GSV Capital

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Education Industry badge.png This article is part of the Spinwatch privatisation of Schools Portal project.

GSV is a US venture capital fund that invests heavily in education technology start-ups, among other things.

Its founder CEO is Michael Moe.

The company lobbies for the increased use of technology in teaching and learning.

Two published reports – one by Moe, the other by Moe's previous company – provide real insight into the push for more commercial edtech in schools. They detail the investment opportunity; outline lobbying and PR stratgies for the education reform lobby; and clarify the central role that standardised testing and the US government's schools 'accountability agenda' play in growing the education technology industry.

Core business

Launched in April 2011, GSV (which stands for 'Global Silicon Valley'), defines six themes that it feels have the greatest investment potential: Social Media, Mobile Computing and Apps, Cloud Computing, Software as a Service, Green Technology, and Education Technology.


Companies in GSV's edtech portfolio as of August 2015 include:

  • 2U, online education platform
  • Avenues, private school chain
  • Chegg, online textbook rentals, homework help, online tutoring etc
  •, online 'lifelong learning' firm
  • Coursera, a for-profit edtech company offering online courses (MOOCs)
  • Declara, a 'personalised learning' software company,
  • General Assembly, a New York City 'startup campus' featuring courses relevant to internet startups
  • Tynker, programming courses for kids


2005: the investment opportunity

In 2005, Michael Moe's previous company, investment bank ThinkEquity Partners, published a report on the investment opportunities it saw in the US education system. New Rules, New Schools, New Market: K12 Education Industry Outlook 2005 is a useful introduction to how the investment world views education, which is as a profitable market, albeit one that they hope will benefit from their investments; and the factors driving these opportunities. The report, which is a decade old (in 2015) begins:

'We believe the U.S. K12 school system is undergoing structural changes that have the potential to redefine and expand the role of business in the $500+ billion market over the next decade.

It puts the 'domestic business opportunity' in the primary and secondary school market, known in the US as 'K12' (Kindergarten to twelth grade), at $163 billion by 2015 'as the K12 market moves into an age of data, efficiency, technology and globalization'.

Barriers to change

'Education Market Outlook, 2005 from ThinkEquity's report 'New Rules, New Schools, New Market'

Businesses wanting to get involved in state education, including those that see technology and the digitisation of teaching and learning as the answer, face numerous hurdles, the report notes:

  • Americans in the main oppose business trying to profit from public education systems: 'there remains a pervasive stigma', about it.
  • The school system is large, fragmented, bureaucratic and unionised.

How to crack the market then?

Drivers of reform

First define 'The Problem' (to which more involvement from business is the answer).

The report identifies the problem with the US public schools system as: 'stagnant student outcomes', the achievement gap between racial and socioeconomic groups, globalisation and the threat of outsourcing. It notes that these factors 'all meant the stage was set for a major, top-down, sweeping reform package' at the turn of the century.

President Bush responded in 2001 with a set of new policies, named 'No Child Left Behind', which tied funding to market reforms: school choice, an increase in assessment and a reliance on data to improve accountability. The report notes that Bush's reforms initially had little impact.

However, the report saw positive signs that the system is changing, and becoming more attractive to investors.

These include:

  • Data-driven schooling and 'accountability': the focus on holding schools and teachers to account through the collection of ever increasing amounts of data, according to the report, makes schools more 'results oriented' albeit based on an increasingly narrow set of 'outcomes', like test scores.
  • Introduction of business thinking into schools: as schools become more focused on data and outcomes, it brings them closer to business-thinking. Schools are warmer to the offering from business (with its focus on efficiencies etc).
  • Rethinking what constitutes good teaching and learning: politicians and parents are led to reevaluating what matters in education – namely test 'outcomes' – through transparency measures like school league tables (which we're told are all about holding schools to account).
  • Creation of additional consumer demand: a 'byproduct' of this focus on results, or outcomes, is that schools have learnt to game the system by focusing more attention on the students that are in the middle, and trying to drag those that are just below the pass mark up. This brings investment opportunities in straight to consumer education products – add-ons – for those students that aren't in this bracket and want more.
  • Public, or private? It doesn't matter as long is it 'works': discussions on education quality have shifted from debates around best teaching (pedagogy etc - the 'inputs') to 'student outcome data' (the ends). So, if a product or service improves test scores, who cares how they did it, it has a place in the market 'despite feuding theorists and/or anti-for-profit sentiment'. Businesses just need to show that their solutions raise test scores, which is all (they have said) matters.
  • Ditching teachers who don't get with the programme: different people were beginning to be in charge – what the report calls the 'evolving school leadership base' – who are more business and technology friendly. Of the 'drivers of change' in education, the report identifies this last one as most significant. The teaching and school leadership workforce is often identified as the single biggest barrier to reform. This is about getting rid of experienced teachers and replacing them with younger, less experienced, but more tech savvy people. 'With a teacher retirement bubble coming, we believe the new teacher base will be younger and will include more career switchers, both of which are generally more tech-savvy and forward thinking.' School bureaucrats and local education leaders also need to make way for those from non-education backgrounds 'who may be more willing to take advantage of the tools and services the business world offers'.

The resulting profitable market

Investment opportunities as a result of this focus on results/outcomes, more testing, and holding schools and teachers to account from that data include:

  • Learning products that promise to raise test scores
  • consumer funded education products and services (i.e. privately purchased by parents to be used outside school)
  • increased use of consumer or public pay supplemental education (e.g., tutoring, after school programs, etc)

Additionally, a new focus on school choice and 'alternative routes to education' will create opportunities to make money from:

  • charter schools
  • virtual schools
  • special needs programs

Finally, with fewer barriers to technology in classrooms and a more tech-savvy workforce, investors will be able to profit from products that provide:

  • digital content for teaching
  • online assessment
  • school data management and analysis software

'As a result of these trends, we believe the system will finally enter the 21st century in the coming decade. When it does, we believe the $500-plus billion US K12 education system will be more closely integrated with the business world, allowing for numerous, long-legged investment opportunities.'

'What to be excited about'

In summary, the report identifies the following as reasons investors should be 'excited' about the US public school market:

  • The Bush reforms increased central government control over the US's fragmented schools systems (which was largely a state-run affair).
  • The reforms did this by forcing schools to collect continual student test data (the accountability agenda), by tying it to funding. 'Standardized testing', the report says, has been the 'most salient change in the US public school system' in terms of 'opening doors for private enterprise'.
  • The only realistic way schools can collect such detailed data on pupils, mandated by government, is through 'the widespread use of technology in assessment, data management and deploying individualised [computer-driven] instruction'. 'This bodes well for continued technology demand in schools.'
  • The report notes that the first few years of the Bush reforms were about getting schools to follow this new regime; but 'looking forward' the opportunities lie in getting schools to improve test results. Products – education content, 'outsourced tutoring' – tied to 'state standards' should be in high demand, it says, citing the following companies that are set to benefit: Scientific Learning, Plato Learning, LeapFrog SchoolHouse, and Educate.
  • Because test results are made public (the transparency agenda), parents are 'more likely to take action to fix problems not being adequately addressed by the school… increasing consumer behavior among parents… and thereby opening several doors to private enterprise', such as educational toy and games makers like Leapfrog and Riverdeep, as well as charter schools, private schools, and virtual schools.

In short, what the report is saying is this: forcing schools to collect and publish standardised test results data, under the guise of accountability, leads to opportunities to profit for education technology companies.

However, crucially, the report also notes that there is no evidence to show that technology raises test results.

'Has this impressive level of investment produced the real intended results – a better educational system?.. student outcome data is mixed. It has been difficult to link any positive test score data to increased use of technology in schools as standardized tests have changed over time (making year over year comparisons difficult). Meanwhile, some independent longitudinal studies have revealed stagnant student outcome data… In the end, it is difficult to evaluate the benefit of technology in real life situations.'

Rather than cause schools to pause before investing heavily in technology, or a change in government policy, the report argues that the lack of evidence means that schools have not digitised enough.

'… placing devices into classrooms is only the first step in the process of integrating technology into classrooms. We believe that our society’s belief in the transformative power of technology will continue to drive investment for the next decade. What the criticisms do bring to light, however, is the need to make the existing technology infrastructure more productive. This implies… a shift in investing from hardware and one-off software applications to large, rationalized technology systems which incorporate and enable individualized instruction, new curriculums and adaptive learning methods.'

Ten years on from this report, the drive to push more technology into teaching and learning has intensified. What the report makes clear, however, is that this is less about the stated aims (of government and companies) of raising standards through increased transparency and teacher and school accountability, and more about increaing the profits and value of the education technology industry.

2012: the battle plan

In 2012, perhaps frustrated by the pace of change in schools, GSV founder, Michael Moe published American Revolution 2.0’’, a blueprint for radical reform of America's education system':

'It should not be lost on us that revolutions are actually a fairly common occurrence in modern society. The most recent prominent example is the “Arab Spring,” but since 1900, there have been over 250 governments overturned by revolutionary action... The revolution America needs today is not against an oppressive monarchy, but rather against an educational system that has equally oppressive effects. Fortunately, we have the arms and technology to fight this war.[1]

The Nation's Lee Fang comments:

'The revolution GSV goes on to describe is a battle to control the fate of America’s K-12 education system. Noting that this money is still controlled by public entities, or what’s referred in the document as “the old model,” the GSV paper calls for reformers to join the “education battlefield.” (A colorful diagram depicts “unions” and “status quo” forces equipped with muskets across businesses and other “change agents” equipped with a fighter jet and a howitzer.) The GSV manifesto declares, “we believe the opportunity to build numerous multi-billion dollar education enterprises is finally real.”'[2]

'Time to Fight'

The manifesto includes a chapter titled 'Time to Fight' (which is followed by a quote from the film The Untouchables: 'He pulls a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue.') It includes case studies profiling education technology business - the 'Special Forces' of Moe's revolution – a large number of which are in GSV's investment portfolio.

'Battle Strategies

It concludes with a series of 'battle strategies', which it believes will bring about radical, technology- and market-driven education reform ('We believe that capitalism works,' it reads, adding that 'market forces will do a lot of the heavy lifting').

The 'battle strategies' include:

'Education Battlefield, from Michael Moe's 'American Revolution 2.0'
  • eliminate the term “education reform” as we focus on education innovation as the means to solve our education problem.
  • outlaw the terms “for-profit” and “not-for-profit” as they represent corporate structures and thus have no bearing on the effectiveness of a particular program or product. Return on Education (”ROE”) becomes the objective measurement to determine if an education program is good or bad.
  • embrace the philosophy of choice and competition by creating an even playing field for charter schools, virtual charters and other alternative programs
  • buy every pre-K through 6th grade student in America a tablet computer
  • establish Computer Language as a core curriculum that will be required from kindergarten on up
  • create an open marketplace for information on all schools, administrators, teachers, and ROE for educational products and services
  • adopt the Common Core (standardised tests) in all 50 states and create incentives for innovators to develop disruptive, high-impact content.
  • make Teach for America even more celebrated and scaled by enrolling the nation’s brightest college graduates to teach for two years
  • implement a “universal” pre-school voucher program
  • establish... national standards [that] are consistently applied, with real consequences for schools that don’t teach, and conversely, real rewards for schools that are effective.
  • create tax-deductible individual learner savings accounts
  • institute a “Truth in Education” policy. Students and parents sign a document before they accept enrollment that they have read and understand the percentage of students that graduates, the number of years it takes to graduate, the percentage of graduates that find a job within 12 month, the average starting salary, and the average student loan amount.

The rhetoric of Moe's 2012 report 'American Revolution 2.0' is strikingly different from the 2005 investor report. This is now a call to arms; a moral quest; a social imperative. The reforms are no longer presented as exciting and profitable investment opportunities; it has become about saving America from decline and its people from failure.

'Today, we stand on a precipice and must decide to jump or cower and hope our challenges are magically solved. We could allow chaos and class warfare to dismantle the institutions that hold our society together. Conversely, we can choose a positive direction. We can provide a path for participation, reinventing, revitalizing, and revolutionizing education.

The 'sell' may have changed. The reforms, however, are the same.



GSV has political links in the following people:

  • Deborah Quazzo, co-founder of GSV. Quazzo is on the board of the Chicago Public Schools. According to Hack Education: 'since [Quazzo] joined the board, her investment portfolio companies have seen an additional $2.9 million in business from the district.[3]
  • Bob Grady, member of GSV advisory board. A close confidant of New Jersey Gov. Chris Christie and former chairman of the $81 billion New Jersey Investment Council. Also former Deputy Assistant to President George H. W. Bush

As noted by Hack Education's Audrey Watters:

'Education technology investment is closely aligned with education reform efforts. As such, ed-tech investment shouldn’t simply be read in terms of the “business of ed-tech” but is also connected to the “politics of ed-tech.”'[4]


  • GSV is one of many investors in Edsurge, a publication described as 'probably the most active in narrating the current ed-tech investment and implementation story'.[5]


  • Michael Moe, co-founder and CEO of GSV; ex-director at Merrill Lynch. Described as being 'on the cutting edge of investment for more than 20 years'.[6] Moe predicted in his book Finding the Next Starbucks: How to Identify and Invest in the Hot Stocks of Tomorrow: 'We see the education industry today as the healthcare industry of 30 years ago.' Moe is also a director of the US Center for Education Reform.
  • Deborah Quazzo, co-founder of GSV
  • Mark Flynn, president from 2014





  1. July 2012, American Revolution 2.0: How Education Innovation is Going to Revitalize America and Transform the U.S. Economy, accessed August 2015]
  2. Lee Fang, Venture Capitalists Are Poised to ‘Disrupt’ Everything About the Education Market, "The Nation", 25 September 2014
  3. Audrey Watters, Who's investing in Edtech, Hack Education], 05 Feb 2015
  4. Audrey Watters, Who's investing in Edtech, Hack Education], 05 Feb 2015
  5. Audrey Watters, Who's investing in Edtech, Hack Education], 05 Feb 2015
  6. Want to invest early in the next big startup? Ask Michael Moe, ZDNet, 16 May 2014