Educational technology is one of the best fields for examing the "blended capital" model of investing, in which philanthropic and private capital funds flow to for-private firms in hopes that they will produce K-12 innovations to provide the kind of impact sought by funders and the profits sought by private financiers.
The Michael and Susan Dell Foundation (MSDF) is one of the most significant players in the ed tech funding landscape. It entered this area of K-12 education in the belief that educational technology can be a valuable tool for social change and that the funder could encourage ed tech companies to design tools that would service low-income schools across the country.
A recent MSDF blog post on the MSDF discusses the impact and lessons learned thus far from Dell's investments in educational technology. In 2013, Dell provided a grant to the NewSchools Seed Fund (NSSF). NSSF began in 2012 as an initiative of the New Schools Venture Fund to invest in promising educational technologies. With the help of funding from Dell and other sources, NSSF has invested in more than three dozen ed tech firms, many of which were founded by educators with classroom instructional experience.
NSSF invested some $8 million in these companies, who also secured more than $150 million in additional capital from other sources, such as venture capital firms. NSSF has since relaunched as Reach Capital, a private capital firm with a social impact focus.
While this experience has been instructive in demonstrating how philanthropic and private capital can work together, despite differing goals, Dell also has found that its investments in educational technology are reaching the schools and students the funder hoped to impact. The funder reported that roughly half of the students served by the firms in which they've invested, either directly or indirectly through NSSF, qualify for free or reduced-price school lunches, the benchmark measure for low-income status.
As the ed tech sector has grown, with millions in new investment dollars flowing in, Dell promises it will reassess how to maximize its investments in this area so as to ensure its funding continues to work toward improving opportunities for disadvantaged students.