Silicon Valley wind-targeting online education: Free Value added strategy to be tested

Silicon Valley VCs are starting to focus on education technology, and the New York Times writes that technology companies and many educational technology start-ups follow a free value-added strategy used by consumer software companies, but some investors are more focused on direct-fee education start-ups. The article reads as follows: The Education technology field is crowded with the fledgling company, some innovation idea has not been proven, some is not yet profitable. But this has not affected investors ' enthusiasm by injecting large sums of money into a variety of educational technology projects, such as free classroom management for teachers and foreign language courses for adult learners. Research agency CB Insights reported that in 2014, the scale of venture capital and equity investment for educational technology companies surged to $1.87 billion, up 55% from the previous year. 2009 CB Insights began statistical education technology investment data, the data is the all-time high. Many educational technology start-ups have completed high-profile financing deals. Programmer Training Website Pluralsight Financing 135 million USD, Free home School Exchange Messaging application remind financing 40 million dollars, investors including KPCB, education social networking site Edmodo financing 30 million dollars. VCs are starting to target the online education market. "Education is one of the last industries that Internet technology touches, and we find that a lot of competition is going on," Bezy Cocklen Betsy Corcoran, Edsurge chief executive of the Education Technology information website. We see more traditional investors--kpcb,andreessen Horowitz and Sequoia Capital-more focused than ever on the market. "Despite the rapid growth, the scale of investment in education technology is negligible compared to the scale of investment in the consumer software sector," he said. For example, 2014 taxi application Uber financing 2.7 billion dollars. Business model Education technology company financing scale is relatively small. This suggests that they face a variety of challenges as they try to convince the public school system to adopt new products. Start-ups must often deal with local districts with limited budgets and slow procurement. In order to circumvent the bureaucracy, many start-ups directly promote free learning applications and websites to their schools in order to eventually purchase enhanced services. But for educational software, this "free value-added" strategy, which is directly customer-oriented, remains to be tested for time. "There are still many problems with the business model of educational technology companies," said Matthew Wong, an analyst at CB Insights. Because the product is free, one of the questions is: ' How do you generate revenue from users? ' Remind is one example. Teachers can use remind to send homework reminders to students and share classroom news with parents. Sports team coaches can also use remind to send information about weather and timetable changes to athletes. Word-of-mouth Marketing makes remind from obscurity into a household name brand. Remind was founded in 2009 and has now reached 23 subscribers.0, higher than 5 months ago 18 million. Remind message delivery has exceeded 1 billion. Brettes Kopf Brett Kopf, co-founder and CEO of Remind, said: "Today, you can order a box of pizzas quickly, or take a taxi with Uber." If students work very hard at school, parents often do not understand. We want to create a more real-time way to communicate. "Other educational technologies have been developing very slowly in the mobile world, but remind is growing very rapidly, in part because remind allows teachers to send messages in a variety of ways, such as sending text or voice messages through web sites and applications," he said. Recently, remind recruited growth strategists and engineers with experience in consumer companies such as Skype and Facebook. Kopf said remind planned to charge subscription fees for additional services, which would eventually generate revenue, such as issuing emergency notices to schools. In order to improve the product and expand the international market, remind will invest 40 million dollars. If the start-up of educational technology attracts both teachers and considerable market size, it may eventually profit through the free value-added model. Consumer brands such as the music service Spotify are successful in this mode. Michael Moe, chief executive of GSV Capital, a VC company, said: "I think there is a business model that cannot be used for reference." Michael Moy However, if you can generate income from 2% to 20% of users, this pattern is appropriate for the education sector. "GSV Capital investment Dropbox, Spotify and other consumer technology companies, but also invest in free online curriculum services Coursera and other educational technology companies." Coursera is profitable by selling certificates to students. Circular revenue However, some investors are paying more attention to direct-charging educational technology companies, such as companies that sell SaaS (software as a service) to schools. For example, the programmer training website Pluralsight for individuals to charge a monthly fee of 29 dollars, corporate customers can also pay annual fees, to provide staff with pluralsight training courses. Last year, Pluralsight revenue was close to $100 million trillion. Aaron Skonnard, chief executive of Pluralsight, said: "The speed of technological change is so rapid that the knowledge of software professionals is set aside by half every two years." "For educational technology investors, this is a cyclical source of revenue. "We are looking for a rewarding business," said Matthew Greenfield, education partner at Rethink, a VC company. Pluralsight plays an important role in the career, and users continue to subscribe. "Rethink Education did not invest in Pluralsight, but invested in professional skills assessment and scoring systems SmarTerer. Last year, Pluralsight bought Smarterer for $75 million. Given that the education technology industry is at an early stage of development, investors believe they need to choose carefully their investment goals. "If you have share, user and participation, you can build a viable business," said John Doerr, KPCB partner John Dours. But the business is not easy to do. ”