Partnerships for Learning

• 12/01/99

A variety of partnerships exist in education. These may be between educational institutions and businesses, state and local governments and industry, and local universities and schools. Their number is increasing, especially with the growing use of technology in schools and the greater availability of funds in grants that require partnerships. To cite a few interesting recent partnerships:

• West Virginia recently became the first state in the nation to create a voluntary child ID program for ages 2-15. In partnership with Polaroid Corp. of Bedford, Mass., a card contains information on each child, along with a digital photo and the child’s fingerprints. The primary purpose of the program is to create a current database of images, including facial and fingerprints, as well as demographic data that the state can use to distribute electronically for law enforcement if a child is lost or missing.
• The University of Wyoming and the Wyoming Business Council have created a partnership called the Small Business Innovative Research program that assists Wyoming technology companies in acquiring federal grants that help get their investments to the market.
• Dozens of colleges and universities have sponsored or formed partnerships with charter schools. One such school is the Preus School in San Diego, Calif., at the University of California and housed at the campus. Its aim is helping low-income minority students prepare for admission. In Michigan, eight of the state’s 13 universities now oversee mostly 90% of the state’s 173 charter schools. About 70% of Michigan’s charter schools have contracted with for-profit management companies to handle their operations.
• A group of academic institutions is forming a non-profit Internet think tank that will conduct research and offer education on a number of ‘Net related subjects. The group is expected to include Netscape, America Online and the Georgia Institute of Technology, among others.

Many of the above partnerships are acquiring venture capital. This is usually defined as money invested through private partnerships in start-up companies, which, after developing for a few years, sell stock to the public. Venture capital has given a boost to many high-tech companies until they could make it on their own. For-profit companies and institutions turn to venture capitalists for seed money once they have developed a business idea, researched the market to determine the visibility of the concept and created a strategy for how to make their business work. According to the article "Venture Capital" in the October 11, 1999 issue of Computer World, there was more than $330 billion in private venture capital under management last year. The following graph, from the above article, is interesting:

Organizations pay a price for this capital. Because the risk to investors is so high, venture capitalists require an ownership interest in the company, which can initially run from 5% to 30%. Venture capitalists believe they are investing much more than money. They become advisors and mentors and can be quite involved with the running of the company.

How can this apply to educational institutions, which are non-profit organizations? A number have received venture capital by forming for-profit institutions. The for-profit entities created with venture capital by the universities are designed to protect the integrity of the academic program. Free from some of the rules governing the university, these for-profit entities are allowed to operate in a commercial, unrestricted environment. For example, National Technical University (NTU) originally created the non-profit North Central accredited institution (based in Colorado) that provides engineering education at the master’s level via satellite and the Internet. After 20 years of successful operation, NTU needed additional capital. It set-up NTUC, a for-profit company, in June, 1998. A venture capital firm bought one-third of NTUC for $15 million.

Universities are also joining with other companies that are receiving venture capital. Caliber has created a network of electronic classrooms located in business districts and suburban shopping malls. Each Caliber classroom is equipped with interactive computer access and live video for 20-30 students. The network cost millions of dollars, obtained through venture capital. Caliber centers provide the curriculum, markets it, and distributes it to the students. Participating colleges or universities establish standards, admit the students, deliver the curriculum, evaluate their progress and award degrees. Tuition is shared between Caliber and the participating institution.

Conclusion

Educational institutions are seeking monies, not only to provide their present services, but also to support expansion and growth. Is seeking venture capital a legitimate option? Many institutions have developed innovative curriculum or interesting projects (either with their own funds or federal funds) that could be replicated. Is forming a for-profit company and developing a business plan to seek venture capital an unthinkable activity for educators? Can we establish an entity that serves an institution’s needs and interests, free from some of the restrictions and rules that govern the institution? It certainly should be investigated.