From Bloomberg Technology:
Top Hat, the Canadian education technology startup, completed a new round of funding to give it more firepower to go after textbook publishers like Pearson Plc.
The $22.5 million round is Top Hat’s biggest yet and brings its total funding to about $40 million, the Toronto-based company said in a statement Wednesday.
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Top Hat is one of a handful of startups trying to find ways to disrupt the traditional textbook publishing industry, dominated by companies like Pearson, Cengage Learning Inc. and McGraw-Hill Education Inc., which is owned by Apollo Global Management LLC. All of these firms have added digital educational materials to their range of products, but the transition has been rocky.
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Even as the big publishers work to increase the proportion of sales that come from digital products, they’re still largely dependent on physical books.
That’s a weakness Top Hat Chief Executive Officer Mike Silagadze said he’s trying to exploit. He started by selling software tools to professors that help them engage their students, such as smartphone apps that let them tell lecturers if they understand new concepts in real-time. The company, which launched in 2009, has 2 million students using its products.
The next step is to go directly after the textbooks and digital course content made by Pearson and McGraw, Silagadze said in an interview. In November, they launched an online content marketplace, where professors can create course materials and sell it around the world. The idea is to cut out the publisher and let professors sell directly to students and each other, Silagadze said.
“It fundamentally breaks the publisher’s traditional model of producing content,” he said. “Our aim is to disrupt the paradigm the publishers have created over the last 100 years.”
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The industry “has been dominated by really traditional publishers that come exclusively from the content side and not the technology side,” Wenger said in an interview. His son’s Intro to German textbook cost $230.
“That era is coming to an end,” he said.
Link to the rest at Bloomberg Technology and thanks to T.K. for the tip.