Judging by the number of learning apps available to classrooms around the country

Judging by the number of learning apps available to classrooms around the country, the education technology market aimed at elementary through high schools is booming.

There are more than 3,900 math and reading apps, classroom management systems and other software services for schools in the United States, according to LearnTrials, a start-up that helps school districts assess and manage these tools.

The money pouring into ed tech tells a different story, however. Despite the volume of novel products aimed at schools, the biggest investments are largely going to start-ups focused on higher education or job-related skills — businesses that feed a market of colleges, companies and consumers willing to spend to promote career advancement.

Venture and equity financing for ed tech start-ups worldwide rocketed to $2.98 billion last year, up from about $1.87 billion in 2014, according to a new report from the research firm CB Insights. Industry analysts attributed the bulk of that increase to seven investment rounds of $100 million or more, none of them for businesses focused on public schools in the United States.

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Biggest Ed Tech Funding Rounds in 2015

HotChalk A California-based company that sets up online degree programs for universities

$230 million

  • TutorGroupA China-based company that offers online tutoring and language instruction

Nearly $200 million

  • Lynda.comA California-based company that offers online professional skills courses for individual and corporate customers

$186 million

  • HujiangA China-based company with a platform that offers study materials and live video instruction

$157 million

  • UdacityA California-based company that offers courses in software development and data analytics

$105 million.

  • ChangingeduA China-based app developer that connects students and tutors

$100 million

  • 17zuoyeA China-based company with an online learning platform for students, parents and teachers

$100 million

Source: CB Insights

The financing trend highlights the difficulties facing the numerous young companies that develop apps for school use. Many of those tech start-ups have been able raise early-stage financing, often in comparatively small amounts; a subset of those, mimicking techniques established by popular consumer apps, have grown quickly by giving away their products.

But industry analysts say school start-ups that have not yet figured out how to make money are likely to have a harder time raising mid-stage financing this year — which could lead to a bit of a shakeout in the industry.

“We have yet to see that aha business model in the space,” said Matthew Wong, a research analyst at CB Insights. “The pressure is now on those companies to show they can provide scalable revenue models.”

By comparison, companies focused on corporate training or professional skills, like those that teach computer programming languages to adults, say they have found it easier to generate revenue by marketing directly to corporations or consumers. Lynda.com, for example, markets video tutorialsboth to companies and to individual software developers and other professionals. It raised $186 million last year and was later acquired by LinkedIn for $1.5 billion.

Many big companies also pay for corporate learning services to administer and track internal programs like sexual harassment training. That has already led some academic-focused start-ups to rethink their audiences.

“A very simple explanation is: In corporate, they have money,” said Josh Coates, the chief executive of Instructure, an ed tech company that has broadened its strategy.

In 2011, Instructure began marketing a learning management system, called Canvas, to universities and school districts. Last year, the company expanded its business into employee-training platforms for corporations. Mr. Coates said he expected that Instructure would eventually derive much of its revenue from companies, which pay higher fees than schools.


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“If they can make an employee 2 percent better by paying $50 for corporate training, they are going to do that in a heartbeat,” Mr. Coates said. “A school can’t do that kind of calculation. It’s not an obvious return on investment.”

Instructure went public in November and, as of the close of business on Friday, had a market capitalization of about $490 million.

While investors currently appear averse to pouring giant sums into start-ups focused on public schools, the use of ed tech services has grown steadily over the last few years. One catalyst has been higher government subsidies for school districts to install faster Internetconnections. Some districts have also increased their spending on tablet, laptop and desktop computers for students, bolstering the footprint of tech giantslike Apple, Google and Microsoft in education.

The increased availability of connected devices in turn has paved the way for a new generation of learning apps, websites and software services. Some have attracted large user bases by offering a free basic product to teachers while charging schools a site license fee to use a more premium product.

“We are seeing companies getting to really significant scale in short periods of time — the ability to get hundreds of thousands or more than a million users — on very low capital and very lightweight market spend,” said Tory Patterson, co-founder of Owl Ventures, a venture capital fund that invests in ed tech start-ups.

Yet software start-ups hoping to sell to schools face particular challenges. The market is divided into about 13,500 districts, each with its own curriculum review and often monthslong purchasing processes. And while digital tools have great potential to make education more accessible and efficient, it is unclear whether the latest wave of technology will significantly improve learning and academic outcomes for the majority of students over the long term.

“When I speak to investors, they say they would love to be invested only in the companies that are making a difference in improving education and have quantifiable results,” said Bart Epstein, the chief executive of Jefferson Education Accelerator, an organization that helps ed tech start-ups study the effectiveness of their products. “But research is complicated, expensive and risky, and right now it doesn’t really matter in most schools’ purchasing decisions.”

Some ed tech start-ups are hedging their bets by expanding beyond schools to corporations, professionals and even parents.

“If your sole focus is the K-12 institutional market, it’s limited,” said Jennifer Carolan, co-founder of Reach Capital, an education technology fund. “Investors are looking at what are the adjacent markets — consumer, international or corporate learning — that companies can grow into.”

As an example, she mentioned Kaymbu, a small start-up with a school messaging app that raised $175,000 in late 2014 from NewSchools Seed Fund, where Ms. Carolan previously worked. While sending messages is free, Kaymbu charges parents for other products, like compilations of class photos their child’s teacher sends throughout the year.

The start-up behind Pencil, another communications app once used in several dozen schools, closed last year.

Others have found more success, among them Schoology, a learning management platform for schools that raised $32 million in November, and Knewton, an analytics company that personalizes educational materials for students, which has raised a total of about $147 million.

Because many school start-ups are so new, Mitch Kapor, a partner at Kapor Capital, a venture capital fund that has invested in more than 30 education start-ups, predicted that it would take seven to 10 years for the school ed tech market to become clearer.

“I think we will see some successes,” said Mr. Kapor, creator of the software Lotus 1-2-3. “But we’re also going to see lots of companies get off to a good start, falter, end up being acquired, or fail.”