Ed-tech sector is booming

By Erica Alini, Maclean's | October 29, 2012

nyone whos ever sat

in
on
a
500undergraduate lecture
knows that taking good notes
can get tricky, says 23-year old
Jack Tai. What if you happen
to be sitting too far to hear
properly? Or, worse still,
what if youre an international
student?
That was the case for Tais
classmate Jackey Li, whod
just landed at the University of
Toronto from China. But their
friend Kevin Wu, a native
Canadian, also had trouble
transcribing what he heard in
class. The three bonded over

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those struggles with spotty

registered users, says Tai.
annotations,
they
started
Today, the company counts
sharing
notebooks
and
over 60,000 users across
spending afternoons together
Canada and 14 employees.
at the library going over
Notesolution
is
part
of
material covered in class.
Canadas so-called ed-tech
Four
years
and
three
boom,
with
software
Bachelors degrees later, in
companies
catering
to
September 2010, Tai, Wu and
students,
teachers
and
Li launched Notesolution, a
professional trainers sprouting
website that lets students
up all over the country. The
share notes online
last few years have
Booming
without having to line
seen education shoot
the
edup at the photocopy
to the top of the charts
sector is!
machine. They started
in terms of startup
marketing the service at their
activity. According to a recent
alma mater, and within the
CIBC study, the ranks of selffirst year we had 9,000
employed Canadians working

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in the sector grew by a

staggering
65
per
cent
between 2007 and 2012. By
comparison, the second-best
performing startup industry in
Canada,
healthcare,
saw
growth of less than 25 per cent
during the same period.
Canadas ed-tech champion is
arguably
Desire2Learn,
a
provider of software solutions
for educational applications
that
has
boldlyand
successfullytaken on U.S.
giant
Blackboard.
The
Kitchener, Ont.-based startup
secured $80 million in funding
in its latest round of financing
earlier this year, a significant
venture capital investment
even by U.S. standards and

BTT10

the largest such investment on

record
in
a
Canadian
education-related business.
The Canadian trend mirrors
whats happening south of the
border. In California, ed-tech is
the latest hot thing. Startup
forums are abuzz with chatter
about how education software
will save the world, from
revolutionizing academia to
bringing free knowledge to the
low-income students and the
developing world, as purported
by Coursera, which offers
online courses on anything
from Contemporary American
Poetry
to
Computational
Finance at no cost. Investment
in education-related software
companies has nearly tripled

between 2002 and 2011, rising

to $429 million from $146
million, according to the
National
Venture
Capital
Association.
Perhaps unsurprisingly, those
numbers are much smaller in
Canada, where similar deals
by local venture capital funds
accounted for only $116
million between 2008 and
2012, according to Thomson
Reuters data. Between 2007
and the first half of this year,
ed-tech companies made up
only 3.6 per cent of software
investment, and a meager 0.6
per cent of overall investment.
The sector, it seems, hasnt
escaped
the
familiar
constraints so many Canadian

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entrepreneurs
come
up
against:
relatively
scarce
capital
and
risk-averse
investors. Whenever pitching
to a Canadian venture capital
fund, says Notesolutions Tai,
the first question that comes
up is: are you profitable yet?
In the U.S., he says, its about
selling a vision, rather than
having established revenue
flows.
Luckily,
Notesolution
and
several others are getting
some loving from Silicon
Valley. In June, Tai and Wu
were
in
San
Francisco
schmoozing
with
U.S.
investors and faculty from
Stanford and the University of
California,
Berkley.
They

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attended
the
Launch
Education Conference, an
event hosted by Microsoft
where promising startups in
the field got a chance to
mingle with a whos who of
Californias tech industry.
Still, Canadian investors seem
to be warming up to the idea
that theres money to be made
out of the digitalization of
education.
GrowthWorks
Atlantic, a retail venture capital
management company that
concentrates
on
Atlantic
Canada, doesnt normally
focus on the business of
education, but in 2006 it
dipped its toes in the ed-tech
sector with an investment in
Azorus Inc., a Halifax-based

company
that
helps
universities
connect
with
prospective
students
and
improve their enrollment rates.
The company is receiving
great interest from universities
in the U.K. Recent cuts to
higher education funding there
are making college applicants
more
selective
and
heightening
competition
among schools trying to attract
applicants,
according
to
GrowthWorks Atlantic CEO
Tom Hayes. Weve been very
pleased, he says, were
pretty bullish about where that
might take us.

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