The longtime testing organization ACT has made its first-ever investment in a venture capital firm, citing an alignment with the company’s focus on promoting equity in education and its interest in advancing ed tech.
The ACT, a nonprofit with headquarters in Iowa City, Iowa, has said it will make a $10.8 million strategic investment in New Markets Venture Partners, which is based in Maryland.
Marten Roorda, the ACT’s CEO, said in an interview that New Markets Venture Partners reached out to his organization within the last year about the deal, and the two organizations came to recognize their shared goals.
The ACT was impressed by the VC firm’s extensive investment portfolio in school-focused companies, with a particular interest in “equity and closing the opportunity gap,” Roorda said. The venture firm’s record putting money behind new forms of school technology, at a time when the ACT has sought to greatly expand its digital capabilities, is also appealing, he added.
“They have a good track record,” Roorda said. “There was a strong alignment,” he added, calling the move a “clear sign of the increased interest at the ACT in education technology.”
Since Roorda took the helm in 2015, the ACT has made other investments, including the acquisition of OpenEd, a provider of open educational materials. It also announced earlier this year its plans to invest in ProExam, a nonprofit focused on professional credentialing and noncognitive assessment.
New Markets Venture Partners says it supports companies and organizations working in both the K-12 and college arenas. The ACT’s investment will go into a 10-year fund that will back “education companies with proven models of success” in early childhood education, K-12, and postsecondary education. The fund also plans to focus on workforce development and training, the organization said in a statement.
The ACT will be the biggest strategic investor in the new fund, the two organizations said. The fund recently named Jason Palmer, a former deputy director at the Bill & Melinda Gates Foundation, as a general partner. Other investors in the fund include the ECMC Group, the Lumina Foundation, Prudential Financial, and the Strada Education Network.
New Markets’ past investments include Credly, a digital credentialing platform; PresenceLearning, a company focused on teletherapy in K-12 schools; and Graduation Alliance, which is focused on dropout prevention and recovery.
Given that an overriding focus of the VC firm is ed tech, Roorda suggested he expects the two organizations can help each other on that front.
He specifically pointed to the ACT’s “sizable investment” in technology through ACTNext, a research, development, and business division within the organization. ACT officials say that the division weaves interdisciplinary research in computational psychometrics, machine learning, and multimodal analytics focused on assessment and learning.
The ACT and the VC firm will be “possibly working together on a scientific and technological level,” Roorda said.