Could a U.S. Government program deliver education technology breakthroughs?​

Seed Money, Catalytic Support, and Social and Economic Impact: A U.S. Government Program Delivering Education Technology Breakthroughs

By Ed Metz and Eric Tucker

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Can a modest government program actually launch dozens of startups, reshape education, and secure a nine to one return on investment? The answer might surprise you.

In the U.S., America’s Seed Fund - the Small Business Innovation Research (SBIR) program - channels approximately $4 billion a year into small businesses pursuing early-stage R&D. By targeting ideas too risky for traditional investors, this pioneering public investment vehicle drives critical technological innovations, tackles urgent national needs, and fuels economic prosperity.

At the U.S. Department of Education (ED), SBIR operates through its research arm, the Institute of Education Sciences (IES), as the ED/IES SBIR program. It awards up to $1.25 million through competitive phased grants to small businesses, enabling them to research, develop, evaluate, and commercialize innovative education technology products designed for school adoption.

Amid global uncertainty around public investment in innovation, our newly released report - From Seed Funding to Scale - provides critical insights into the measurable economic and social returns of publicly funded education innovation. It asks a vital question: Can a public seed fund deliver meaningful real-world ROI? The data offer a resounding answer.

Origins of this Study

After two decades serving as the Program Manager of ED/IES SBIR, Ed stepped away from the role in March 2025 amidst a broader federal workforce restructuring. This transition offered us both an opportunity—and indeed, an imperative—to collect and analyse the impact of a program that has quietly driven innovation in American education.

Having directly engaged with every participating company, witnessed in-person demonstrations by students and educators of most products, and reviewed the resulting outcomes, Ed understood the remarkable scale and depth of the SBIR program’s contributions. Yet, without systematic documentation, the proven results and track record of this public infrastructure might go unnoticed,   potentially undermining future support for this effective innovation model.

Together, we initiated this program impact analysis to comprehensively quantify and understand SBIR’s economic and social ROI. Our goal was straightforward l: to establish a clear record of impact, ensuring that policymakers, funders, school leaders, the public, and innovators alike appreciate the lasting value generated by strategic public investments in education innovation.

What the Numbers Say

This portfolio-wide scan focused on 104 firms funded by ED/IES SBIR between 2012 and 2022. While self-reported by these firms and in many cases relying on estimated data, key findings clearly indicate substantial benefits.

Social Impact:

• 70% (73 companies) successfully developed and commercially launched at least one research-based product.

• These products reached more than 130.6 million users—students, educators, and administrators. 

• That’s a public cost of just $0.70 per user.

Economic Impact:

• $268 million in product revenue and licensing.

• $196 million in follow-on capital from investors and other funders, representing 85% of firms that developed a product.

• $363 million in disclosed acquisition value across 19 exits.

That’s a 9:1 return on public investment—comparable to or exceeding benchmarks reported for SBIR programs in other sectors like defense and health.

And this wasn’t just driven by a few top performers: over one-third of companies exceeded $4.8 million in lifetime sales, and more than half raised follow-on funding from VCs, venture studios, or angel investors.

From Origins to Growth

Where did these ideas come from? Many came from entrepreneurs with deep insight into education’s pain points. But many others originated in places that venture capital and philanthropy typically overlook: 

• 36% began in academic research labs and 19% were created by educators in partnership with a firm.

Research also played a critical role. Every funded project was required to have a qualified team member (usually a Ph.D.-level researcher) design and conduct a pilot study to evaluate feasibility, usability, and promise of outcomes.

Many went further: 57% conducted additional research after the SBIR project, often full efficacy trials, either with new grants or self-funding, and more indicated they would conduct more research if funding was available. The research during and after was not an academic exercise, it played a fundamental role in refining and validating products to secure procurement contracts and help companies stand out in a crowded market. Over two decades, ED/IES SBIR played a fundamental role in strengthening the research-base for the ecosystem of the education technology industry.

Why This Model Matters Now

In an era defined by accelerating advances in artificial intelligence, heightened demand for rigorous evidence, and urgent calls for equitable innovation in education, public investment plays a crucial strategic role. The ED/IES SBIR program directly addresses this need by providing targeted funding to small businesses pursuing high-risk, high-reward ideas, and facilitating collaboration between entrepreneurs, educators, researchers, and market experts to ensure practical, scalable products.

Yet the benefits extend far beyond individual companies. The programme catalyzed an ecosystem of innovation, creating numerous spin-offs, new product lines, deeper school partnerships, and reusable technologies. For many startups, ED/IES SBIR funding wasn’t merely the catalyst for a successful product—it was the foundational step toward building their entire business.

Takeaways for Funders and Policymakers

1. Structured research-based R&D leads to go-to-market strategies. Through the ED/IES SBIR program model, firms had a sufficient runway and funding to develop prototypes, conduct iterative research to test and refine until full product development, and to plan for and commercially launch, all while receiving support from the program and partnering organizations. Firms reported that this structure was key to their success.

2. Public capital can de-risk meaningful innovation. Many companies indicated that despite interest in private or philanthropic investments, this was not possible because the concept was viewed as too high risk to offer a return. In such cases, this public investment vehicle was the only way forward. To this point, responding to a survey question, 75% of firms indicated their product would not exist without ED/IES SBIR funding.

3. Investments in concepts originated by researchers or educators pays off. While all projects were led by firms, 55 % of products either originated in a university by an academic researcher or a graduate student or in classroom by an educator, showing the program converts both research- and evidence-based insights and frontline ideas into market‑ready products. This includes many products by firms that were acquired and used at scale in practice.

4. Research and evidence are value drivers. In education, where procurement is cautious and outcomes matter, research- and evidence-backed products scale more successfully.

5. Leveraging Public Funds for Next Level Growth. 86% of firms that commercialized a product secured next-level level funding from the public dollars, demonstrating that ED/IES SBIR awards effectively position firms for additional research and scaling. For example, firms such as Learning Ovations and ThinkAUM went on to win Education Innovation and Research (EIR) grants from ED to expand and evaluate their programs in schools, while Graspable Math, Education Modified, and Speak Agent, and IQ Sonics won Tools Competition awards.  Others, including eSpark and Sown to Grow, successfully raised venture capital rounds. And firms were acquired to scale their reach and integrate into larger platforms—Science4Us was acquired by Explore Learning, LEARN Platform was acquired by Instructure, and xSel Labs was acquired by 7 Mindsets, among many others.

Final Word

America's Seed Fund (SBIR) provides a proof point that targeted public investment can unlock innovation, stimulate economic growth, and deliver measurable, real-world outcomes in education technology. ED/IES SBIR in particular has successfully bridged academic research, entrepreneurial creativity, and direct engagement with educators—delivering transformative products that scale effectively and make a genuine impact in schools. This approach matters more than ever as nations’ work to advance the future of learning and working in the age of artificial intelligence. 

For UK and European investors, policymakers, and stakeholders, the lessons are compelling: strategically directed government seed funding can catalyse a thriving ecosystem of evidence-backed educational innovation. If Britain seeks a future of dynamic, research-driven EdTech companies—built in close collaboration with schools, teachers, and researchers—then establishing a UK equivalent of the SBIR model to invest in teams designing innovations in teaching and learning is a timely and strategic opportunity. Now is the moment to lay the foundations for a robust innovation pipeline that can strengthen educational outcomes, foster economic resilience, and position the UK as a global leader in education technology.

Edward Metz is the former Program Manager of the U.S. Department of Education and Institute of Education Sciences’ Small Business Innovation Research program.

Eric Tucker is President and CEO of The Study Group.

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Note for Readers in the UK and Europe: The European Digital Education Hub hosts this website which provides a range of funding opportunities for innovation in education.

About ED/IES SBIR The U.S. Department of Education’s Small Business Innovation Research (ED/IES SBIR) programme, operated by its research arm, the Institute of Education Sciences (IES), provides seed funding to for-profit small businesses for the research and development of novel, commercially viable education technology products that address pressing needs across pre-K through adult education, including special education. Awards are made through a competitive grant process wherein government personnel who are experts in education technology and research evaluate proposals. Funding through SBIR is non-dilutive, meaning firms retain the intellectual property of products developed with federal support. Since 2002, ED/IES SBIR has supported the development of dozens of research-based products used by more than 130 million students, educators, and administrators. The program is currently authorized by the U.S. Congress through September 30, 2025; its status for Fiscal Year 2026 and beyond is not yet known.

Learn more at www.ies.ed.gov/sbir.