Industry News

Pearson Commits $50 Million to Edtech Startups

By Cait Etherington
April 15, 2019

Pearson Education, an offshoot of the historic publishing company Pearson PLC, has announced plans to reserve $50 million to participate in Series A and Series B funding rounds in the edtech sector. Bootcamps, emerging assessment and credentialing platforms, learning tools, and augmented reality-based education solutions are all on Pearson’s radar as they go shopping for potentially fruitful investments in edtech. While the launch of the company’s new venture capital arm may come as a surprise to some onlookers, in fact, it is just the latest chapter in the company’s long history of innovation.

Pearson Education

Pearson PLC was founded in the 1840s by Samuel Pearson in Yorkshire, England. For many decades, Pearson operated as a construction company, but in the 1920s, Pearson switched from construction and engineering to publishing. While the switch from bricks to books may have been unusual, the company would go on to become the largest textbook publisher in the world.

With change in its DNA, it is no surprise that as the publishing landscape started to shift in the face of emerging digital technologies, Pearson proved especially adaptable. By 1998, as many traditional publishers were facing dire financial troubles, Pearson had already created a new company, Pearson Education, and had started to rapidly scale its online products. Unlike many of its competitors, Pearson was not only quick to adapt to the growing demand for digital books but also among the first educational publishers to appreciate the potential of augmenting online textbooks with related digital content. The company’s foresight enabled it to survive the digital turn and to rapidly expand during the early 2000s. Pearson now owns a wide range of brands including Prentice Hall, which is just one of the traditional publishers that failed to adapt to digitalization and was subsequently acquired by Pearson.

Pearson Ventures Extends Pearson’s Commitment to Driving Innovation

The creation of Pearson Ventures (Pearson’s new venture capital arm) may be consistent with the company’s legacy of innovation, but so far, Pearson hasn’t revealed many details about its new venture.

A new page on the Pearson Education website states, “With an initial capital commitment of $50M over three years, Pearson Ventures will invest in companies building new market opportunities using innovative business models, future technologies, and new educational experiences. While Pearson Ventures will pursue competitive financial returns, equally important is its ability to collect shareable insights and drive organizational learning to help future-proof the company. As a result, we will be doing things a bit differently than a typical venture fund.” A TechCrunch article published on April 10th offers a few details about what “doing things a bit differently” might entail.

As detailed in the TechCrunch article, Pearson Ventures will back up to five companies per year over the next three years. However, as Pearson’s investment director Owen Henkel told TechCrunch, they have no plans to lead rounds, purchase large stakes in startups, or control terms. Pearson Ventures will solely operate as a co-investor alongside other VC funds. Henkel also confirmed that Pearson Ventures will not, as one might expect, serve as an acquisition pipeline for Pearson Education.

As Henkel told TechCrunch, “The only reason this is worth Pearson’s time is if we can learn important things about markets that are important to us. It’s about keeping Pearson’s ear to the ground in relevant markets and verticals. If we don’t have the knowledge of the space, we won’t know where it’s going.” Henkel added, “For us, it’s about learning, not about staking our flag in something we want to buy later.”

While Pearson Ventures is a new initiative, this isn’t the first time Pearson has played an investor role. Previously, Pearson’s Affordable Learning Fund invested $20 million in other education companies.

Image source: seth-schwiet-40984-unsplash.