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What Angel Learning's Deal With Harcourt Illustrates About k-12 Online Learning

I know the school improvement industry is far short of the investment it requires to help leave no child behind. I also know that wrong-headed investment trends have hurt the industry overall. The mad dash to Education Management Organizations (EMO) in the late 1990's sucked up money that could have gone to products and services that actually work. The great disappointment in EMO's discouraged other investors from taking far less risk in those same offerings. The pack mentality and its effects were repeated with the Supplementary Educational Services boomlet early this century.

That's why I've been so critical of the proposed Initial Public Offering for virtual EMO K12. If it goes forward, it will get a lot of media coverage, raise a lot of hopes and, for reasons I've stated earlier, disappoint. The result will not only harm firms seeking investment for online k-12 education; once again investors will be turned off by the school improvement industry. This worry is all the more salient as we move into a period where the sub-prime mortgage mess is turning investors towards more conservative positions in general.

One of the more important points I've made is that the turnkey/one stop shop/soup to nuts solution to online learning is becoming less necessary. I've pointed to evidence in the RFPs showing how potential clients are asking for parts and building their own solutions. Now let's look at the supply side and how providers are offering those parts.

On October 22, Angel Learning, a provider of the software backbone required to operate an online program, signed an agreement with Harcourt Education facilitating linkage between Angel's Learning Management System and educational offerings from Harcourt School Publishers and Holt, Rinehart and Winston. A quick review of the Angel Learning website will show similar relationship with other content providers.

Last week, I noted that DeVry's acquisition of Advanced Academics showed a movement by post-secondary providers into the online high school market. The Apollo Group made a similar move in January, purchasing online Insight Schools. It's worth noting that Angel's main client base is higher education, and it too has diversified its revenues and risks by migrating into k-12.

Angel Learning is a privately held firm building on technology developed in the late 1990's at Indiana University-Purdue University Indianapolis (IUPUI). It may not be looking for new investment. Still, it represents the kind of school improvement business investors should be following if they believe the promise of online public education.

(By way of disclosure, both Harcourt and Angel Learning are clients of my firm's $1500/year RFP reporting service, K-12Leads and Youth Service Markets Report.)

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