Ed-Tech Startup 2U Goes Public
In late March, educational technology startup 2U Inc. began trading publicly on Nasdaq. It is only the third U.S. ed-tech company to unveil an initial public offering (IPO) in the past five years — a move that can potentially make a big splash in the relatively small pond of ed-tech startups.
2U specializes in assisting nonprofit colleges and universities in all things digital. Some of its clients already include Georgetown University, Syracuse University, University of Southern California and the University of North Carolina at Chapel Hill. It is backed by venture capitalists like Hillman Company, Redpoint Ventures and Silicon Valley Bank.
The potential of the type of service offered by 2U is huge, particularly as more people look research affordable college options instead of just deciding on the “best” school on other merit. The company began trading at $13 per share, and saw a $2+ rise in its first week, before ending up around $1 higher than its debut.
VentureSource reports that venture capitalists put up $76 million in a mere 25 ed-tech companies in 2013. That’s an increase from $64 million in 2012. The thirst for ed-tech centers on an increasingly mobile and remote student body, and a demand for better efficiency in educator workflow.
Will ed-tech startups stand the test of time though? Big players like Scholastic and Amazon have already shown interest in these business models and some industry analysts say that it is only a matter of time before the major ed-tech startups are acquired by larger companies. The impact would mean more availability of technologies to a mass audience, but may also mean less innovation.