Moksa Ventures iGame Conference:

Games in Education

Investing in Educational Technology

September 28 2013

Moksa Focus: Sectors of High Interest

Capital Efficient Get somewhere on a

few million dollars, not tens of millions

Games and Game Layer

Games and tech companies that use

game design principles, mechanics,

technologies, interfaces to meet

business needs

Early Stage After seed, with revenue in sight,

before the big venture firms

enter

Games Digital health and wellness Educational technology Crowd-sourcing, distributed labor platforms Employee motivation, social task management Sensors, wearables, innovative human/ computer interfaces/AI Blended/augmented reality

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Key elements of games – goals, rules, feedback and assessment, voluntary participation – are highly relevant beyond the entertainment sector. Entrepreneurs are building these “gameful” applications, technologies and interfaces in many non-entertainment sectors, drawing on game industry design and technology experience.

What is a game and why care?

Goal Rules

Feedback and

assessment

Voluntary participation

“A game is nothing but a problem-solving opportunity

you engage in because you feel like it.”

- game designer Jesse Schell

Four elements of a game from Jane McGonigal, Reality Is Broken: Why Games Make Us Better and How They Can Change the World

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framework for modern technology

framework for connections: Facebook open social graph API

framework for influencing behavior: under construction mechanics and tools to capture attention and influence behavior and leverage collective human/computer intelligence

Digital

Social

Game layer

The digital game industry pioneers technologies, mechanics and business models later adopted by non-game sectors. Useful lens for predicting mass market adoption and use of these technologies. Game mechanics and other conventions of the game layer are powerful tools for building engagement and influencing behavior in non-game sectors*

What is the game layer and why care?

*See Seth Priebatch’s 2010 TED talk. http://www.ted.com/talks/seth_priebatsch_the_game_layer_on_top_of_the_world.html

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Digital

Platform limited

Solo/single player

Hardcore limited market

Keyboard/controller interface

$50 box (US)

Pastime for kids

Digital + broadband + mobile

Multi-platform

Massively multiple player/ social

Mass market/casual players

Motion interface with device

Digital download, virtual goods, subscription, “free” to play

Mass entertainment + “serious” games

Digital + broadband + mobile + cloud + SAAS

Omni-platform; transmedia

Open social graph

Mass market + beyond games

Motion interface without device/interface through any device

Games + social layer + markets in attention and reputation + enterprise market for game mechanics

Game layer of reality in serious games, augmented reality and other emerging explorations

Digital

Social

Game layer

Evolution of the digital game industry

A lens for seeing the future: Games

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William Gibson* on the Game Layer

“The future is already here.

It’s just not evenly distributed.”

*American-Canadian speculative fiction novelist who has been called the "noir prophet" of the cyberpunk subgenre. Gibson coined the term "cyberspace" in his short story "Burning Chrome" (1982) and later popularized the concept in his debut novel, Neuromancer (1984).

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Education Market Overview

Education

U.S. $1.45 trillion

K12

U.S. $688 billion

School

Parents

University/

Grad school

U.S. $535 billion

Credentialed/

Accredited

Lifelong Learner

Skills Enhancement

U.S. $225B

Professional/

Employee

U.S. $131 billion

Consumer

$94B

Languages

U.S. $83B

Test prep

U.S. $11B

Guitar, arts, programming??

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Sources: Moksa Ventures analysis, NeXt Knowledge Factbook , Trainingindustry.com, U.S. Bureau of Economic Analysis, American Society of Training & Development (ASTD) 2012 State of the Industry Report, GSV Advisors 2012 Education Sector Factbook

eLearning Share:

$5B -- $60B + apps

$17B --$24B

+ MOOCs/apps

$9.6B (pro/emp) $30B (language)

+ MOOCs/apps

= “informal education”

EdTech Adoption Challenges

Institutions vs. Consumers • Institutions (K12, University/Grad, Corporate)

Budget constraints Long purchase cycle Lack of proof of effectiveness Cultural resistance High consolidation (K12) BUT Big dollars, big win if capture

• Consumers Fragmented, high spend to reach and acquire BUT Eager, fast adopters, high growth rates, test models

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Educational Tech Hype Cycle -- Gartner

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Sources: Gartner

Venture Investment In EdTech

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Source: National Venture Capital Association, Crunchbase, Edsurge

$150m

$580 m

0

20

40

60

80

100

120

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Educational Technology Deals

Deals

Entrepreneurial Vigor In EdTech

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Source: AngelList. 258 companies, 824 angel investors interested in educational technology, games in education

0

20

40

60

80

100

120

140

160

180

200

2010 2011 2012 2013

“Educational Games” Company Listings

Educational Games

Areas of Investment Focus – Trends

• Content

▫ Interactive texts, multimedia, online

• Learning

▫ Adaptive learning and GAMES!!!

• Learning infrastructure

▫ MOOCs and learning management systems

• Validation/Assessment

▫ Credentialing, assessment, peer feedback platforms

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Prominent Investors in EdTech

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Non-Profit Return-Seeking/For-Profit Strategic

(Pearson)

(MacMillan)

$500 Million collectively pledged for education starting 2010 forward

$2 Billion+ collectively invested for education in 2002 - 2012

Thank you

For more information:

Stephanie@moksaventures.com

310-210-2130

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