Venture capitalists are flocking to Phoenix to invest in the growing ed tech sector


ACA ed tech

Arizona Commerce Authority

This past April, 2,000 people headed to the Phoenician resort in Scottsdale, Arizona, near Phoenix, to mingle at the annual ASU+GSV Summit, an event The New York Times referred to as "the must-attend event for education technology investors."

In all, 270 ed tech companies presented at the conference, which attracted a who's who of the education technology industry and drew the highest-ranking policymaker in education: US Secretary of Education Arne Duncan.

The success of this year's summit shows how much the education technology sector has grown in Phoenix and the surrounding area. Millions of investment dollars are now flowing to Phoenix-area startups that develop education services and tools designed to improve academic performance.

Capitalizing on a national ed tech movement

It makes sense that investors, executives, and policymakers would convene in the Grand Canyon State about ed tech. Nationwide, venture-capital firms invested more than $2 billion last year in educational technology companies, a 50% jump from 2013, according to TechCrunch.

Recently, Arizona has established itself as a leader in the industry. Ed tech startups in the state have raised more than $100 million in angel and venture capital in the past three years, resulting in at least 750 new jobs, ed tech entrepreneur Matthew Pittinsky says. Pittinsky is cofounder of the educational software company Blackboard and founder of Parchment, a Scottsdale-based company that helps learners, educators, associations, and employers securely send and receive education credentials online.

A thriving ecosystem

Arizona is now being mentioned by industry insiders alongside other innovative hubs such as New York and Silicon Valley. "We do have a great cluster in place," Pittinsky says, "and it includes all the different stages, from the startup stage up to the publicly traded companies."

That robust ed tech ecosystem in Arizona includes startups such as the Tempe-based Picmonic, which allows medical professionals and students to create audiovisual study cards, and midsize firms such as Parchment, which has secured $60 million in funding and employs about 140 people.

But those startups would not even exist if there hadn't been an example to lead the way. "Often for clusters to develop you need some early successes that build up, scale, and attract talent and entrepreneurs, and then those people go off and start other companies," Pittinsky says.

Apollo Education Group, the leading for-profit online education provider, was one such early success. Founded in 1973 and considered a pioneer in online learning, the company has proved to be a breeding ground for a lot of the area's talent in the Valley.

Helping students in more ways than one

Gregg Scoresby, who owns the Gilbert-based CampusLogic, says: "There is something really special going on in Arizona around education technology." His CampusLogic speeds up the financial-aid process by giving students a simple TurboTax-like platform to apply for and receive aid.

Whether in online learning, test prep, study aids, or skills training, technology is rapidly expanding what's possible in education. And with the ed tech sector booming both locally and nationally, Arizona is poised to be at the forefront of this area for some time to come.

Learn more about the ed tech sector in Arizona.

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