How a Federal Seed Money Program Has Powered Ed Tech Innovations

Get stories like this delivered straight to your inbox. Sign up for The 74 Newsletter

Fifteen years ago, Scott Laidlaw was a middle school teacher in Ogden, Utah, who created tabletop games using paper cutouts to keep his algebra class engaged. Seeing his students’ interest in algebra surge, he wrote a proposal and received a federal grant to create a game in which students use mathematical concepts to advance a virtual civilization in ancient Mesopotamia.

Today, Laidlaw runs MidSchoolMath, which reaches over 60,000 students a day across 48 states with research-based curricula built around the original paper game concept. His is just one of dozens of education technology breakthroughs highlighted in “From Seed Funding to Scale,” our analysis for The Study Group of the impact of the Small Business Innovation Research program, run by the Education Department’s Institute of Education Sciences.

Between 2012 and 2022, this quiet innovation engine invested approximately $92 million in education research and development, seeding innovations from AI-driven literacy tools to teletherapy platforms that help rural schools access speech and occupational therapy.

The returns are staggering. Products developed through this funding have reached more than 130 million students and educators nationwide — at a cost to taxpayers of roughly 70 cents per user. Each federal dollar invested generated nearly $9 in sales, investments or acquisitions. 

But today, seed money that helps address real student needs is at risk. Layoffs and funding cuts at the department have frozen innovation grants. One startup had to let go of most of its team, stalling a promising project overnight. Another was forced to put off recruiting new team members, the type of holdup that can upend a young venture. When Fiscal Year 2025 awards were pushed back by months, delaying contracts, one company founder missed a planned school-year pilot window entirely — a costly setback in a fast-moving market.

This federal turbulence does real harm to these small businesses and to the students they are trying to help. That’s unfortunate, because public seed funding helps education innovation to grow more accessible and rooted in real learner needs. And at a time of rapid advancement in artificial intelligence, it is crucial that innovations reach all students and meet varied needs.

In fact, while roughly 90% of startups fail, many SBIR-backed education ventures succeed where others fall short. A primary reason is that they often originate with teachers and academic researchers who deeply understand schools’ toughest challenges. An educator notices students struggling with fractions; a practitioner sees rural students who can’t access speech therapy; a researcher wonders if AI could help English learners master science vocabulary. The Small Business Innovation Research program supports early-stage innovations the private sector initially hesitates to fund.

For example, federal seed funds supported development and evaluation of an early version of Presence, a teletherapy platform that addresses critical shortages of special education specialists. Presence now facilitates millions of virtual speech and occupational therapy sessions, as well as mental health counseling. The startup attracted over $70 million in investments, underscoring how strategic public funding can catalyze transformative private-sector growth.

Another example: Learning Ovations’ literacy platform A2i, an evidence-based early reading rapid assessment to inform instruction. A2i, developed over a decade of federally funded research, uses algorithms to tailor lessons to individual student needs. With SBIR backing, the evidence-based platform expanded rapidly, and it was so compelling that publishing giant Scholastic acquired A2i to grow nationally. Today, thousands of classrooms use this technology to boost early literacy.

Beyond individual successes, SBIR has created an ecosystem of innovation with numerous spillover effects. Companies report spinoffs, entirely new product lines and deeper partnerships with schools and researchers. For many, the seed money didn’t just launch products — it fostered their entire business.

Programs like this aren’t charity, they’re smart economics. They demonstrate how public dollars can be used effectively: not as ongoing subsidies, but as smart, initial investments that private markets scale and sustain. This approach is a blueprint for future investment in critical areas, such as using AI to personalize learning, prepare students for careers and equip educators with the tools they need to be effective.

As a former SBIR program manager and longtime educator and now applied researcher, we’ve witnessed firsthand what targeted, strategic public investments can achieve. Early-stage ideas by classroom teachers and scientific researchers can, with the right nurturing, transform education for millions. Small, well-placed bets can create powerful solutions, like games that engage students in algebra; data dashboards that provide real-time insights into whether students are succeeding or struggling, and why; and assistive technologies that accommodate the needs of individual learners, including those with disabilities.

In an era marked by skepticism toward government spending, the SBIR program stands out as a model worth celebrating. It empowers innovative small businesses to harness education’s transformative potential.

As the nation debates how to spend limited education budgets, it’s crucial to consider that if 70 cents per student can deliver these breakthroughs, the possibilities are limitless. The nation’s students and educators deserve no less.

Get stories like these delivered straight to your inbox. Sign up for The 74 Newsletter