Add an elementary school to the list of ventures attracting nine-figure sums from Silicon Valley investors. AltSchool, a chain of technology-centric private schools in San Francisco, has raised $100 million from Facebook Chief Executive Officer Mark Zuckerberg, through his family's charitable organization, as well as from Founders Fund, Andreessen Horowitz, and other backers.
Founded by former Google executive Max Ventilla, AltSchool has been developing customized hardware and software that it says allows teachers to create more personalized education plans. Instead of having children follow the same curriculum throughout the year, lesson plans can be tailored to each student. Tuition costs about $21,000 a year, and the company eventually plans to sell its technology to other schools. "Everything is instrumented through technology," Ventilla says.
Tech investors have been pouring money into education-related companies. Spending on education startups last year increased 55 percent, to a record $1.87 billion, according to CB Insights, which tracks venture capital spending. In 1999, when the researcher started tracking education, financing within the industry was $385 million.
Zuckerberg has been especially focused on education. He donated $100 million to the Newark, N.J., school system in 2010—a venture that wasn't entirely effective—and promised an additional $120 million in May 2014 to improve education in the San Francisco Bay Area. His enthusiasm is infectious. "We believe the time has come to reimagine education,” Brian Singerman, managing partner of Founders Fund, says in a statement. Founders Fund was an early backer of Facebook, and Marc Andreessen, whose VC firm Andreessen Horowitz also invested in AltSchool, sits on Facebook's board of directors. (Bloomberg LP, the parent company of Bloomberg Business, is an investor in Andreessen Horowitz.)
AltSchool is different from many other education-tech companies, which typically build applications to help with math or reading. That's because it operates its own schools. The company started last year in a single San Francisco classroom with 20 students. This year, it plans to have eight schools serving 500 kids. Its first school outside of California will open later this year in—where else—Brooklyn, N.Y.
After Ventilla sold his search startup, Aardvark, in 2010 to Google, where he worked until 2013, he became increasingly interested in what he describes as a failing education system in the U.S. The country ranks 14th—below Russia and other developed nations—in a Pearson study on global math, science, reading, literacy and graduation rates. One reason for that is a lack of funding for public schools, something Ventilla's hot tech startup no longer needs to worry about.