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Intel Capital Leads $30 Million Funding of Education Startup Kno

Intel Corp. (INTC)’s venture-capital arm is investing $20 million in digital textbook and tablet maker Kno Inc., supplying funding that will be used to develop software.

Intel’s investment is part of $30 million in funds from a group that includes Andreessen Horowitz, Advance Publications Inc., First Round Capital, Floodgate Fund LP and SV Angels, the Santa Clara, California-based chipmaker said in a statement.

The funding boosts Intel’s involvement in the growing field of educational technology, a market that may top $47 billion this year, according to research firm Compass Intelligence. The alliance may also help Intel find wider distribution for its chips in tablet computers.

“The increasing consumption of digital content has primed the textbook market for disruption, creating an exciting opportunity for technology innovation to fundamentally change the way 1.4 billion students globally learn,” Arvind Sodhani, president of Intel Capital, said in the statement.

Founded in 2009, Kno raised $46 million in equity and debt financing last September from investors such as Andreessen Horowitz, the venture capital firm co-founded by Web pioneer Marc Andreessen. Before the Intel-led investment, the Santa Clara-based startup had raised a total of $65 million.

Kno said in November 2010 that it would charge $599 for its single-screen tablet aimed at students and $899 for a dual- screen version. The company shipped a limited number of the devices in December and then suspended sales.

Investment Portfolio

At the end of last year, Intel Capital held a portfolio of investments worth $2.27 billion. Since 1991, it’s invested more than $9.8 billion in more than 1,100 companies. In that period, 189 portfolio companies have gone public and 258 were acquired or participated in a merger, according to Intel’s website.

Intel Capital looks for technologies and products that will support or create demand for its personal-computer chips.

Intel, whose processors power more than 80 percent of the world’s PCs, has struggled to parlay that dominance into sales in the faster-growing market for tablet computers. Apple Inc. (AAPL)’s iPad runs on chips based on ARM Holdings Plc’s technology, which is more widely used in mobile phones.

Kno is the second education-related startup founded by Osman Rashid. In 2005, he co-founded online textbook rental provider Chegg Inc. and led the company to $100 million in annual sales in less than five years. While at Chegg, he raised seed funding for Kno, which was then called Kakai.

To contact the reporters on this story: Douglas MacMillan in San Francisco at Dmacmillan3@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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