The AltSchool idea was founded by a Google executive, who decided he could redesign American education. It operates for profit, but it is not making a profit.
Max Ventilla, a Google executive who left the search giant to launch AltSchool in 2013, wooed parents with his vision to bring traditional models of elementary education into the digital age.
AltSchool has raised $175 million from Mark Zuckerberg, Peter Thiel’s Founders Fund, and others, and the startup is closing a Series C round of funding. But now some parents are bailing out of the school because they say AltSchool put its ambitions as a tech company above its responsibility to teach their children.
The startup, which launched in 2013, develops educational software and runs a network of small schools with four locations, in California and New York; two others closed their doors in the past year, and three more will close in the spring of 2018. These schools serve as testing grounds for an in-house team of technologists to work on tools for the modern classroom.
Since August, 12 parents spoke with Business Insider on the condition of anonymity, some because they worried that speaking out against AltSchool could hurt their children’s chances of being enrolled elsewhere. Six parents have withdrawn their children from AltSchool in the past year, and two others said they planned to do so as soon as they found a transfer spot at a different school. AltSchool enrolls between 30 and 100 students at each campus.
“We kind of came to the conclusion that, really, AltSchool as a school was kind of a front for what Max really wants to do, which is develop software that he’s selling,” a parent of a former AltSchool student told Business Insider.
In New York City, where private schools may cost $50,000 or more, the for-profit school sector is growing. BASIS, the high-flying charter chain in Arizona, has opened two private schools in the city, undercutting the traditional private schools with lower tuition costs.
Unlike most of New York’s private schools, these newcomers are all for-profit businesses.
Matt Greenfield, a managing partner of ReThink Education, a venture capital firm focused on education technology, said that this group of new schools seemed to reflect a mix of passion projects, started by parents frustrated with the available options who want to create their dream school, and cold-eyed business ventures.
“Schools are not an inherently bad business,” he said. “New York has a scarily high real estate cost, and other costs are high, too,” but the tuition a school can charge in New York is high, as well, he said. “So I think those are not implausible businesses.”
Not everyone is convinced of the value or long-term viability of the new for-profits:
Some observers are skeptical of the new crop of schools. Amanda Uhry, the founder and owner of Manhattan Private School Advisors, which helps families with the admissions process, said she discourages parents from applying to for-profit schools, because she doesn’t have confidence in the long-term stability of those schools.
“There are people who these schools obviously attract and obviously go there,” she said, but only because they don’t get into the more prestigious nonprofit schools. In her experience, she added, many families “would rather go to public school than go to a privately owned new school that has no history.”
As long as parents don’t expect the state or the federal government to pay for their tuition with vouchers, the choice is theirs to make.
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