Venture Capitalist Sees Growing Investment Opportunities In Serious Games

by on 2 December, 2007 - 10:48

What makes Serious Games attractive to investors

Via: Richard Carey - Digital Media Solutions, Serious Games & Learning Smiluations

As
anticipated on my prior posts focused on Serious Games Market Size,
funding has started to become available from foundations, governmental
agencies, non-profits and venture capitalists.

The following
article by Richard Carey, offers a unique opportunity to get a venture
capitalist perspective on investing in the educational technology
market, including educational games and simulations.

A VC’s Perspective on EdTech Investment - Published November 29th, 2007 The SIIA’s annual Ed Tech Business Forum, the leading business and finance conference for the K-12 and postsecondary education technology market, attracts senior management
from education software companies, platform technology firms, solution
providers, publishers, private equity firms and venture capitalists.The keynote speaker for this years conference was John Martinson, Managing Partner of the Edison Venture Fund.
With 31 years of venture capital experience, including 8 investments
for Edison from $3-10M and 12 investments from $250K-12M as an
individual, Martinson has significant experience and a unique
perspective on investing in the educational technology market.In
his presentation, Martinson provided a candid appraisal of what makes
educational technology attractive to investors, as well as its unique
challenges. He
also shared his “tired or wired” list, highlighting emerging segments
of the market — invaluable insight for anyone managing an educational
technology portfolio or investing in new products for this market. K-12 Software is a Sizable Niche MarketAmong his obserations: K-12 software is a sizable niche market with 55M students, 125K schools and 12K districts.There’s tremendous public pressure to improve student performance, reduce costs and improve productivity.It’s
a market of passionate entrepreneurs, a market with a high SAS
(software as a service) renewal rates. Equally important, if somewhat
below the radar of many departments of education and school boards who
make purchasing decisions, today’s students are digital natives as are
many of their parents, so the demand for educational technology will
only increase.On the downside, there’s a long tradition that
schools pay for hardware and expect software and services to be free.
Add to that regulations that differ by state, a long (and seasonal)
sales cycle, decision making by committee, and disbursed sales (12
thousand districts, 125 thousand schools) and the challenges become
clear.Growing Investment OpportunitiesIn
spite of these negatives, Martinson sees growing investment
opportunities on several fronts, including instruction management
(learning management systems), data management (assessment reporting
and analytics to drive individualized instruction), portals and
communication systems, special education (see individualized
instruction), online schools and courses (distance learning),
educational games and simulations -- "Serious Games”, and in mobile
computing devices.Martinson is particularly bullish on the
post-secondary market. Despite being much smaller than K-12, the
technology infrastructure is more robust, there are fewer cumbersome
regulations, there are business-like initiatives to increase revenues
and lower costs, and decisions are more timely compared with those made
by state and local school committees.In a nutshell, while
educational technology remains unarguably a niche market with unique
challenges, Martinson feels the need for applied technologies, rapid
acceptance of web-delivered software as a service, recurring revenue
business models, and pent-up demand from years of restrained investment
in K-12 point to increased opportunity for investors, publishers and
product developers.Original Post: http://elianealhadeff.blogspot.com/2007/11/venture-capitalist-sees-growing.html