Google Capital Invests $40M In Learning Analytics Firm Renaissance Learning At $1B Valuation

Renaissance Learning, one of the leading cloud-based K-12 assessment and learning analytics companies, today announced that it has raised a $40 million investment from Google Capital. This marks the first investment in education for Google Capital, the search giant’s late-stage investment vehicle, and makes Google a minority owner of the company.

Google Capital, which launched its fund last summer, made the investment at a $1 billion valuation for Renaissance Learning. A representative from Google Capital will join the company’s board of directors.

While Renaissance Learning may be relatively unknown, the Wisconsin-based company has a large presence in the education space. Founded in 1984, it started with a software-based assessment tool for teaching reading skills. Today, it offers a wide variety of desktop- and web-based learning and assessment tools, but at its core, its mission remains to provide a data-driven approach to learning to both teachers and learners and to enable teachers to use this data to help their students.

Jack Lynch, Renaissance Learning’s CEO, told me that this investment wasn’t necessary for the company’s business operations, “but rather it opens up a number of doors for the two companies to collaborate in the education space, and we think the potential for educators is huge.”

It’s no secret that Google has been highly interested in education. Google Apps for Education, for example, has made inroads into many schools and colleges and its Chromebooks are now being used in a wide variety of schools. It does also offer lesson plans and other resources for teachers. So far, however, it hasn’t offered any assessment tools. As Lynch told me, though, the company met Google while working on a “commercial deal.” The two companies are still working “on the nature of that deal,” he told me, but couldn’t disclose more about it.

Renaissance plans to use the additional funds to continue working on the products in its pipeline (which includes the unspecified deal with Google). Last year, Renaissance acquired the edtech startup Subtext and chances are, it will use some of the new funds to make more acquisitions, too.

Renaissance Learning now hosts data for more than 38,000 schools and reading records for almost 11 million U.S. students. In total, 18 million students now use the company’s cloud-based Renaissance Place platform. Together with the 30 million students and teachers on Google’s platform, Lynch told me, that’s a “really big reach into K-12.” The company says it saw a 20 percent increase in its top-line growth in 2013 and double-digit growth in the year before.

Thanks to this wide portfolio of applications and reach, the company today owns one of the largest anonymized data sets on learning progress, which in turn helps it to provide teachers with guidelines for how their students are doing. Renaissance Learning says that last year alone, it powered over 45 million STAR computer-adaptive assessments.

Lynch tells me that these adaptive tests allow the company to “determine on the fly what the next question to ask should be based on the answer to the previous question— always searching for the skills the student has mastered regardless of the grade in which those skills were taught.” Using this kind of data, teachers can then create personalized learning plans for each student or class.

Google Capital has previously invested in SurveyMonkey and Lending Club, among other companies. The fund is managed by Gene Frantz. It remains a relatively unknown part of Google’s venture capital operations, though, but maybe that will change after today’s announcement.