Google Buys into STAR/Accelerated Reader Parent Company

• By Dian Schaffhauser
• 02/19/14

Google is upping its ante in the education segment with a $40 million investment in Renaissance Learning, a Wisconsin company that produces the popular STAR assessment system and Accelerated Reader and Accelerated Math curriculum programs. The investment was made by Google Capital, the company's newish "late-stage" investment division that has also become a shareholder in online survey company SurveyMonkey and online peer-to-peer lending company Lending Club. Google also makes early stage investments through Google Ventures.

Renaissance said Google Capital would hold a minority stake in the company, which is owned by Permira, a European private equity firm. A representative from Google Capital will join Renaissance's board of directors.

CEO Jack Lynch said what differentiates his company's offerings from competitors' products is their "teacher-centric" focus. "We see ourselves as a company that leverages technology to provide teachers [with] insight they in turn use to unlock a student's learning potential. A number of companies use the same technology we do — adaptive sequencing algorithms. They use it to personalize instruction independent of a teacher." Renaissance tools provide data that helps the teacher pinpoint gaps in a student's understanding of a subject, Lynch explained, and then the teacher uses his or her expertise and knowledge of the student to determine which instructional content is most appropriate.

Renaissance has a solid footprint in American schools. The company's data center hosts the data for more than 38,000 schools. That includes learning records for 10.7 million American students. On average its Accelerated Reader quizzes are given 1.9 million times each school day. And during the last school year, 45 million STAR assessments were completed by students.

Lynch said the investment is "really not necessary for the business, but it does open a lot of doors for the two companies to collaborate in the education space.... Google now has an interest in our success. As a result of that we'll be able to operate in the education space in a mutually reinforcing way." Lynch added that the investment would not be used "for working capital or drawing down debt."

Although Lynch didn't elaborate on how the two companies would "collaborate," he emphasized that student data would not be part of the conversation. "I would just say unambiguously, Google will not have their hands on any of the data that is owned by school districts and students and parents in those school districts. We have very strict data privacy policies — stricter than anything you've read about in the industry [with a] highly protected data center [and] encrypted technologies, and none of that data is going anywhere."

Concerns about the use of student data for non-educational purposes has become a hot-button issue for some parent groups, which have expressed concern that their students' information will be sold to vendors.

Last August Renaissance acquired a free K-12 iPad app, Subtext, which complements the larger company's Accelerated Reader program. Subtext allows a teacher to embed videos, questions, highlights or other digital matter into the digital pages of a book.

Lynch suggested that other acquisitions may be in the company's future. "If there's a fit in our product line where we feel there is an opportunity to create additional value for our customers, that's the kind of acquisition we're looking for," he said. "I think you'll see acquisitions down the road. Nothing imminent. But that's a part of how we're going to operate going forward."

The investment in Renaissance is far from the first foray made by Google into education. Currently, an estimated 30 million students, faculty, and staff use Google Apps for Education. The company also claimed that 5,000 schools are using Chromebooks in the classroom (though it has not reported just how many Chromebooks are in use in each of those schools). Earlier this month Google introduced Google Play for Education, a content store for teachers.

"All over the world, technology has opened new doors for students to learn both in the classroom and at home. For many educators, the question is not whether to embrace new technology, but how to embrace technology in a way that makes teachers' lives easier and meaningfully boosts student achievement," said Gene Frantz of Google Capital. "Renaissance Learning is at the forefront of this educational movement, and their ability to use data to support effective teaching and drive student growth is unparalleled."