Education Technology

The Future of EdTech in Greater Baltimore

Patrick Dougherty, Business Development and Research Associate

Introduction The development of Education Technology (EdTech) builds not only companies and products, but the futures of students and the roots of an entrepreneurial ecosystem in Baltimore for years to come. EdTech innovators and entrepreneurs are central to moving classrooms and the economy into the 21st century and beyond. For instructors, EdTech is a revolutionary efficiency tool that can be used to reshape the way classroom interaction is constructed. To students, it represents open doors that were previously closed or even unimaginable. The users of EdTech garner massive gains from the adoption of progressive technology in the classroom. Greater Baltimore is the ideal place for technology developers with plans to improve education. It is impossible to understate the importance of Education Technology use in the classroom and of the need to adequately educate and prepare todays students. Instead, this report seeks to highlight Greater Baltimore as a premiere hub for the development of new EdTech. The Baltimore MSA offers strengths and opportunities to entrepreneurs in or seeking to enter the EdTech industry. No region is better positioned for the launch of a new EdTech company. Among the advantages of the Baltimore region are: First-class education in public schools, private schools, and numerous universities; A wide variety of funding opportunities with a history of funding education initiatives; A talented, educated workforce with a large number of tech professionals; Fluid commuting patterns allow Baltimore labor market to extend into DC metro; Well-connected region, with many options for transportation; A storied history of being a receptive market for testing new technologies; A vibrant and growing startup culture; and, A network of advocates for tech in the classroom and teachers with ideas to share.

Defining the Industry Education Technology is a combination of learning with and about technology. It enables current and future entrepreneurs and innovators to adapt to the changing needs of todays information economy. EdTech bridges knowledge between traditional business education and the skills necessary for jobs in todays economy. Education Technology is essential to the growth and success of a culture of innovation, the entrepreneurial ecosystem, and overall economic strength and leadership. Students exposed to EdTech learn to creatively problem-solve, innovate, create, and explore all skills and interests needed to be successful in the new economy. The way students engage with Science, Technology, Engineering, and Mathematics (STEM) fields is revolutionized through the use of Education Technology. It drives interest and enthusiasm in young students that would otherwise be uninterested in science and technology. EdTech allows innovation and creativity in the classroom: students can experiment, build models, run businesses, and simulate practical uses of STEM knowledge at an incredibly low cost, but with great benefit. The barriers to attracting, retaining, and teaching students in STEM fields are reduced through the use of technology in the classroom. EdTech generates hands-on learning and experimentation, which keeps students engaged and sparks a future interest for study of the most important subjects of the changing economy. Strength of the Region Greater Baltimore features a unique mix of qualifications that gives it a head start in the impending boom in Education Technology. Well-Connected and Well-Positioned Greater Baltimore benefits from its proximity to Washington, D.C. These two metro areas are often combined when comparing the technology industry in the region to other economic hubs across the country. The suburbs between Baltimore and Washington are home to a number of well-educated, high-tech professionals. Over 100,000 residents of the Maryland/D.C. suburbs commute into Greater Baltimore for work every day, more than the number of residents that travel to Northern Virginia for work. The fluid movement of labor in the Baltimore-Washington CSA effectively extends Greater Baltimores potential employment base well into the Washington, D.C. metro area. Numerous transportation options in Greater Baltimore connect the region internally and to the rest of the East Coast. BWI, one of Americas fastest growing airports, offers frequent flights around the country and the world. Amtrak trains travel from Baltimore and Central Maryland to New York in less than 2.5 hours. The MARC train offers low-cost transportation between Greater Baltimore and Washington, D.C. The region has a comprehensive interstate highway system, with I-95 passing directly through Baltimore to connect the major East Coast markets. Successes Greater Baltimore has been recognized as an emerging EdTech ecosystem (Wan, 2012). The region is already home to a number of Education Technology success stories.

Laureate Education, Inc. plans to file an initial public offering (IPO) that is projected to generate between $500 and $750 million (Kim, 2012) and boasts Former President Bill Clinton as honorary chancellor (Olivia Oran, 2012). Connections Education was recently acquired by Pearson, the largest digital content provider in the industry by number of students reached, for a reported $400 million. Connections Education operates in 21 states and serves 40,000 students every school year. Moodlerooms was purchased by Blackboard in 2012. StraighterLine is expanding from the Emerging Technology Centers incubator to a 6,000 square foot office. The company has raised $10.5 million from investors (Zaleski, StraighterLine to Allow Professors to Pitch Courses, 2012) and is one of the first to offer students college credit for their online enrollment. Common Curriculum is launching as a full product after two successful pilot programs in Baltimore City public schools. The startup has raised over $160,000 in funding (FormDs.com, 2012). Teachers across the country have expressed interest in the program (Zaleski, Common Curriculum Launches, 2012). Unbound Concepts was selected as one of three Alva Emerging Fellows and will receive $8,500 in seed grants to execute their proposed project (Glei, 2012). The company will also be an inaugural member of the AccelerateBaltimore program. Guaranteach was acquired by Sophia in 2011. Curiosityville has partnered with National Geographic Kids, The Goddard School for Early Childhood Development, and The Association of Childrens Museums (eSchool News, 2012). National Geographic Little Kids has included a Curiosityville page on its website (Zaleski, Startup Roundup, 2012). Course Canary launched a pilot program in the spring of 2012 and is currently used at schools such as Johns Hopkins University and Harvard University (Zaleski, 2012). Educate, Inc. consists of Sylvan Learning Centers and Educate Online. Sylvan is a pioneer in personalized education and tutoring, while Educate Online is an online educational program. The offerings of Educate, Inc. reach Asia and the Middle East. 2Tor, based in Maryland in the neighboring Washington, D.C. metro, was recognized as one of six fast-growing tech companies by Forbes (Pozin, 2012).

Funding Many predict an influx of capital into the Education Technology sector because education is primed for change. The educational system has failed to keep up with the new ways that children are learning and significant opportunities for startups abound (GSV Advisors, 2012). Capital investment in education in 2011 surpassed investment in education in 1999, previously the year with the greatest volume of transactions. Investors rate Education Technology as a very attractive emerging market (GSV Advisors, 2012). Funding for the creation of Education Technology companies is available from a number of sources. Over $368 million in venture capital was awarded to Information Technology services firms between 2007 and 2012 in the DC/Metroplex region. This investment in IT is equivalent to over

half of all venture capital awarded to companies in the DC/Metroplex area. Most IT venture capital in the region went to firms in the Software industry, as these companies received 34.2% of all venture capital awarded. The mean IT services venture capital investment in the DC/Metroplex region was worth $6.9 million, well above the national average of $6.3 million. One hundred fortysix technology companies in the Baltimore-Washington corridor received VC investment in 2011, more than in Los Angeles, Seattle, San Diego, Denver, or Austin. In 2011, investment in those 146 companies totaled $0.98 billion, more than in San Diego, Seattle, Chicaco, Austin, and Denver (Florida, 2012). The Maryland Technology Development Corporation (TEDCO) provides grants and loans for technology companies in the Greater Baltimore area. The Propel Baltimore Fund, created through a partnership between TEDCO and the Abell Foundation, offers angel investments to startups (VentureBeat Staff, 2012). Fifteen of the twenty-five largest charitable foundations in Greater Baltimore support education (Baltimore Business Journal, 2011). The Abell Foundation, the third largest charitable foundation in Baltimore, lists technology-aided education as one of its areas of interest (The Abell Foundation). The region is home to the Baltimore Angels, a network of angel investors who focus on technology startups. The organization is comprised of accomplished entrepreneurs seeking to help other entrepreneurs advance their businesses and goals (Baltimore Angels, 2012). Baltimore also has a number of private investors available to entrepreneurs. For example, Sterling Partners in HarborEast has invested in Educate, Inc. and Laureate Education, Inc., two of the most successful Education Technology companies founded in the region. Camden Partners, another private equity firm based in Baltimore, targets the education sector to provide capital to growing companies. Talent The talent pool in Greater Baltimore is the driving force behind the regions position at the forefront of the EdTech industry. The real advantage for Education Technology entrepreneurs in Baltimore is the strength of the regions Education industry. Maryland ranks #1 in Education Weeks State Education Rankings. Maryland is also #1 for percent of seniors passing AP exams. The 2011 graduating classes from most counties in Greater Baltimore recorded SAT scores at or above the national average, with some counties scoring well above average. (Maryland State Deartment of Education, 2011). The best school system in the country is open to innovation and improvement. Many of the best schools implement new technologies to adjust to the changing needs of the workforce and continue to provide the best possible education. For instance, Towson University has funded and opened a digital fabrication lab for student and educational use. Morgan State University has opened a $70 million center for STEM education (Bauer-Wolf, 2012). Forward thinking educators in the region are concerned with educating students for a rapidly evolving workforce with greater expectations

for technological literacy. Schools and universities in the region have shown a dedication to educating the next generation of visionaries. The Baltimore area is filled with people that value education. The region produces some of the most educated people in the country. Baltimore and neighboring Washington, D.C. both rank in the top 10 metros nationally for percentage of people with college degrees. Both metros are in the top 5 for percentage of people holding a graduate or professional degree.

Percent with Bachelor's Degree or Higher Among the 25 Largest US Metro Areas 2011 Rank Metro Area % 1 Washington D.C. 48.0% 2 San Francisco 43.9% 3 Boston 43.1% 4 Minneapolis 38.5% 5 Denver 38.4% 6 Seattle 37.1% 7 New York 36.2% 8 Baltimore 35.8% 9 Atlanta 34.5% 10 Chicago 34.2% US Average 28.5%
Source: Census; American Community Survey, 2011 1-Year Estimates

Percent with Graduate or Professional Degree Among the 25 Largest US Metro Areas 2011 Rank Metro Area % 1 Washington D.C. 22.9% 2 Boston 19.0% 3 San Francisco 17.4% 4 Baltimore 15.1% 5 New York 14.9% United States 10.6%
Source: Census; American Community Survey, 2011 1-Year Estimates

The Baltimore-Washington, D.C. corridor is the most densely concentrated region in the country for Information Technology professionals. The region is second only to the New York CSA for total number employed in IT occupations.

Employment Concentration IT Occupations 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 CSA Washington, D.C. MSA Washington-Baltimore San Francisco-San Jose Austin MSA Seattle Raleigh-Durham Denver Boston Minneapolis Baltimore MSA Dallas Atlanta Sacramento San Diego MSA Phoenix MSA New York Portland MSA Detroit Philadelphia US Average Tampa MSA Chicago Los Angeles Miami MSA LQ 2.78 2.35 2.26 2.19 2.08 1.97 1.67 1.65 1.45 1.45 1.36 1.35 1.30 1.26 1.17 1.13 1.11 1.03 1.01 1.00 0.98 0.96 0.92 0.77
Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Total Employment IT Occupations 2011 IT Employment CSA New York 319,540 Washington-Baltimore 294,900 Washington, D.C. MSA 239,610 San Francisco-San Jose 219,260 Los Angeles 183,240 Boston 164,980 Chicago 123,730 Dallas 120,120 Seattle 115,080 Atlanta 93,560 Minneapolis 78,990 Denver 71,830 Detroit 64,230 Philadelphia 61,720 Phoenix MSA 59,560 Baltimore MSA 54,650 Austin MSA 51,790 Miami MSA 50,200 San Diego MSA 46,700 Raleigh-Durham 45,580 Sacramento 32,940 Portland MSA 32,570 Tampa MSA 32,270

Source: Economic Alliance assesment using Bureau of Labor Statistics, Occupational Employment Statistics, May 2011 Note: CSA data is not available; figures are derived by adding core MSA components for each CSA.

Source: Economic Alliance assesment using Bureau of Labor Statistics, Occupational Employment Statistics, May 2011 Note: CSA data is not available; figures are derived by adding core MSA components for each CSA.

Information Technology is a growing field for rising professionals of Greater Baltimore: between 2005 and 2010, Greater Baltimore colleges and universities conferred over 24,000 Information Technology degrees. In 2010, over 17,000 students were enrolled in Information Technology programs.

The Washington-Baltimore CSA conferred more than 5,300 computer and information sciences bachelors degrees (or higher) in 2005. Both Baltimore and Washington rank among the top 10 US regions in this category. Two universities ranked among US leaders in research and development expenditures in computer science are located in Baltimore.

Computer and Information Bachelor's and Higher 2005 US # Degrees Rank Metro Area Conferred 1 New York 3,953 2 Washington, DC 3,730 3 Chicago 3,067 4 Los Angeles 2,159 5 Atlanta 1,883 6 Boston 1,756 7 Baltimore 1,652 8 Pittsburgh 1,425 9 Philadelphia 1,350 10 Santa Ana-Anaheim 1,218
Source: Atlanta Regional Consortium for Higher Education 2007 (most recent as of 2012)

Top Universities R&D Expenditures, Computer Science 2009 Dollars, thousands Rank Institution 1 USC $93,042 2 Carnegie Mellon U $89,094 3 U Illinois $86,282 4 Johns Hopkins U $71,800 5 Georgia Tech $66,248 6 Penn State $56,880 7 U Texas $50,454 8 MIT $46,566 9 U Tennessee $45,602 10 U California $44,769 11 UMD College Park $31,736
Source: Survey of Research and Development Expenditures at Universities and Colleges, 2009 (most recent as of 2012), National Science Foundation

Opportunity

Baltimore has a history of fostering inventive ideas and acting as a test market for new products. Beta testing is a time-honored tradition in the diverse Baltimore region. Pilot programs launched in the area reach people of different cultures, socioeconomic levels, geographies, languages, and educational backgrounds. The varied population makes for a valuable test market, as innovators have the opportunity to see the value and effectiveness of their product to a number of market segments. Highly successful pilot programs run in Baltimore include analog cellular, cellular/PCS, and wireless data service. EdTech startups can benefit from the schools across the region as well. While some counties excel in producing prepared graduates, some districts have recognized challenges in maintaining student engagement and graduating well-qualified students. Educators in these districts are actively seeking a solution to achieve their goals, and many hope to utilize technology to inspire students. An EdTech entrepreneur would not only have access to world-class universities and outstanding public schools, but would also be able to gauge the effectiveness of their product in markets that most need a new solution to educating youth in addition to making a positive impact on students.

Already home to a strong technology cluster, Baltimore offers incubator and accelerator programs to entrepreneurs looking to start a tech-based business. The Emerging Technology Center (ETC) is the original incubator in Greater Baltimore and focuses exclusively on technology startups. Betamore is an incubator and educational facility for technology startups. AccelerateBaltimore helps entrepreneurs bring their technology to market. A number of organizations and events in the region encourage Education Technology innovation and development. The goal of these organizations is to inspire new startups in this new industry. The Digital Harbor Foundation (DHF) encourages the adoption of Education Technology through local and global education initiatives. By fostering a community of innovation and entrepreneurship in students, DHF seeks to create an ecosystem in which local EdTech startups provide inspiration for future startups. DHF is also committed to ending digital inequity in an effort to close the achievement gap and empowering teachers with technology to be leaders in education relevant to the evolving demands of the modern workforce. As an advocate for the increased use of technology in the classroom, DHF helps make Greater Baltimore an ideal place to create and to implement new classroom technology. The EdTech Link program launched by DHF helps teachers learn new technologies to incorporate into their classrooms and helps to foster relationships between entrepreneurs and the educators whose problems they are trying to solve. Technology-literate educators in the region can provide clear insight on changing needs in the classroom to innovators who want to disrupt the traditional classroom environment. Education Hack Day is a two-day event where software developers and designers take ideas from local teachers and administrators and build applications that provide practical solutions for education-related problems. Final products are demoed and graded, and winners are given help generating startups. The goal of the competition is not only to solve classroom problems, but to generate sustainable product companies in Greater Baltimore. A number of MeetUp groups have been organized around the region have a specific technology and entrepreneurship focus. Some, like Digital Harbor Foundations EdTech Link, look to specifically encourage a mixture of technology and education. The Future of Education Technology Projected Growth Education expenditures in the US in 2012 reached over $1.43 billion, and are expected to climb to $1.8 billion in 2017 (GSV, 2012). The US eLearning market, worth $32.5 billion in 2012, is expected to grow 15% in the next five years to $65.6 billion. This expansion is led by K-12 eLearning, a $5.4 billion market projected to grow 20% to $13.4 billion, and Higher Ed eLearning, worth $17.4 billion now and a 2017 projected value of $39.8 billion (18% growth rate). 96% of teachers and 92% of parents believe that schools integration of technology into teaching and learning is important to the education of students. 82% of teachers and 71% of parents believe a greater use of technology would be helpful in connecting learning inside and outside the

classroom. There is substantial opportunity in this growing market moving forward: 96% of teachers and 86% of parents think technology in the classroom will become more important in the next ten years than it is now (Hart Research Associates for LEAD Commission, 2012). With the prevailing notion that technology is indispensable to the education of current and future students, the EdTech industry will grow to meet the desires of educators and parents. Trends The Education Technology industry is pushing all education into an era of unprecedented personalization (EdSurge). The most exciting change associated with EdTech is adaptive learning. As students use learning programs, the programs adjust based on student behavior to best tailor the presentation of information to that specific students needs and learning style. The numerous individualized pathways possible with EdTech have excited teachers since technology was introduced to the classroom. That interest in reaching, motivating, and educating every student possible has also invigorated entrepreneurs. Education Technology will lead a change in schools and push students to solve real-world problems. By providing a cost-effective means to simulate the world as it is, EdTech gives students the opportunity to apply knowledge and learning to practical examples. EdTech startups will have to meet the needs of educators and students inside and outside of the classroom and offer innovative ways to blur the line between work and schoolwork. For Greater Baltimore, and the Baltimore-Washington corridor to continue thriving as a technology innovation hub and a central location for EdTech expansion, two things are necessary. First, the region needs serial entrepreneurs that choose to reinvest time and money created in previous successful ventures into new ones. Spin-offs and a reinvestment of resources are important to creating a sustainable entrepreneurial economy. Fortunately, Baltimore has seen a recent emergence of serial entrepreneurs and re-investors. This first wave of entrepreneurs dedicated to innovation spurs the second great need of the region being a healthy startup ecosystem. Greater Baltimore is seeing this ecosystem in its earliest stages begin to develop along with its serial entrepreneurs. As these two connected and important pieces to a strong technology market further materialize, EdTech and the technology industry in Greater Baltimore will continue to grow and prosper.

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