NEA Boosts Education Bet, Leads $25M Investment in Edmodo

Photograph by Lisa Pines

Venture capitalists have been pouring money into online education services this year.

Education has long been a challenging market for startups because it’s hard to sell into school systems and students tend not to be flush with cash.

New Enterprise Associates thinks that’s ancient history. The venture capital firm announced today it led a $25 million investment in Edmodo, the social-networking service for teachers and students in kindergarten through high school.

Earlier this week, the firm added to its stake in Coursera, a site for higher education classes, which NEA first backed in April as part of a $16 million investment with Kleiner Perkins Caufield & Byers.

NEA and other investors see new opportunities in education, thanks to the increasing adoption of smartphones and tablets, and the near ubiquitous usage of social networking tools.

“As a firm we’re very active in the education technology arena, and Edmodo is far and away the most impressive social learning network in K12 education,” Tony Florence, a general partner at NEA, said in a statement.

Both Edmodo and Coursera offer their services for free with the goal of attracting millions of people and figuring out revenue options later. Edmodo, founded in 2008, recently surpassed the 8 million member mark and is being used in 85 of the largest 100 U.S. school districts. The service lets educators connect with each other and their students via a browser or smartphone and provides technology so they can share resources and assignments.

Edmodo, based in San Mateo, California, has raised $47.5 million from investors including Greylock Partners, Benchmark Capital and Union Square Ventures. LinkedIn founder Reid Hoffman is on the board.

NEA is also an investor in EverFi, a site that teaches and certifies students in areas such as financial literacy, student loan management and substance abuse. The company raised $11 million in September of 2010.

Venture capitalists have been pouring money into online education services this year. In January, college collaboration site Piazza raised $6 million, and two months later, Education Elements, which builds software for schools and school districts, raised the same amount. In April, online university The Minerva Project raised $25 million, and Schoology, developer of a cloud-based learning system, brought in $6 million.

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