BUSINESSWEEK ONLINE : SEPTEMBER 25, 2000 ISSUE
SPECIAL REPORT

The Explosion in e-Learning


Dozens of new companies are springing up to serve the emerging K-12 market 
for digital learning. Investors have poured nearly $1 billion into these 
companies since the beginning of 1999, estimates Merrill Lynch. Among the new 
players:

COMPANY        FOUNDED  HEADQUARTERS  INVESTORS

APEX LEARNING  1997     Bellevue,     Founded by Paul Allen; other
                        Wash.         investors include Warburg
                                      Pincus, Edison Schools.

CLASSROOM      1994     Brisbane,     More than $70 million from
CONNECT                 Calif.        Intel, AT&T, U.S. Trust,
                                      and others.

LIGHTSPAN      1993     San Diego     Listed on Nasdaq with
                                      market value of around $130
                                      million; private investors
                                      include Microsoft, Sony.

NETSCHOOLS     1996     Atlanta       GE Capital, Paul Allen's
                                      Vulcan Ventures.

SIMPLEXIS      1999     San Francisco $35 million from Internet
                                      Capital Group, GE Capital,
                                      Kaplan, Commerce One, and
                                      others.

ZAPME!         1997     San Ramon,    Public, with market value of
                        Calif.        some $80 million. Private
                                      investors include Dell,
                                      Sylvan Learning Systems.


COMPANY        COMMENTS

APEX LEARNING  Provides advanced placement courses over the Net, target-
               ing the 40% of high schools that don't offer such courses.
               Also offers online professional development for teachers.

CLASSROOM      Offers online curriculum, including virtual adventures
CONNECT        known as ''quests'' in which teams of scientists go to
               locales like the Galapagos Islands; classes follow the team
               online and ask questions. Says it has reached 3.7 million
               students in 50,000 schools.

LIGHTSPAN      Sells digital curriculum tied to state standards. Its
               products are often assigned as homework. Expected to
               generate revenues of $65 million in fiscal 2001, ending
               Jan. 31, up from $50 million in fiscal 2000.

NETSCHOOLS     Provides ubiquitous access to the Internet in schools it
               serves by giving every student a specially designed
               wireless laptop. Now serving some 41 schools with 14,000
               students and expects that to double in coming year.

SIMPLEXIS      Founded by former GOP Presidential candidate Lamar
               Alexander to apply e-business technology to procurement
               of school supplies. Claims savings from automation and
               purchasing cooperatively can cut K-12 spending on
               supplies by 10%, or $8 billion, by 2005.

ZAPME!         Installs free computer labs, with Net access, in public
               schools in exchange for showing students on-screen
               ads. Though controversial among groups opposed to
               school commercialism, has installed labs in 2,200
               schools and has a waiting list of 2,000 schools.


DATA: BUSINESS WEEK, MERRILL LYNCH & CO.


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