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Bill Gates: Education System Needs More Entrepreneurs

Bill Gates, speaking at the SXSWedu conference in Austin, urged entrepreneurs to create educational programs for the 21st Century.

Bill Gates presents the keynote address during South By Southwest edu at the Austin Convention Center on March 7, 2013 in Austin, Texas.

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The Bill and Melinda Gates Foundation has invested more than $250 million in U.S. schools, but according to Bill Gates, who spoke Thursday at the SXSWedu conference in Austin, that's not nearly enough.

"Is the overall investment in education commensurate with its importance?" he asked. "Absolutely not."

The numbers speak for themselves: From 1995 to 2011, the share of venture capital invested in education companies was just one percent--compared with 38 percent in technology companies, and 19 percent in healthcare firms.

The lack of VC interest has come as education quality in the United States--once heralded as the best in the world--has declined rapidly. In the widely-cited 2006 OECD Programme for International Student Assessment list, the U.S. ranked 35th out of 57 in mathematics. It ranked 29th out of 57 in science.

When it comes to investment, "It would be rational for society for that number to be much larger, and create that big opportunity," he said. Part of the problem, he says, is that not enough entrepreneurs are entering the space.

Gates recognizes that technology on its own can't cure our country's education deficits, but it could play a large role--and Gates believes the time is ripe for entrepreneurs to step in. That's because state and local-level educational funding is beginning to shift toward companies that are positioned to offer more innovative and technologically-driven educational services.

Another reason entrepreneurs should enter the space? It's becoming cheaper to host and distribute content--the bread and butter of most ed tech endeavors.

Take online video, for instance. In the 1990s, it cost about $400 to host a four-hour video online. Today, the cost is two cents. And lower costs mean bigger margins. The venture industry appears to have noticed--investment in education is finally on the rise. In 2012, $1.1 billion was invested in ed-tech companies. In 2005, it was just $52 million.

"Innovation can completely change the framework of how we look at [education]," Gates said. "There was a wave of optimism in the 90s, he said, but nothing's really changed. Entrepreneurs and venture capitalists are going out there and taking the risks, and that should be congratulated, because that's the heart and sole of innovation."

IMAGE: FilmMagic/Getty
Last updated: Mar 7, 2013




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