Massachusetts Builds Diverse Edtech Sector, Still Seeks Big Wins

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California-based (acquired by LinkedIn last year for $1.5 billion) and Maryland-based 2U (publicly traded, with a $1.6 billion-plus market cap). Meanwhile, Bussgang says the most notable edtech firm in Boston in recent years, arguably, is a nonprofit: edX, the online course provider founded by Harvard University and MIT in 2012. (It’s worth noting that Bussgang is on edX’s board.)

Bussgang isn’t sure what, if anything, is holding the local edtech sector back. “Maybe it’s just a young space, and it just takes time,” he says. “Maybe there’s too much talent going to the incumbents. I don’t know.”

A challenge for many edtech firms, Bussgang says, is that it’s tough to sell products and services to schools.

“It’s just really hard to break into an industry where you have a lot of the money coming from government at the local, state or federal level, and where you have a lot of gatekeepers,” such as school boards, administrators, and teacher unions, he says. “It’s hard to grow fast when you’re selling to slow-moving bureaucratic organizations.” (That’s why his firm focuses its edtech investments on companies that sell directly to consumers, he adds.)

Hammond acknowledges these challenges.

“The big purchases in both K-12 and higher education all happen in June and July,” she says. “And so that big buying cycle has an impact on how rapidly things change and how fast things can get adopted. That’s sort of a slowing factor on the industry.”

She continues, “But we do see an increasing number of companies cresting up [and saying] ‘Hey, we’re in business, we’re making money here.’”

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