Education Industry News

Published June 1, 2002

A sampling of education industry news from The Education Economy, a weekly publication of the market research firm Eduventures, Inc., which conducts research on the pre-K-12, post-secondary, corporate training, and consumer markets worldwide. This copyrighted material is used by permission of Eduventures, Inc.

Venture Capital Decline Hits Education Hard

Total U.S. venture capital investment declined for the seventh straight quarter during the first three months of 2002, down from $27.2 billion in the second quarter of 2000 to only $5 billion in the first quarter of this year. The education industry accounted for less than 1 percent of all private investment activity in the U.S.—a poor performance matched only by the third quarter of 2001, reports Eduventures, Inc. Executive Vice President Peter J. Stokes in The Education Economy on April 1.

“While firms such as Warburg Pincus, Goldman Sachs, Forstmann Little, and Putnam have dipped into the investment waters this winter,” notes Stokes, “many private equity shops are avoiding the polar bear club altogether and keeping their money warm and dry.”

Artificial Intelligence Tutors to be Offered Online

On March 27, Holt, Rinehart and Winston (HRW), a textbook publisher and provider of online learning tools for secondary education, announced a long-term agreement with Quantum Simulations, Inc., a developer of artificial intelligence tutoring technologies. As part of its initiative to offer robust e-learning curricula along with textbooks, HRW will offer Quantum Intelligent Tutors over the Internet for middle school physical science and high school chemistry, physical science, and integrated science.

Assessment, Scoring Programs to Be Integrated

EdVision Corporation, a provider of curriculum and assessment software solutions, and ETS Technologies, Inc., a subsidiary of Educational Testing Service that provides automated scoring of essays and short-answer questions, announced a partnership on April 9. The companies plan to integrate the e-rater automated essay scoring technology produced by ETS Technologies with EdVision’s Performance Series program for standards-based assessment and reporting.

CNN Student News May Remain Sponsor-Free, Unprofitable

AOL Time Warner is backing off plans to sell paid sponsorships for a commercial-free, educational CNN news show used in 18,000 U.S. schools, according to a March 26 Atlanta Constitution report. Sponsorship revenue would have defrayed some of the costs of improving the half-hour program, but the proposal was criticized as an example of increased commercialism in classrooms. CNN Student News has been commercial-free and unprofitable since Ted Turner launched it 13 years ago.

Colleges Try Hybrid Classes: Real and Virtual

As colleges and universities have migrated courses to the Web over the past few years, many have reported high dropout rates for classes that are completely virtual, according to a recent issue of the Chronicle of Higher Education. To combat this problem, a growing number of colleges are experimenting with “hybrid” or “blended” models of teaching that replace some in-person meetings with virtual sessions.

Online Instruction for Virtual Classrooms

Odyssey Learning Systems has entered into a strategic relationship with TutorsEdge, an innovative provider of live online instruction technology. TutorsEdge’s online virtual classroom technology vClass will be integrated into Odyssey’s Nautikos eLearner managed learning platform to provide virtual classroom capabilities.

Scholastic Acquires Innovative Publisher

Scholastic Corporation, a global children’s publishing and media company, announced on April 8 that it has completed the previously announced acquisition of Klutz, an innovative publisher and creator of “books plus” products for children, from Corus Entertainment, Inc., one of Canada’s leading media and entertainment companies.

Xap Will Offer Online Tutorials for ACT and SAT

On March 27, Xap Corporation, a developer of online student services for the postsecondary market, announced the acquisition of, a provider of Internet-based test preparation services. The acquisition will allow Xap to offer students easy-to-use tutorials for each subject area covered by the ACT and SAT.

The Education Economy is read by leading education company executives, investors, academics, policy experts and education leaders around the globe. To subscribe to The Education Economy, register online at Eduventures, Inc. may be reached at 20 Park Plaza, Suite 833, Boston, MA 02116, 617/426-5622, fax 617/426-5431.