'Merit, Not Marketing'
The educational-technology market is flooded with companies that say their products will “disrupt” or “revolutionize” how faculty and administrators work and students learn. To cut through the noise, the University of Virginia’s Curry School of Education is launching an ed-tech accelerator that will help start-ups bring their solutions to the market -- if the product lives up to the company’s claims.
And while the Jefferson Education Accelerator, which launches today, will initially only work with a handful of companies at a time, its founders say in the future it could expand to serve as an independent quality control organization -- a Consumer Reports for all things ed tech.
“We want everybody buzzing about the following two phrases: ‘prove it’ and ‘merit, not marketing,’” CEO Bart Epstein said. “We want every conversation at every procurement meeting at every level of education to include a real understanding of ‘What’s the proof?’”
The accelerator is not an incubator, Epstein stressed. It will target ed-tech companies in the growth stage, meaning the start-ups must have figured out certain aspects of how to run a business to qualify. For example, the companies must have generated $1 million in revenue, filled most of their leadership roles and produced some internal data the accelerator can review before being accepted into the program.
On one hand, those requirements disqualify many ed-tech start-ups that may have identified an issue and developed a solution to address it but not established how they will bring that product to the market. On the other hand, they also disqualify established companies whose products are in use at schools and colleges across the country.
“Only companies that add value and help students can and should expect to be around for the long haul,” Epstein said. “Right now, the role of efficacy in the marketplace is not as prominent as many people think it should be.”
Companies will, for a share of their equity, get to choose from a menu of five services that includes access to capital, consulting, efficacy research, faculty-supervised pilots and mentoring. Different companies will require different combinations and periods of engagement, Epstein said.
For the companies interested in testing their products, the accelerator plans to assemble a network of school systems and higher education institutions. In cases where the advisory board lacks the expertise to properly review a company’s data, the accelerator will draw on talent from faculty and teachers in the network.
“Education needs something like this for a quite a few reasons,” Epstein said. “From the perspective of colleges and universities, it’s difficult and confusing and sometimes overwhelming to decide between and educate oneself on all the products and services that are coming out.... From the entrepreneur’s perspective, it’s... difficult for them to break through and get attention.... Also, from an investor’s perspective, they want to invest in companies that will succeed based on merit.”
The Curry School Foundation and the nonprofit student loan guarantor United Student Aid Funds will invest $11 million in the accelerator, which will operate as a private, independent for-profit venture. Beyond funding the accelerator, the ed school will also form a scientific advisory board among its faculty members, who will evaluate data produced by participating ed-tech companies to determine what works and what is likely to succeed. At this point, the board won't evaluate companies that aren't officially participating in the program.
The board will make its research available through white papers and the accelerator's Web site, said Robert C. Pianta, dean of the ed school, and plans to coordinate with the other schools and institutions in the network on how to publicize its findings.
“Ed schools have a responsibility and an obligation to do what they can to bring to bear the best, the most evidence-supported products and solutions out to end users,” Pianta said. “It puts the voices of educators squarely in the development cycle for ed-tech-related solutions, so we don’t have what is typically a pretty wide chasm and disconnect between the technology that gets developed and whether it gets used.”
The accelerator has its own reasons to work with companies it believes can be successful, Epstein said. If several of the companies it invests in perform poorly, the accelerator will be unable to fund future investments. In that case, the accelerator would have to rely more heavily on foundational grants, which in turn could dictate which segments of the ed-tech market the accelerator evaluates.
Epstein called that scenario “relatively unlikely,” saying, “We would like to maintain the flexibility to work with the very best companies, no matter what.” He also pointed to the faculty advisory board as evidence that research determining the efficacy of ed-tech products will remain independent.
USA Funds’ involvement as a financial backer is likely to raise similar questions. Like many guarantee agencies, it issearching for ways to diversify as its old market of insuring private loans begins to disappear.
William D. Hansen, president and CEO of USA Funds, was unable to comment for this article. Hansen previously served as deputy U.S. Secretary of Education during the first two years of the George W. Bush administration.
Epstein said USA Funds decided to fund the accelerator because of its interest in “completion with a purpose” -- ensuring students go to college to find a suitable career path.
“Investing in an education accelerator like this requires a partner who has a social mission and not just a financial mission,” Epstein said. “In other words, if we went down to Wall Street... bond traders are not going to be rushing to be putting their money in.”
The accelerator plans to become self-sustaining within five to seven years -- a prediction that may change depending on developments in the ed-tech market, Epstein said. A period of acquisitions, mergers and initial public offerings could lower the time frame to two years, while a “quiet period” in the market could have the opposite effect. “Our success rate is hugely important,” he said.
The accelerator isn't planning to name its inaugural group of companies today -- that announcement will come later this month -- but Epstein said seven are in final discussions to join. The accelerator plans to work with an even mix of companies serving the K-12 and higher education markets.