Baltimore fostering 'thriving, emerging' industry of education technology firms

As technology transforms classrooms, a booming industry is sprouting in Baltimore to respond.

School districts spend millions of dollars a year training teachers in ways to improve instruction.

It's rarely effective, contends Nicole Tucker-Smith — if lectures bore students, why force teachers to sit through them? The former Baltimore City teacher and Baltimore County school administrator had another idea.

After watching creative teachers who could share their successful methods with colleagues move on to training jobs elsewhere, she developed LessonCast, a mobile application that allows the sharing of lesson plans and classroom videos. School districts can use the app to create, share and save training materials, rather than paying expensive consultants to lead development conferences.

Tucker-Smith is among a growing number of entrepreneurs, many of them former educators, who are turning efforts to improve student performance into for-profit ventures. Investors are joining them in predicting a windfall — investment in the "ed tech" field is booming as the technology is seen as increasingly effective and easy to use in the classroom.

Baltimore is re-emerging as one of the industry's hubs with a growing number of ed tech start-ups and efforts to attract and sprout more of them. The region can boast a history of successful education companies, such as Sylvan Learning and Laureate Education; a well of experienced investors; and a pool of teachers eager to make a difference for students.

"I tell people, if you want to start up a company in Baltimore, we've got really all the resources you'd need," said Frank Bonsal III, a former educator who's invested in more than two dozen ed tech startups and is Towson University's first director of entrepreneurship.

But there is competition for those entrepreneurs. New York and San Francisco attract thousands of people to regular ed tech "meetups," while such events in Baltimore draw several hundred — still nothing to sneeze at, said Betsy Corcoran, CEO and co-founder of EdSurge, an ed tech news and information website based in Burlingame, Calif. Boston, New Orleans and Washington, D.C., are also among the nation's developing ed tech hubs.

While some of those cities may have a deeper roster of investors than Baltimore, this region's strength is people like Tucker-Smith, Corcoran said.

"One of the things we see that's fundamental in the ed tech ecosystem is you need both sides of the equation — entrepreneurs that are interested in starting companies, but you also do really need a community of educators who are interested in collaborating and interacting with those entrepreneurs," she said. "Maryland is really, really strong in its community of teachers."

The region first emerged as an ed tech hub during the Internet bubble as Sylvan Learning funded a number of other startups. One of those was Connections Education, a developer of online and virtual education tools, which was acquired by the British publishing conglomerate Pearson Plc in 2011 after growing into a $200 million-a-year operation.

But the state's ed tech work force peaked at around 450 people in the mid-2000s before tumbling to about 300 by 2010 amid the recession, according to data compiled by the Economic Alliance of Greater Baltimore. The most recent data showed there were nearly 50 ed tech companies employing nearly 400 people in 2012.

And advocates say it's grown more in recent years.

Bonsal and John Cammack, a former T. Rowe Price executive who also invests in local ed tech startups, have been working to attract companies like Citelighter, which is developing a software system that helps students improve their writing, and ThreeRing, maker of an application that allows teachers and students to share work across mobile devices. And both men said they are wooing several more at any given time.

For Citelighter, which moved from New York in 2013, the effort included multiple stays at Cammack's North Baltimore home as co-founders Saad Alam and Lee Jokl met with local ed tech veterans and investors to refine their ideas.

"It wasn't something on our immediate radar, moving to Baltimore," Jokl said. "We realized not only was there a knowledge base here, there's also smart money. That was something we hadn't been exposed to very much in New York."

Ed tech is an increasingly easy sell with investors, though as with any startup, it can be a challenge for the youngest startups to gain momentum. Ed tech companies raised $1.36 billion in investment last year, up from $1.2 billion in 2013, according to EdSurge.

The industry doesn't usually promise investors the same returns as, say, a young drug company, Cammack said. But the chance to have a larger impact on education can make up for that among wealthy individuals who might choose to back young companies.

"If I make three to four times on my money in any of these companies, which is a low return for the risk I take, I accept that because I'm making the choice to have this social impact," he said. "That is something not everyone is comfortable with doing."

Robb Doub, general partner with New Markets Venture Partners in Fulton, said his firm has focused on ed tech for the past eight years with steady successes. Its local portfolio has included Calvert Education Services, a distance-learning venture sold to a private equity-led investment group in 2013, and Moodlerooms, an open-source education software company sold to Blackboard Inc. in 2012.

He said he sees more successes ahead for ed tech investors.

"We think there's a lot of opportunity and the education space is ripe for change and innovation," Doub said. "We continue to look aggressively at ed tech both in the region and across the country."

Baltimore also has a large and growing pool of entrepreneurial teachers.

The region is home to more than 700 alumni of Teach for America, the organization that places high-achieving people without backgrounds in education in urban and rural schools. Another 300 of its corps are currently teaching in Baltimore schools, according to the organization.

And at Towson, Bonsal is working to ignite an entrepreneurial spark in the minds of some of the hundreds of students the university trains in education each year. This fall, he will teach for the first time in years, leading a class of undergraduates, and continue running a business incubator that moved into new space on the campus this year. The incubator shifted its focus to ed tech in 2013.

Other efforts are sprouting in Baltimore's technology community.

The Digital Harbor Foundation and Betamore, two tech organizations in Federal Hill, announced a partnership in April with Federal Hill Preparatory School to establish "EdTech Lab," an effort to connect startups with students to work on design and testing of products.

EdSurge's second annual Baltimore Tech for Schools Summit in February drew 600 teachers and 85 other education leaders.

"There's definitely a thriving, emerging community of education technology in the Baltimore area," Corcoran said.

One of those former teachers turned entrepreneurs is Jess Gartner. She found her way to a Baltimore classroom through Teach for America six years ago, and then turned that experience plus a brief stint in venture capital into Allovue.

The Baltimore company gathers data on student performance and school district finances and combines them to help administrators find the best ways to spend their budgets to improve learning. Ed tech companies like hers are gaining in value because of the larger social impact they can have, said Gartner, Allovue's founder and CEO.

"It comes down to, are you solving a problem that has an inherent value to it?" she said. "The solutions that are providing great value will naturally rise to the top and will probably be profitable as a result. The other ones will probably cease to exist."

Though Tucker-Smith's focus is on helping teachers get better in the classrooms, she acknowledges the business of ed tech is also about the bottom line. She is in the throes of pitching to investors, and her message is clear: The industry depends on school spending.

"Education has an $8 billion problem," she said, referring to an estimate of spending on teacher training across the country. "It's not all about the money, but investors need to hear there's a market, a real problem and a real solution. … This is money that has to be spent every year. It has to go to somebody."

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