Why a 30-Year-Old Education Company Just Landed a $1 Billion Valuation
Silicon Valley treasures its shiny, new startups. They're the ones who typically get all the adoration, the attention... and the cash.
Renaissance Learning is not one such company. And yet, on Wednesday, this Wisconsin Rapids-based education technology business, which was founded way back in 1985, announced a $40 million cash infusion from Google Capital. But wait, there's more. The investment values Renaissance Learning at a whopping $1 billion.
Patience, it seems, really is a virtue.
Renaissance was founded by Judith and Terrance Paul with a single product called Accelerated Reader, a reading assessment tool for students. Back then, however, "You had a student to computer ratio of 15 or 20 to 1," says Jack Lynch, Renaissance's current CEO, who joined the company after it was acquired by a private equity firm in 2011. Thirty years since the Accelerated Reader was invented, however, all that's changed. As Muhammed Chaudhry, CEO of the Silicon Valley Education Foundation, recently explained, schools across the country are rapidly transitioning to Common Core Standards, a more rigorous standard of instruction, and as they do, they're investing heavily in technology to help students meet those standards. For Renaissance, and indeed all education technology startups, it's a perfect storm of opportunity.
"At the intersection of these two forces is the teacher," says Lynch. "Where we come in is we deliver insight to teachers to help them unlock the learning potential of students."
For its current fleet of education products, Renaissance has effectively sequenced every skill a student should learn between kindergarten and 12th grade, and has developed tools that help teachers figure out what skills students have mastered and are now ready to learn. It's still up to the teacher, however, to help students advance to the next level. "Teachers are the lifeblood of education. We're not an avatar virtual tutor," Lynch says. "So we're not really looking to harness the power of technology. We're looking to use technology to unlock the power of a teacher."
According to Lynch, Google Capital first expressed interest in Renaissance last summer, noting the obvious opportunities for collaboration between Renaissance's assesment tools and the educational apps Google is developing through Google Play for Education. Already, Renaissance's tools are being used by 18 million students in 45 school systems in 57 countries. If Renaissance's assessments can link to Google Play's instructional materials, it's good news for both companies.
The Startup Opportunity
If you're an ed tech entrepreneur, it could be good news for you, too. As the K-12 market heats up, Lynch says Renaissance is on the lookout for startups it can collaborate with, and in some cases, even acquire. Last summer, Renaissance scooped up Subtext, an e-reading startup whose technology enables students to have a discussion about a book within the digital pages of that book.
"That's an example where spending a long time with startups uncovered the opportunity for an acquisition," Lynch says.
Renaissance is also looking to partner, he says, with startups that are innovating in big data analytics and instructional education technology. Recently, Renaissance opened an office in Fremont, California, in part because of this interest in startup activity.
"There's always gong to be groundbreaking great new ideas coming from entrepreneurs coming into the space," Lynch says. "We like to think we're good students of innovation."