Brief overview of investment trends in educational technology with an emphasis on games in education

1. Moksa Ventures
iGame Conference:
Games in Education
Investing in Educational Technology
September 28 2013

2. Moksa Focus: Sectors of High Interest
Capital Efficient
Get somewhere on a
few million dollars, not
tens of millions
Games and
Game Layer
Games and tech
companies that use
game design
principles, mechanics,
technologies,
interfaces to meet
business needs
Early Stage
After seed, with
revenue in sight,
before the big
venture firms
enter
Games
Digital health and wellness
Educational technology
Crowd-sourcing,
distributed labor platforms
Employee motivation,
social task management
Sensors, wearables,
innovative human/
computer interfaces/AI
Blended/augmented reality
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3. Key elements of games – goals, rules, feedback and assessment, voluntary participation –
are highly relevant beyond the entertainment sector. Entrepreneurs are building these
“gameful” applications, technologies and interfaces in many non-entertainment sectors,
drawing on game industry design and technology experience.
What is a game and why care?
Goal Rules
Feedback
and
assessment
Voluntary
participation
“A game is nothing but a
problem-solving opportunity
you engage in
because you feel like it.”
- game designer Jesse Schell
Four elements of a game from Jane McGonigal, Reality Is Broken: Why Games Make Us Better and How They Can Change the World
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4. framework for
modern
technology
framework for
connections:
Facebook open
social graph
API
framework for
influencing
behavior: under
construction
mechanics and tools
to capture attention
and influence
behavior and
leverage collective
human/computer
intelligence
Digital
Social
Game layer
The digital game industry pioneers technologies, mechanics and
business models later adopted by non-game sectors. Useful lens for
predicting mass market adoption and use of these technologies.
Game mechanics and other conventions of the game layer are
powerful tools for building engagement and influencing
behavior in non-game sectors*
What is the game layer and why care?
*See Seth Priebatch’s 2010 TED talk. http://www.ted.com/talks/seth_priebatsch_the_game_layer_on_top_of_the_world.html
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5. Digital
Platform limited
Solo/single player
Hardcore limited market
Keyboard/controller
interface
$50 box (US)
Pastime for kids
Digital + broadband +
mobile
Multi-platform
Massively multiple player/
social
Mass market/casual players
Motion interface with device
Digital download, virtual
goods, subscription, “free” to
play
Mass entertainment +
“serious” games
Digital + broadband +
mobile + cloud + SAAS
Omni-platform; transmedia
Open social graph
Mass market + beyond
games
Motion interface without
device/interface through
any device
Games + social layer +
markets in attention and
reputation + enterprise
market for game mechanics
Game layer of reality in
serious games, augmented
reality and other emerging
explorations
Digital
Social
Game layer
Evolution of the digital game industry
A lens for seeing the future: Games
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6. William Gibson* on the Game Layer
“The future is already here.
It’s just not evenly
distributed.”
*American-Canadian speculative fiction novelist who has been called the "noir prophet" of the cyberpunk subgenre.
Gibson coined the term "cyberspace" in his short story "Burning Chrome" (1982) and later popularized the concept in his
debut novel, Neuromancer (1984).
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7. Education Market Overview
Education
U.S. $1.45 trillion
K12
U.S. $688 billion
School
Parents
University/
Grad school
U.S. $535 billion
Credentialed/
Accredited
Lifelong Learner
Skills
Enhancement
U.S. $225B
Professional/
Employee
U.S. $131 billion
Consumer
$94B
Languages
U.S. $83B
Test prep
U.S. $11B
Guitar, arts,
programming??
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Sources: Moksa Ventures analysis, NeXt Knowledge Factbook , Trainingindustry.com, U.S. Bureau of Economic Analysis, American Society of Training &
Development (ASTD) 2012 State of the Industry Report, GSV Advisors 2012 Education Sector Factbook
eLearning Share:
$5B -- $60B
+ apps
$17B --$24B
+ MOOCs/apps
$9.6B (pro/emp)
$30B (language)
+ MOOCs/apps
= “informal education”

8. EdTech Adoption Challenges
Institutions vs. Consumers
• Institutions (K12, University/Grad, Corporate)
 Budget constraints
 Long purchase cycle
 Lack of proof of effectiveness
 Cultural resistance
 High consolidation (K12) BUT
 Big dollars, big win if capture
• Consumers
 Fragmented, high spend to reach and acquire BUT
 Eager, fast adopters, high growth rates, test models
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9. Educational Tech Hype Cycle -- Gartner
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Sources: Gartner

10. Venture Investment In EdTech
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Source: National Venture Capital Association, Crunchbase, Edsurge
$150m
$580 m
0
20
40
60
80
100
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Educational Technology Deals
Deals

11. Entrepreneurial Vigor In EdTech
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Source: AngelList. 258 companies, 824 angel investors interested in educational technology, games in education
0
20
40
60
80
100
120
140
160
180
200
2010 2011 2012 2013
“Educational Games” Company Listings
Educational Games

12. Areas of Investment Focus – Trends
• Content
▫ Interactive texts, multimedia, online
• Learning
▫ Adaptive learning and GAMES!!!
• Learning infrastructure
▫ MOOCs and learning management systems
• Validation/Assessment
▫ Credentialing, assessment, peer feedback
platforms
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13. Prominent Investors in EdTech
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Non-Profit Return-Seeking/For-ProfitStrategic
(Pearson)
(MacMillan)
$500 Million
collectively pledged for
education starting
2010 forward
$2 Billion+ collectively
invested for education
in 2002 - 2012

14. Thank you
For more information:
Stephanie@moksaventures.com
310-210-2130
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