Imagine Learning Launches AI-Focused Venture Capital Fund

Imagine Learning is launching its own venture capital fund – and it’s all about AI.

The digital curriculum giant announced the rollout of Imagine Learning Ventures, a new fund it plans to use to invest in emerging artificial intelligence-powered educational products.

The fund will be managed in-house, said Imagine Chairman and CEO Jonathan Grayer, and will be focused on supporting early-stage companies, largely through small, minority investments alongside other firms in seed and Series A rounds.

Imagine is particularly interested in fueling artificial intelligence tools that can improve student learning and outcomes, Grayer said in an interview. He also plans to use the fund to learn more about how AI is evolving to address educators’ needs in the classroom.

“We decided to launch this fund to invest in all kinds of artificial intelligence applications in education so that we would have front-row seats to the learning that’s going on, outside of what we do everyday to serve our teachers, students, and parents the best we can,” Grayer said.

The fund isn’t looking to support some of the more attention-grabbing generative AI applications that are on the market now, he said, as he doesn’t see them as driving the most important developments in K-12 education.

“What [AI] eventually is going to do is help teachers move students more quickly through their learning process by knowing, before they know, what they’re not learning, where the gaps are, and where the weaknesses are before they’re even demonstrated, because the machine can predict that,” he said.

Imagine wants to be a part of the process of developing those technologies, he said, and is also hoping to offer the organization as a resource for portfolio companies as they test out ideas and concepts.

Fund Looks to Make Long-Term Investments

At the same time, the company is still focused on developing its own AI-powered products in-house, such as a tutoring program that is designed to predict students’ questions and a writing coach to give feedback on things like grammar and sentence structure.

“These are the beginnings … but there are a lot more things that are being thought of [internally,]” Grayer said.

The company, formerly known as Weld North Education, reports serving more than 15 million students in 7,500 districts across all of its products and services, which include Edgenuity, Learn Zillion, and it’s namesake, Imagine Learning.

In the last few years, its added science, coding, and robotics to its offerings through a string of acquisitions and launched a foundation focused on backing social-emotional learning.

The capital for the fund will come entirely from Imagine’s own coffers, which Grayer said have more than enough bandwidth to support the effort, especially as the company reports very low debt levels. There is no set limit to the fund. 

“We have the capital to make as many of these investments as we can find that we think are worthy,” Grayer said.

That capital is also patient. Grayer said that Imagine’s financial situation helps it to give its portfolio companies time to grow and develop, which is key to building a “a good company that serves students and teachers well,” Grayer said.

Artificial intelligence technologies may take a longer time to get right for the K-12 space, he added, but “doing it right will lead to great benefits for teachers and students and shareholders of companies that do it.”

The announcement of the fund comes at a time when venture capital investments in the ed-tech space — which hit historic highs in in recent years — have slowed and begun to return to pre-pandemic levels.

Market intelligence firm HolonIQ forecasts global ed-tech venture investments to be at $3.5 billion in 2023, which is down from $10.6 billion in 2022 and a record $20.8 billion invested in 2021.

One of the few bright spots in the ed-tech venture capital ecosystem this year has been the growing interest in artificial intelligence-driven companies, seen in recent funding rounds like live language tutoring company Preply’s $70 million Series C and Kira Learning’s $15 million Series A.

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EdWeek Market Brief | Michelle Caffrey