Founders Fund Leads $33 Million D Round In Learning Startup Knewton

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In what is certainly one of the largest funding rounds of an education startup in recent years, Knewton closed a $33 million D round led by Founders Fund. (Another education startup also based in New York city, 2Tor, raised a $32.5 million series C earlier this year). Education publisher Pearson also invested, as well as existing investors Accel, Bessemer, and FirstMark. The valuation was easily north of $150 million.

Like many education startups, Knewton got its toes wet with online test preparation (GMAT, LSAT, SAT). But it’s real strength is in creating an adaptive learning algorithm which can be applied to any curriculum. “Our ultimate vision is to power all education,” says COO David Liu. This Fall, Knewton began powering an online math readiness course for 10,000 incoming freshmen at Arizona State University. It plans to expand throughout both higher education and K-12 in partnership with schools and education publishers. The company also wants to open up its APIs so that publishers can plug in their electronic textbooks and coursework to Knewton’s technology platform, and eventually create a marketplace for adaptive learning apps and courses. .

Through questions and quizzes, Knewton personalizes the learning experience and adapts what it presents to each student based on how they learn. So if you are having trouble with a certain type of algebraic formula, it will take a step back and give you simpler versions until you master it. Or if you are blasting through questions, it will make them progressively harder until you are sufficiently challenged. Already, some ASU students are working through the math course way ahead of schedule.

It may seem odd at first that the Founders Fund, whose partners also encourage kids to “stop out of college,” would back an education startup. But Knewton is harnessing technology to improve how people learn. General partner Luke Nosek tells me he has little interest in education as it stands today, “the whole bureaucracy, the buildings, the teachers. What I am most interested in is maximizing and personalizing learning for every person on the planet.” He thinks Knewton has a shot at being that company.

Knewton already has 70 employees and is growing rapidly. If it can get paid between $100 and $200 per student/per course/per semester for a platform that helps them learn faster, that could scale very quickly into a very large business. Education is broken. There is a big opportunity, and a lot of money, for startups like Knewton to step in and try to fix it.