For-Profit Education Firms Poised to Grow in Next Decade

Internet enthusiasts in the business world have their sites set on education as the next great frontier. Founders of “dot-com” companies are predicting that parent dissatisfaction with many public schools and the increasingly competitive nature of college entrance requirements are pressing parents to seek for-profit companies to provide solutions.

For these entrepreneurs, education (including higher education and job training) presents an extremely lucrative market that they can reach with unprecedented ease through the internet. For example, FamilyEducation Network offers a series of education web sites, slicing into segments the 53 million children in grades K-12. Officials at the company say that they are drawing 2.5 million visitors per month. FamilyEducation Network also works hard to reach the parents of schoolchildren, seeing them as the purchasers of education (and other types of) products and services.

Even for companies looking at the traditional facility-based education, the rush towards charter schools has opened vast opportunities to challenge the present public school structure. Business Week says that venture capitalists are pouring money into startup companies serving the education market, and that it is only a matter of time before some of these companies generate enough attention from parents and children that schools will have to take notice. For-profit pioneer Edison Schools went public in November 1999, and investors strongly support the company’s plan for competing with public schools through technology-intensive education. And Edison faces at least 10 competitors seeking to duplicate its success—and profit.

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