Venture Capitalists Invest in Educational Reform

Silicon Valley venture capitalists, who have backed hundreds of high-technology entrepreneurs, are eagerly financing a new group these days: Schoolmasters.

"We give education entrepreneurs money to start or to speed up building their companies," said L. John Doerr, who over 26 years has helped start dozens of ventures, including Sun Microsystems, Amazon.com and Google.

Unlike the usual venture capital firm, this [new school] venture does not earn the standard three to five times its investment in five years. It earns nothing, because it is "a philanthropy held accountable by the rigors of venture capital financing," as Mr. Doerr describes it.

The financial professionals of the fund oversee the business operations of the schools it backs. The operations are expected to quickly become self-sustaining on the stipends paid from local, state and federal taxes for educating each student.

Recipients of the fund's investments are not whiz kids eager to become the next Bill Gates. Mainly, they are public school teachers with a passion to improve the ways poor children are taught. The companies they form are nonprofit charter school management organizations, capable of running publicly financed elementary and secondary schools producing educational results better than those of the large urban school district. Almost all their students are eligible for free or reduced-price breakfasts and lunches.

[Excerpt from an article by James Flanigan, The New York Times]

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