Thursday, August 2, 2012

Hedge-fund vultures circling public ed

"This is a new frontier. The private equity guys and the hedge fund guys are circling public education." -- Diane Ravitch 
Stephanie Simon at Reuters reveals profiteers waiting in the wings to cash in on Common Core Standards. About 100 of gathered in a meeting last week at the University Club in Manhattan, billed as a how-to on "private equity investing in for-profit education companies." 
If they're as rigorous as advertised, a huge number of schools will suddenly look really bad, their students testing way behind in reading and math. They'll want help, quick. And private, for-profit vendors selling lesson plans, educational software and student assessments will be right there to provide it. 
"You start to see entire ecosystems of investment opportunity lining up," said Lytle, a partner at The Parthenon Group, a BostoThe conference last week at the University Club, billed as a how-to on "private equity investing in for-profit education companies," drew a full house of about 100.n consulting firm. "It could get really, really big."
In the venture capital world, transactions in the K-12 education sector soared to a record $389 million last year, up from $13 million in 2005. That includes major investments from some of the most respected venture capitalists in Silicon Valley, according to GSV Advisors, an investment firm in Chicago that specializes in education.

Education entrepreneur John Katzman urged investors to look for companies developing software that can replace teachers for segments of the school day, driving down labor costs.
"How do we use technology so that we require fewer highly qualified teachers?" asked Katzman, who founded the Princeton Review test-prep company and now focuses on online learning.

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