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"Edupreneurs"

Today "edupreneurs" are seizing that

Introduction

opportunity and developing innovative

are developing

products and services to fill the vacuum left

innovative

by government-run schools. Although the

The failure of government-run schools to

products and

for-profit sector of the education industry is

prepare students for the rigors of the modern

small compared with the government-run

economy is a pressing policy problem, but it

services to fill

sector, it is growing.

is also an opportunity for the private sector.

the vacuum left

As Figure 1 shows, the for-profit education

Analysts for Merrill Lynch explain:

market is approximately $70 billion, or

by government-

approximately 10 percent of the $740 billion

The education needs of the knowl-

run schools.

education market.2 Overall, Merrill Lynch

edge economy, contrasted with the

current system's inability to fill those

estimates that the for-profit education mar-

ket will grow at a rate of 13 percent per year.3

needs provide innovative companies

with open-ended opportunities for

Many factors have contributed to and will

growth. The classic "big investment

continue to contribute to that growth,

opportunity" is a company that has a

including (1) businesses' demands for a more

solution to a problem; the more sig-

highly educated workforce; (2) consumers'

nificant the problem, the larger the

demand for retraining to keep pace with the

investment potential. There is not, in

evolving workplace; (3) parents' demands for

our view, a bigger problem in the

alternatives to government-run schools; and

U.S. today than the need to better

(4) an expanding market spurred by policy

educate our populace and hence, we

reforms of the 1990s, particularly those that

think the investment potential in

have encouraged the growth of charter

this sector is tremendous.1

schools and private schools.

Figure 1

Market Share of For-Profit Education

For-Profit Education

$70 Billion

Publicly Funded and

Not-for-Profit

Education

$670 Billion

Source: Michael T. Moe, Kathleen Bailey, and Rhoda Lau, The Book of Knowledge: Investing in the Growing

Education and Training Industry, Merrill Lynch & Co., Global Securities Research & Economics Group, Global

Fundamental Equity Research Department, Report 1400, April 9, 1999, p. 25.

2