16 Startups Poised to Upend the $4.6 Trillion Education Market Colleges and universities are facing new competition for customers–students and their parents–from startups delivering similar goods (knowledge, credentials, prestige) more affordably and efficiently. Here’s a rundown of some of those startups.

How pricey is a traditional four-year education? 

So pricey, that even the mayor of New York City, who lives rent-free, earns $225K per annum and owns two Brooklyn homes, considers the cost of schooling his two children “a big challenge,” according to a recent New York Times story.

In a new book, The End of College: Creating the Future of Learning and the University of Everywhere, author Kevin Carey distills a brave new world in which a myriad of lower-cost solutions–most in their infancy–threaten to upend the four-year, high-tuition business model by which colleges and universities have traditionally thrived. 

Whether Carey or his publishers are overstating the scope–“the end of college” is no small claim, hedged as it is in the subtitle–is a question time will settle. What matters more, for entrepreneurs, is how fertile the opportunity is for startups exploring what Carey reports is a $4.6 trillion market for global education. 

Carey’s book describes many of these startups, all of which are taking aim at vulnerabilities in the incumbent business model. Here’s a rundown: 

1. Rafter. Using cloud-based e-textbooks and course materials, Rafter helps campus bookstores digitize their offerings and keep their prices low, allowing them to regain the market share they were losing to other stores and course materials marketplaces.

The school wins because store revenues rise. The students win because course materials are cheaper. And then Rafter wins, boasting of the results in convincing win-win customer testimonials. Rafter’s customers include the University of Hawaii, North Carolina State University, and Thomas More College.

2. Piazza. Piazza is an online study room where students can anonymously ask questions to teachers and other students. The best answers get pushed to the top through repeated user endorsement. Like Rafter, Piazza serves existing schools (1,000 of them, including Stanford, MIT, and Princeton). And it boasts endorsements from several professors at those schools. 

How does Piazza make money? As Adam Vaccaro reported last year on Inc.com, Piazza offers recruiters access to its talent pool of 1.25 million global students.  

3. InsideTrack. As with the above two companies, InsideTrack sells its services to the universities. It provides highly personalized coaching to students and it helps colleges assess whether their technology and processes are equipped to measure student progress.

In short, it helps students learn, and it also helps colleges collect and manage the technology that assists and provides evidence of that learning. By combining high tech analytics with flesh-and-blood tutors, InsideTrack helps schools do what they’re supposed to do: Teach. 

The company boasts testimonials from leaders at Arizona State, the University of Virginia, and others. In addition, InsideTrack recently announced a partnership with Chegg, through which it will provide its coaching services directly to students. 

4. USEED. If you attended a four-year school, then you know the feeling of receiving relentless requests for alumni donations. USEED is like Kickstarter for school fundraising: It helps schools build customized crowdfunding platforms for specific projects, and it helps them target alums who may have a particular interest in supporting those projects. 

Customers so far include the University of Pittsburgh and Penn State University. 

5. Course Hero. One of Inc’s 30-Under-30 companies from 2013, Course Hero is an online source of study guides, class notes, past exams, flash cards, and tutoring services. More than five million students use its resources. 

Though it’s not really a startup anymore–it was founded in 2006–it’s still receiving rounds of VC money (including a $15-million infusion late last year).

6. Quizlet. This is another site offering shared learning tools from students worldwide. It was founded around the same time as Course Hero, in 2005.

Today it humbly has numbers other companies would brag about: Almost 15 million monthly active users who average nearly 20 minutes per session, not to mention a consistent showing in the top 10 free education apps in the iTunes and Google Play stores, according to Tony Wan’s superb story on EdSurge

7. The Minerva Project. Other companies on this list provide services to schools or students. The Minerva Project is, literally, a new school.

It offers a world-class undergrad education for $10,000 a year, using online teaching methods and not wasting money on sports or buildings. Yet the students live together and enjoy a community experience. As freshmen, they live in San Francisco. They then spend each of the next six semesters together in a different global city. 

Minerva’s first undergrads–a class of 70 selected from 2,500 applicants–enrolled last September. 

8. Dev Bootcamp. In its own way, Dev Bootcamp is also a new school. Its program allows you to become a web developer after a 19-week course costing under $14,000. 

It’s one of many web-developer schools taking this approach: Giving customers a credentialed certification, career services, and an alumni network for a price that’s a fraction of what traditional education costs. 

Plus, if you go to Dev Bootcamp, you’ll never have to endure an annoying conversation at the dinner table about what you plan to “do” with your degree. 

9. The UnCollege Movement. Founded by Thiel Fellow Dale Stephens (who took $100,000 from Peter Thiel to not to go to college), this organization provides students with a 12-month Gap Year experience for $16,000. 

The yearlong program has four phases: living in a Gap Year House, traveling abroad, working at an internship, and completing a creative project.

In other words, enrollees get some of what you’d get in college–dorm life, community–and some of what you’d get in a traditional gap year: travel, real-world experience. But you get it at a lower price.

10. Udacity. Founded by Stanford computer science professor Sebastian Thrun, Udacity creates online classes through which companies can train employees. AT&T, for example, paid Udacity $3 million to develop a series of courses, according to theWall Street Journal.

Other corporate partners include Google, Facebook, and Salesforce.

11. Coursera. The tagline says it all: “Free online courses from top universities.” Indeed, its partners include prestigious universities worldwide.

It makes plenty of money too–$8-$12 million in annual revenues, by EdSurge’s estimate–through specialty classes and verifiable certifications of completed coursework.

12. EdX. In a nonprofit joint venture, MIT and Harvard created their own organization offering free online courses from top universities. Several other schools now offer their courses through EdX, including Berkeley, Georgetown, and the University of Texas system. 

One of the many strengths of Carey’s book is its in-depth profile of EdX, through which Carey himself takes a class in introductory biology. 

As a nonprofit with an open-source platform, EdX can appeal to schools with a distrust of what drives venture-backed startups. Over time, it will be interesting to observe how nonprofits like EdX–founded by the schools themselves–compete and coexist with traditional for-profit startups in the education space. 

13. Carnegie Mellon University’s Open Learning Initiative. CMU’s OLI is another example of a nonprofit startup founded by a school to ward off its own potential disruption. 

14. Saylor.org. Founder Michael Saylor has been musing on how technology can scale education since he himself was an undergrad at MIT in the early 80s. Anyone, anywhere, can take courses on Saylor.org for free. 

Carey writes that Saylor sees a potential business opportunity in what he calls “deep identity” credentialing: The technology that will, one day, create authentic, mobile-friendly documents attesting to anyone’s educational accomplishments. 

Think of it this way: If there were a secure, fast way for employers to view your educational credentials–to sort and compare in the click of a mouse with the credentials of thousands of other job candidates–wouldn’t any employer want it?  

15. Open Badges. Founded by Mozilla, Open Badges is an attempt to establish “a new online standard to recognize and verify learning.”

It is, in other words, another recognition that credentialing is a developing frontier in a landscape increasingly occupied by countless students taking countless courses from countless online providers of those courses. 

16. Accredible. Calling itself the “future of certificate management,” Accredible is the company that provides certification services for several of the online schools on this list, including Saylor.org and Udacity. 

Through Accredible’s services, students can also add recommendations to their certifications. So, instead of doing it the old-school way–asking a professor to mail an actual letter–all you have to do is ask once, and the recommendation becomes a part of your digital badge. 

All of these startups are just a small piece of what Carey’s book paints as the bigger long-term picture: “A thriving ecosystem of nonprofit and for-profit organizations [that] will develop around the core education providers, offering students a range of services to support, facilitate, and improve their educational experience.”

http://www.inc.com/ilan-mochari/16-startups-that-will-disrupt-the-education-market.html

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s