Although education is a huge part of the U.S. economy, until recently it wasn't much of a business. The advent of the knowledge economy, combined with mounting dissatisfaction with the dismal state of many public schools, is creating vast openings for for-profit companies. They're doing everything from running elementary and secondary schools to conducting corporate training for companies that traditionally taught employees in-house. This revolution is being fueled by an explosion in the money available to education startups.
Investors see enormous potential in education.
Nowhere are the challenges more evident than in the fledgling business of running for-profit elementary and secondary schools. In addition to Edison, more than a dozen other for-profit startups compete in this arena. All are promising to do a better job at educating youngsters than traditional public schools, while making money in the process. The number of such charter schools exploded from fewer than 100 in 1994, to nearly 1,700 last fall, and should reach 2,300 this year. While most charters are nonprofits, the for-profit operators are gaining market share and growing rapidly.