The race for education tech heats up

Selling out, cashing in and calling it a day seems to be many startup founders' dream these days. And in a shaky market, who can really blame them? New York-based Knewton is hanging tough.

The online learning company announced that it is pairing up with Pearson to add its adaptive learning technology to all of the publisher's online courses, starting with its college-level programs. Instead of selling itself, Knewton has entered into an agreement with the industry giant, which might otherwise have been an acquirer. The deal is just the latest sign that some startups are holding their own with the industry's heavyweights as the market for new educational technology heats up. Knewton uses an algorithm to track how students learn, tailoring courses incrementally based on a student's individual strengths and weaknesses. The system is intended to grow more intelligent as more students use it, much like Google's search results. Pearson's close to 9 million college-age digital students will work within Knewton's system, creating a massive amount of coveted data on how student learn online. Pearson will get semi-exclusive access to Knewton's adaptive learning technology. And Knewton, which recently raised $33 million in venture capital funding in a round led by Pearson and Founders Fund, will get a share of proceeds based on the number of Pearson's online students.