Smart Sparrow raises $4m for digital courseware platform
Smart Sparrow has raised $4m to support its adaptive learning platform. The company's third funding round was led by Moelis Australia Asset Management, which put forward $3m, and also featured contributions from existing investors OneVentures and Uniseed. So far Smart Sparrow has raised almost $14m in venture funding. The Australian-founded company, which is now based in San Francisco, offers course-building platforms to teachers, allowing them to design online programmes from scratch, including interactive content such as embedded quizzes, virtual labs and simulations. Thus far Smart Sparrow has signed up 150 universities and been used to create more than 20,000 courses.

Since entering the U.S. market in 2014, Smart Sparrow’s offerings have increasingly been described as “adaptive courseware.” Yet Dror Ben-Naim cringes—just a little—every time he hears that comparison. “‘Adaptive’ is just one feature of good learning design,” the company’s founder and CEO tells EdSurge. “Good learning design also needs to be engaging, motivational and structured in the right way.”

“Digital courseware platform” is the term that he is much more at ease with, and so far his offering is catching on. The Australian company, now based in San Francisco, has signed on 150 universities, along with another 50 companies and organizations. More than 20,000 online courses have been created by over 8,000 educators, the company claims.

His company has attracted big dollars from investors as well. Today, Smart Sparrow closed an additional $4 million in its third funding round, this one led by Moelis Australia Asset Management, which contributed $3 million in the deal. Existing investors OneVentures and Uniseed also chipped in. To date the company has raised nearly $14 million in venture funding.

With the gusto expected from a company’s leader, Ben-Naim gleams that this latest milestone is proof that his company’s thesis has merit: that Smart Sparrow is riding the second wave of the digital revolution, or “the ability for schools to redesign courses to be digital-first experiences.”

Letting Humans Drive Adaptivity

The first wave, he says, were efforts that “solve[d] for access.” Often this manifested in efforts from publishers and schools to digitize existing content and make them available online, usually in the form of PDFs and videos.

The market has since moved into the next phase. What Smart Sparrow and a slew of other upstarts now offer are course-building platforms that let instructors and supporting staff design online courses completely from scratch. These could include interactive content (such as the ability to manipulate objects and modules on the screen), along with embedded quizzes, simulations, virtual labs and other multimedia features.

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What makes Smart Sparrow “adaptive” is that faculty and instructional designers can create unique sequential branches of content specific to a learner’s misunderstanding. If a student picks an incorrect answer to a question, what he or she sees next may be different from what another student, who picked a different wrong answer, gets. Data from the course informs instructors where students may be getting stuck and, as a result, where a new content branch may be required.

Herein lies the crux of Ben-Naim’s quibble with the word “adaptive”—and why he claims Smart Sparrow is different. Many other “adaptive” products operate like a black box, in the sense that neither the teacher or learner can understand how or why the tool made a certain recommendation over another. (All they see, as described eloquently by David Wiley, Lumen Learning’s co-founder and Chief Academic Officer, is a “Next” button.) Ben-Naim believes in giving instructors full control over designing all the different paths of content that learners may encounter. (The company offers pre-made courses, too.)

“The fundamental belief is that we should give teachers the power to create more resources, reflect on the quality of their creations, and then let them quickly iterate and improve,” says Ben-Naim.

Will Schools Pony Up?

The endeavor usually involves more than a single instructor, he acknowledges. To build a digital offering completely from scratch, schools not only have to retrain their faculty, but also hire a new cadre of specialists: instructional designers. These people often come with pedagogical research backgrounds, and they can also help with visual design and technical support.

Yet hiring and training new staff involve significant overhead costs. Depending on its complexity and the number of adaptive branches, a course could take anywhere from a few weeks to nine months to create. Skeptics (especially reporters, Ben-Naim points out), have raised concerns about whether cash-strapped colleges are willing to make this investment to make full use of Smart Sparrow’s coursework design tools.

The fundamental belief is that we should give teachers the power to create more resources, reflect on the quality of their creations, and then let them quickly iterate and improve. Dror Ben-Naim

When he’s pitching a potential client, “no one says to us, ‘You’re mad, we don’t want it,’” claims Ben-Naim. The response, rather, is “‘How do we make this work?’” Cost—not just for the product itself, but also for the support staff required to make it effective—is one barrier. “Often we hear, ‘Dror, come back in six months. We need to get approval from the top.’”

For every university, change management is just as critical a factor as financial investment. Yet Ben-Naim is optimistic that university leaders are starting to commit. At this year’s SXSWedu, the annual education technology conference in Austin, Texas, he heard from provosts at large public university systems in states including Florida and Maryland commit to phasing out textbooks in favor of creating in-house online courseware design teams.

“More and more universities are embracing the fact that the curriculum has moved online and that they need to build original digital experiences,” as opposed to relying on prepackaged content, he says. Just like IT (information technology) departments eventually became an integral part of any school’s operations, so too, Ben-Naim predicts, will ID (instructional design).

To ease this transition, Smart Sparrow has a team dedicated to providing onboarding and support services. Last June the company launched its Learning Design Studio, an internal team of designers and engineers, who work with professors to build their digital courseware. Nearly half of Smart Sparrow’s 50 full-time employees are part of this effort.

Investors often lecture about the importance of timing to a startup’s success, and how there must already be an existing market ready to adopt a new innovation. Yer Ben-Naim isn’t shy about jumping the gun. Smart Sparrow’s approach, he says, is that “product-market fit is about where the market should be—not where it is now.”

From Down Under to Top Funders

Smart Sparrow is technically a startup, but the product has been in the making for more than a dozen years. In 2005, Ben-Naim, then a Ph.D. student at the University of New South Wales in Australia, began researching and writing on creating intelligent tutoring systems.

The homegrown tool quickly took hold in its hometown—and beyond. New South Wales today offers more than 100 digital courses that leverage Smart Sparrow’s technology. In fact, all of the major Australian universities are using the tool in some capacity; Ben-Naim claims 56 percent of them have purchased a license to use it across their campuses.

...product-market fit is about where the market should be—not where it is now. Dror Ben-Naim

The U.S. market has taken a little longer to penetrate; roughly 100 colleges here are using the platform. “There are unique challenges and cadences here that would not exist in Australia,” says Ben-Naim, such as the wide gap between low-income and well-off students. The company will use the funding to refine its product and focus on capturing more of the U.S. market, says Ben-Naim, who adds that Smart Sparrow is not cashflow positive—yet.

The company has already captured the attention of one of the world’s most famous funders: Bill Gates. Ben-Naim met the philanthropist after the company received a $4.5 million grant from his foundation, which partly funded its BioBeyond course that launched last February. The offering, which uses the theme of space exploration to teach biology and earth-science concepts, is by far the most complex course built on the platform.

It’s not likely that Bill Gates will subsidize every digital offering, but Ben-Naim is confident that colleges and universities will step up. If that doesn’t pan out, expanding courseware offerings to cover K-12 science is another possibility, he hints.