Friday, September 28, 2007

eLearning Startups - New Wave Coming

I'm not sure if other people are seeing this, but based on a bunch of conversations and calls, it appears that there is a wave of new eLearning startups being created right now and the trend is accelerating. Because of my background doing startup software development with leading startups, e.g., eHarmony (see Matching Algorithm), MyShape, LoanToolbox, etc., my background in eLearning, and the fact that I'm a CTO-type person, I may get more of these kinds of calls, so I'm curious if other folks are seeing this as well.

What's interesting about the new wave is that most are targeting outside of traditional eLearning Solutions. Traditionally, we've seen start-ups that focus on authoring tools, virtual classroom, learning management, content, services. When you look back at 2000-2002, companies getting VC funding were folks like Outstart, Hyperwave, Infocast, Element K, Pathlore, Vuepoint, Knowledge Impact. Some of that is still happening with folks like Cornerstone getting $32M. But a lot of what you see today is consolidation among players in these areas.

Today the startups in eLearning sit in smaller niches or by attacking tangential opportunities in eLearning. They are going after things like:
  • specialized tools and content that meet particular industry or audience needs
  • games and simulations
  • web 2.0 approaches that leverage distributed content creation, social aspects as part of learning, collaborative learning and editing.
This is likely a natural outgrowth of the maturing of the industry. The larger players become focused on bigger and bigger opportunities. The bottom of established markets get eaten by lower-cost, e.g., open source players. And innovation comes from nimble start-ups who can attack smaller market opportunities. What's interesting though is how many of these "smaller" opportunities have the ability through network effects to grow very large.

One thing that was curious to me is that I can't find a good resource that shows what companies have received funding in our world? Where are the analysts? Is there a list somewhere? How could I find this out?

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