Founders Fund-Backed Knewton And Other Education-Tech Companies Move to the Head of the Class

10/19/11Follow @jpruth

School is in session with education technology startups earning good grades from investors. Last Thursday, New York’s Knewton raised $33 million in a funding round led by Founders Fund and education and media company Pearson. The new cash will go towards further development of Knewton’s adaptive learning platform, which customizes education content for each student. The investment also speaks to a broader interest among investors in backing startups that use technology to revamp the way students learn.

Knewton thus far has raised $54 million in total funding according to chief operating officer David Liu. Other investors in the latest round include Accel Partners, FirstMark Capital, and Bessemer Venture Partners.

Much in the vein of Pandora recommending music based on interest and on-the-fly feedback, Knewton’s learning platform tailors education content to the student based on difficulty level and other factors. The platform creates a profile of each student who logs in and suggests new material to them as they progress in class. “We are building an algorithm around adaptive learning,” Liu says.

The investor community has taken a shine to other education technology companies as well. For example, three-year-old 2tor in New York raised $32.5 million in March in a Series C round led by Bessemer Venture Partners. 2tor creates the framework and logistics for graduate degree programs offered online by universities. The Series C round brought 2tor’s total funding to $62.5 million, says co-founder Jeremy Johnson. Investors in the latest round included City Light Capital , Highland Capital, Novak Biddle, and Redpoint Ventures.

Johnson says live video over the Web and other technology make online courses more interactive for students and their instructors. University of Southern California, Georgetown University, and University of North Carolina-Chapel Hill currently use 2tor’s technology to offer online courses for certain graduate programs. Johnson says his company has a staff of 320 and continues to hire. “We’ll definitely be at 400 in the next six months,” he says.

Johnson says others in the education technology sector are also winning over investors. For example, Voxy in New York, which is developing a mobile language learning platform, raised $2.8 million in a Series A round in August from ff Venture Capital, Contour Ventures, and Seavest Capital Partners. “There is an increased interest in wanting to disrupt current models of education,” he says.

That disruption seems well underway at Knewton. As education publishers offer more digital textbooks for computers and tablets devices, Liu says that content can be broken down, tagged, and reformulated by Knewton’s platform for individual students.

Liu likens the system to adaptive tests that choose the next questions based on how students respond to previous questions. Knewton, he says, builds a profile of each student based on such criteria as how long they take to answer certain questions, their academic performance in the morning versus the afternoons, and the videos they watch while using the platform. “For every individual, you will have what’s best for you and only you,” Liu says.

The idea is to present educational material to students in ways that encourage more retention and comprehension. Liu says Knewton has made inroads with educators in spite of the sector being traditionally conservative about change. “It doesn’t move very quickly, but people understand what we are trying to do,” he says.

Knewton developed a cloud-based product called Math Readiness for College that is being used by Arizona State University to help incoming students who are not ready for freshman math. “[Some] college kids today need to go through some kind of remediation course,” Liu says. Such students are typically sent to community college, he says, to get up to speed with their classmates.

With Knewton’s platform, Arizona State students who need to develop their math skills can take a self-paced online course for remediation purposes. “We are able to see how the student is doing, recommend the next piece of math content, and get them through faster,” Liu says.

Looking ahead, Knewton plans to double its current staff of 70 within 24 months thanks in part to its latest funding with hiring especially software engineers and data scientists. Furthermore, the company will try to broaden its reach by opening up its technology for third-party use, which could expand adoption into the K-12 education market, Liu says. “Anybody will be able to work with our [application programming interface] and build courses on top of our technology,” he says.

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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