Software developer Bob Runyan, who has achieved significant success with his educational game Real Lives, recently sought funding from Wall Street investors to further improve and market the game. However, Runyan acknowledged that he needs to take more responsibility in following up on potential opportunities.
In an effort to support small developers of educational technology, the Software & Information Industry Association (SIIA) organized an "innovation incubator" project. This initiative aims to connect innovators with potential backers in the educational market. Sixteen developers participated in a business forum where they showcased a range of educational products and services, including animated illustrations of the human body, web-based platforms for online meetings, a specialized keyboard for children with disabilities, and an information search tool with features of online social networks and wikis. During the forum, these innovators had the chance to present and demonstrate their creations to representatives from venture capital firms, private equity firms, and large education companies, who were looking for investment opportunities, acquisitions, or partnerships.
The SIIA innovation incubator project, spearheaded by Karen Billings, the vice president of SIIA’s education division, aims to foster relationships that will facilitate the commercialization of innovations from universities, nonprofit organizations, and pre-revenue startup companies. The selected innovations were not just good ideas; they had reached a stage where they were ready for commercialization. Some products had even received research grants from the federal government and were already being used by hundreds or thousands of students in schools across the United States. All the participants in the incubator project were either individuals or small organizations lacking certain components, such as funding, technical expertise, or distribution networks, needed for success in the education marketplace. Over the past few months, a working group within SIIA has been helping these innovators refine their presentations to attract potential investors and partners. The annual forum included sessions on the business outlook for the education market, as well as advice on mergers, acquisitions, and partnerships in the education sector. The innovators had opportunities to showcase their products at cocktail receptions and deliver quick presentations to attendees. They also had pre-scheduled meetings with potential investors and partners.
However, the conference sessions made it clear that small innovators face significant challenges in the education market. Panels of investors and executives from large education companies emphasized the need for potential partners or investment targets to have compatible structures, proven economic prospects, and demonstrated market share. Investors expect performance that aligns with or surpasses business plans. Additionally, many small, innovative companies struggle to develop business and marketing plans, which poses a challenge for evaluation. Cash flow is often a critical factor in investment decisions, making it difficult for companies in the pre-revenue stage to secure funding. Ultimately, the majority of deals are driven by financial considerations.
Overall, the SIIA’s innovation incubator project provides a platform for promising educational technology innovations to connect with potential backers and overcome the challenges of entering the education market.
Disconnect Detected
Mr. Runyan, on the other hand, needs to improve his digital game that he conceived of ten years ago while "laying awake one night contemplating the Game of Life." He viewed the long-standing board game as being unrealistically centered around a middle-class perspective of educational and career choices. In Real Lives, students are "born" at a random location on the earth, where they can face challenges and opportunities that are typically encountered by people who reside there, based on demographic and statistical information. Mr. Runyan, the operator of Educational Simulations in Loma Rica, Calif., expressed his desire to collaborate with a partner company that can assist him in adding more advanced features, such as character images that would age along with the characters. In an email, he mentioned that the business forum was a valuable learning experience, but not a great opportunity for partnerships. He added that there seemed to be a disconnect between the products and services presented by innovators and what the larger publishers and investors were looking for.
The developer of a keyboard for students with disabilities also expressed disappointment in the lack of interest shown at the forum. Corinna E. Lathan, the board chair and CEO of AT KidSystems Inc. based in Silver Spring, Md., mentioned in an email that she did manage to find some leads but found little investor interest in special education and a lack of recognition of special education as a growing market.
Valuable Exposure
However, Michelle S. Wornow, the vice president of sales and marketing for ArchieMD in Miami, expressed that the company received significant exposure for its extensive library of 3-D animations and interactive modules of the human body. These resources are currently utilized by certain medical schools and universities. Wornow and Robert Levine, the physician who founded the company, were seeking partnerships in the hopes of entering the high school market and eventually reaching grades K-6 with simplified and more engaging versions of their images. Jody Clarke, an education researcher at Harvard University, showcased the River City Project at the forum. This digital multiplayer game teaches players about science and history. Clarke and the game’s creator, Harvard education professor Christopher J. Dede, were searching for a company to take over the game, which was developed through years of research with grants from the National Science Foundation. Clarke mentioned that the grant money is running out and emphasized that she and Mr. Dede are researchers, not business operators.
Ms. Billings stated that the project will continue to support the current cohort of innovators and additional ones, featuring them at an "ed-tech industry summit" in San Francisco in May. SIIA plans to connect with angel investors, not just in New York but also on the West Coast, to foster meaningful connections.
