This technological change has encouraged established education providers, such as Houghton Mifflin Harcourt, Pearson, Bertelsmann, Educomp and Washington Post’s Kaplan to set up or invest in third-party entrepreneurs as rivals try to break into the media sub-sector.
Jason Palmer, head of Kaplan Ventures, which has completed four deals since the unit launched last year, said a number of non-traditional education companies, such as those from broader media groups News Corp and Bloomberg, and not-for-profit organisations, including Gates Foundation, were investing in start-ups to help their way into the sector.
In February Gates invested $2m in Inigral, a Facebook social media application, while Bloomberg’s ventures unit has created a test to help financial companies recruit people using a common standard.
US-based publisher Advance Publications sold part of its stake in Discovery Channel for $500m to reinvest in other third parties, including linking with chip maker Intel’s corporate venturing unit to invest $30m in online textbook provider Kno in April.
Palmer said Kaplan’s mission was to be the world’s best educator by 2020 and its ventures unit was looking for new technology and markets instrumental in deliver-ing that vision.
He said its investment in Proton Media was a way to use three-dimension interactive training for pharmaceuticals companies wanting to showcase their procedures and wares. And the scope of education investment is global.
Educomp Solutions, India’s largest listed education company, set up a R50 crore ($11m) investment fund and has already made its first deal in Beacon Learning India’s education market has been an attractive entry point for foreign multinationals as well, with Pearson taking a majority stake in TutorVista earlier this year having previously taken a 17.2% stake in June 2009 as part of a $12.5m investment.
However, the potential shake-up to education could still be around the corner if online games developers turn their attention towards the sub-sector, according to insiders.