software (not to mention the myriad startups looking to be the builders of its applications) is sure to follow.

Then there is Google’s oft-forgotten older brother: Yahoo!. Ever since Marrisa Mayer took hold of the reins, Yahoo! has been on an acquisition tear, attempting to establish a stronger foothold and increasing differentiation within the ever-blending world of tech/media. Surely they may be a candidate for ed-tech acquisition.

Not only would tech companies add a whole new buyer to the market of ed-tech venture, but they would also provide smarter implementation. Of all the buckets of possible ed-tech acquirers, technology represents the highest multiples paid on revenue. They can afford to pay a higher tab because they live and breathe automation and scale--they know how to maximize every dollar of value from a new platform or data collection engine. And as far as I’m concerned, no single act of consumption is more ripe for the data-mining than that of a learner with a clear process and goal.

The existence of such an acquirer has the added effect of incentivizing more business folk to start an education-focused venture. Talented entrepreneurs and engineers will look at the upside scenarios present in a market where interested acquirers include the crème-de-la-crème of new school conglomerates and have far greater interest in getting involved. Ed-tech will increasingly be seen less as a niche and “impact-oriented” venture field and more as a legitimate software business with tangible models and exit scenarios. That genius programmer is more likely to dedicate his or her services toward building a sleek teacher-facing technology rather than become the 11,984,042th engineer to join the Facebook team for a nice chunk of change.

It only makes sense that technology super-powers dip into the education market moving forward: customers are sticky and usage can be quite powerful. It’s also no surprise that Amazon is leading the way. Few entrepreneurs in the world have the foresight and aptitude of the great Jeff Bezos. Let’s hope others are swift to follow.

Related Tags:
Investment/Venture Capital Entrepreneurship Google Startups

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