Inigral CEO Michael Staton with Facebook CEO Mark Zuckerberg

The Bill & Melinda Gates Foundation just made an unprecedented investment in education technology. The foundation made its first-ever direct equity investment in a for-profit company. This is the first time they have invested in a for-profit company, so what prompted them to make this big investment?

‘Facebook for Higher Education’

The company that the foundation invested in is Inigral, the maker of the increasingly popular Schools App. (It’s also known as ‘Facebook for Higher Education.’) The app creates a closed community of students within Facebook’s platform. Retro Venture Partners and Founders Fund also contributed to what totaled to a $4 million round of Series B funding.

Right now, only 11 schools use the app (customized variations). Inigral’s CEO and founder Michael Staton describes as “a cross between Yammer and Twitter.” Essentially, each student gets access to two real-time streams. One provides updates from everyone at the school. The other contains updates that only pertain to topics the student has indicated she or he is interested in. Students can join groups and interact without friending other participants.

I wouldn’t be surprised if this functionality was transferred into a different market altogether. Rather than focusing on education, businesses and other communities could benefit from not having to ‘friend’ everyone they want to interact with.

What Is This App?

Schools App – The Student Perspective from Inigral Inc. on Vimeo.

Staton went on to describe why this is a crucial benefit: “The key is the way that we’re designed is to help people who don’t know each other get to know each other,” Staton says. “Whereas Facebook is designed to have people who already know each other stay in touch with each other.”

The folks over at Mashable make a terrific point saying that the Schools App fills the void that Facebook left when it removed the requirement to sign up with a school e-mail address, its education networks and courses features in order to pursue a larger market. The app, which launched in 2009, turns the Facebook platform into a school community again — a function that turns out to be quite important. Source: Mashable.

What It Costs

Schools pay between $10,000 and $50,000, depending on the number of students, to use the app each year. It’s an interest in student acquisition as well as retention that drives this purchase. When deciding between the schools they’ve been accepted to, students are more likely to go to a school where they’ve already started making friends online (at least the that’s how the theory goes).

Why It’s Different

Rather than fight the inevitible, Inigral embraced Facebook as the platform everyone’s using and built on top of it. That idea is working. For example, one school that invites its admitted students to join the school’s app, The University of Texas at Tyler, has started using participation in the app as a predictor of student enrollment. Before the app, whether a student had attended a campus tour was the best predictor. Students who had made a trip to campus were three times more likely to enroll than students who did not.

The school found, however, that students were five times more likely to enroll if they had used the application. Bryson White from Inigral e-mailed Edudemic and expressed just how excited they are about the news:

This is the first time the Gates Foundation has made an equity investment as part of its charitable work and we’re thrilled they’ve recognized the potential for social media to improve education.

The Offficial Press Release

SAN FRANCISCO, Feb 9, 2011 – Inigral Inc. announced today that the Bill & Melinda Gates Foundation has made a $2 million program-related investment (PRI) in the education technology company.  The foundation joins existing investors, Retro Venture Partners and Founders Fund, in $4 million new Series B equity financing.

The new investment provides capital for Inigral to further develop and market its education-focused social media technology product, the Schools App, built on Facebook Platform.  It also marks the first direct equity investment by the Gates Foundation in a for-profit company as part of its charitable mission.

“We’re excited that the Bill & Melinda Gates Foundation shares our vision for the promise of social media to enhance educational outcomes,” said Michael Staton, Inigral co-founder and CEO.  “A college student’s decision to drop out creates a lot of challenges, for that individual’s future and our society at large.  Our Schools App can increase a student’s sense of belonging and integration within an institution, lowering the chances of attrition.”

The Schools App leverages the Facebook Platform to accelerate interconnectedness and build community among college students during the admissions and orientation process as well as their first-year experience.  Through the combination of a familiar user interface, easy access from Facebook, social game constructs and a trusted environment, the Schools App quickly creates affinity groups that drive feelings of friendship and belonging.  Academic research shows that increased social and academic integration, involvement and engagement in college can boost student learning and persistence, thereby increasing the likelihood of completion.

“The foundation’s investment in Inigral reflects our interest in supporting innovative education technology and approaches with the potential to improve student success – especially among students who are the first in their family to attend college,” said Greg Ratliff, senior program officer for Education, Postsecondary Success at the Gates Foundation.  “Leveraging social media to facilitate a student’s integration into academic and campus life is a promising approach toward improving college completion rates in the United States.”

The Gates Foundation’s equity investment is part of an ongoing exploration of innovative avenues of charitable giving to improve education.  The foundation also will provide grants to academic researchers and higher education groups to study the impact of social media on postsecondary student engagement and retention.  Similarly, last October, the foundation launched the Next Generation Learning Challenges, which has already made up to $30 million available through challenge grants to innovators and institutions to expand the use of promising technology and applications that enhance college and career readiness.

Inigral also is backed by Founder’s Fund, managed by Peter Thiel and Sean Parker, and Retro Venture Partners, headed by Larry Mohr and Sal Gutierrez.  Both venture capital firms have experience investing in technology and social networking platforms.

Inigral has been building on the Facebook Platform since 2007 and is the only company working in higher education selected by Facebook to participate in the Preferred Developer Consultant Program.

“Facebook was founded in a college dorm and gave classmates a way to connect with each other,” said Ethan Beard, Director of Platform Partnerships, Facebook. “Inigral’s Schools App continues this legacy by working to positively impact the lives of students and increase the likelihood of graduation. The involvement of the Gates Foundation highlights the opportunity for startups like Inigral to build on Facebook to make an impact on education and create new opportunities for students.”

Eleven schools already use the Schools App, including Arizona State University, Columbia College Chicago, Maricopa Community Colleges, Stetson University and The University of Texas at Tyler.  New clients include Pace University, Samford University, the New Jersey Institute of Technology, Savannah College of Art and Design and the Academy of Art University.  Students use the application to obtain and share information about the academic and social environment at their school, as well as to find other students with similar interests, experiences or course loads and to organize face-to-face meetings.

“The Schools App finds students where they live – online and on Facebook.  The application goes beyond just adding friends and posting status updates, it encourages meaningful interaction – engaging both commuter and residential students with our community, sometimes before they even set foot on campus,” said Michael Crow, president of Arizona State University, which uses the Schools App.  “Social media technology can help facilitate the transition to college life and encourage more students to earn a degree.”

College graduation rates have remained stagnant for many years, yet there is a growing U.S. need for postsecondary degrees.  By 2018, when today’s fifth-graders graduate from high school, an estimated 63 percent of U.S. jobs will require an education beyond high school.  Currently, only 22 percent of students go on to earn a degree after high school.

Inigral will offer grants and discounts to community colleges and public, state and land-grant universities that serve diverse student populations, including high numbers of students eligible for Pell Grants.  This program will be exclusively provided to institutions with ambitions in social media and software.  Interested parties can find more details on the Inigral website.

Inigral Inc.

Inigral Inc. is the emerging market leader delivering social applications to impact student enrollment and engagement.  The Schools App leverages Facebook Platform to drive student interconnectedness and belonging, increasing a postsecondary institution’s yield of accepted students and the retention of existing students.  Inigral was founded in 2007 and is the only Facebook Preferred Developer Consultant focused on Higher Education.  The education technology company is backed by  Founders Fund, Retro Venture Partners and the Bill & Melinda Gates Foundation.