Smart Cities: Chicago is an EdTech Hotspot

This is part 2 in Smart Cities: Chicago series. View part 1 on Collaborative and Chaotic Reform Record here.

Education Industry.  Chicago has a long history of learning innovation. DeVry launched career schools more than 75 years ago and was one of the first to serve returning vets under the GI bill. Chicago is also home to Career Education Corporation which serves 90,000 students from 90 worldwide campuses and online.  The University of Illinois developed PLATO system, the first computer assisted instruction system about 50 years ago.

“Chicago is a leader in the ‘profitable-but-boring’ category in the education sector,” as one local observer said.  Those boring companies have been fetching 5x revenue in recent transactions.  Two Chicago-based big higher education services firms were acquired in October.  Wiley bought Deltak, a higher ed services firm, for $220 million. Pearson purchased EmbanetCompass for $650 million.  Lead generator All Campus spun out from it’s parent in October. Last October, Blackboard bought Edline (now Blackboard Engage).

In the ‘speaking softly’ category, when you hear Follett you may think library, but the $3 billion private company provides universities, schools and libraries a wide range of tools and services from content to e-commerce.

In the ‘wow, are they still around?’ category, Encyclopaedia Britannica and World Book are both headquartered in Chicago and both of are experiencing strong traction selling curriculum and research products to school districts and libraries.

Start-Ups.  Chicago is home to a diverse range of companies leading the shift to digital:

• PrepMe and BenchPrep provide mobile test prep solutions
• Everspring provides full-service, customized online educational solutions
• VLinks corporate learning solution
• MentorMob supports development of learning playlists
• MediaChaperone is a parent engagement platform
• Youtopia a student engagement platform that provides gamification tools
• Better.at supports interest networks
• eSpark Learning makes sense out of elementary iPad learning
• Wowzers is a game-based elementary math solution from the Brain Hurricane team
• Collaborative Learning helps teachers align instruction and curriculum standards
• SchoolTown is a social learning platform
• ThinkCerca supports Common Core aligned literacy instruction
• SkateKids produces elementary reading and thinking games
• Starter League will teach you how to code and market web apps
• WyzAnt will help you find a tutor (and SitterCity will find you a sitter)

NoRedInk, which won the “innovation challenge” at Education Nation this year, was started by a Chicago teacher.

Investors and Bankers.  “Chicago-based funds have completed over 15 venture investments,” according to Christopher Nyren, “in the education market and represent over $1.5 billion in combined assets under management.”

Leading venture investors and some of the education investments include:

• OCA Ventures: EdMap, Campus Explorer
• First Analysis: AdvancePath, Community Education Centers, Learning.com, SmartPros
• MK Capital: Apex Learning, eSpark, TopSchool
• Baird Ventures: InsideTrack

“Chicago and Midwest funds have completed over 30 private equity investments in the education market and represent over $8.5 billion in assets under management.” said Nyren, “No geography features more such experienced investors as right here with Sterling, Riverside, Chicago Growth, Primus, HCP, Prairie, Prospect, Concentric, and more.”

Chicago is home to talented advisors and merchant bankers including Deborah Quazzo at GSV Advisors and Christopher Nyren and Todd Maurer at Educated Ventures.  

“Overall tech space is getting hotter with the creation of Excelerate and 1871, and the impact investing/angel investing is scene is growing centered around Impact Engine,” said Ryan Blitstein.

Chicago rivals New York as an education industry leader and may be second to the Bay Area in edtech startups and funders.  There are great universities and foundations supporting innovation in early learning and afterschool.  Aside from a few bright spots and despite strong philanthropic support and the potential stability of mayoral control, Chicago Public Schools remains chaotic and largely impervious to the innovations and edupreneurs that abound in Chicagoland.

Thanks to Christopher Nyren, Margot Rogers, Kemi Jona, Patrick Haugh, Ryan Blitstein and other contributors to this two part series.  NoRedInk and AdvancePath are portfolio companies of Learn Capital where Tom is a partner.