During the French Revolution London and Paris experienced the best and worst of times, respectively.  But that strange sense didn’t last long.  Before too long, liberte, egalite, fratenite et extreme violence washed over Europe.  Soon, Paris’ problems became London’s and London restored a more natural order in Paris.

So it will be in higher education; this tale of two cities won’t last much longer.  Whereas Silicon Valley edtech companies have garnered headlines and plaudits, for our money the most innovative HE technology is being developed inside the public companies.  Consider the fact that Apollo Group has an annual technology R&D budget estimated to be in excess of $100M.  Or that Capella now owns SOPHIA, a low-cost provider of online self-paced general education courses and was the first institution to receive HLC’s approval to launch direct assessment (competency-based) programs.

Equally, as the largest online (and some of the largest campus-based) universities, the public companies are far ahead of all other institutions in collecting and analyzing data to gain insights on improving student outcomes.  Nearly all traditional colleges and universities are focused on what’s easy to measure (the four Rs:  rankings, research, real estate and rah – i.e., sports) rather than student learning and employment.  Having never focused on the 4Rs – at least until Grand Canyon joined NCAA Division I – the public companies have been working on so-called Big Data initiatives for several years and are focused on identifying key inputs and variables and devising tactical, just-in-time interventions to improve student persistence and outcomes.  This is particularly true for the large online institutions where every click and page view is tracked.  Keep in mind that as adaptive learning comes to the fore, the most effective adaptive systems will be those with the most data, constantly judging which learning object to deliver to which student in which sequence.

Moreover, several of the public companies already have significant international experience and operations.  DeVry’s success in Brazil is a model for others to follow and Apollo is now chasing a number of markets simultaneously.  International expansion requires resources and networks that small private companies will be hard pressed to match.  And keep in mind that Laureate – the leader in international HE – still hopes to join the ranks of the public companies by the end of the year.

Finally, these public companies have a great deal of cash – $2.8B in total, or more than the cumulative $2.6B invested into higher education from 1995 thru 2011.

In fact, there were a few public company CEOs at the Education Innovation Summit.  But instead of sitting on industry panels defending their current business models – something they’ve been doing now for over four years – they were outside on the patio meeting with private companies they might want to acquire.  The need for new growth engines for their businesses and the amount of innovation occurring at private companies has focused many public company CEOs externally over the past year.  Fueled by available cash, these companies are likely to value innovative private companies more highly than financial investors.  This M&A activity won’t only include acquisitions.  As Fidelis has done with American Public, some private companies will take minority investments from public companies to leverage their expertise and resources while the public company gains an option to acquire the business down the road.

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In short, if you’re excited about the future of higher education, the changes around the corner and the prospects for private sector involvement, stop being Dickensian in your thinking.  It’s not a tale of two cities, but rather a single city.  Just as the French survived the Revolution and then a short dictator, the public HE companies survived their own revolution (government/media) and then short sellers.  Having done so, these companies are in the midst of figuring out an important role to play in the future of global higher education.

The big challenge for the public companies is that so many of the significant near-term opportunities involve partnership or collaboration with traditional HEIs.  That’s where 90% of the students are in the U.S., and close to 100% outside the U.S.  But no one wants to be seen out and about with someone who’s just been guillotined.  As a result, public companies are poorly positioned for these opportunities.  (This is more acute for domestic partnership or service provision opportunities than international.  But international is no slam dunk either.  Senator Harkin is a minor celebrity at universities on every continent except Antarctica, which still awaits its first higher education institution.)

Public companies need to sequence the many opportunities ahead of them by first focusing on those that don’t involve partnership or service provision to traditional universities.  By rebuilding their reputations with successful endeavors that demonstrate they are capable of achieving double bottom line success – student outcomes in addition to financial returns – they will reoccupy prominent positions in an increasingly dynamic – nay, revolutionary – landscape.

Ryan Craig is a Partner at University Ventures, a venture fund focused on innovation from within higher education. In the past, he founded an education startup, worked in consulting and government roles. He attended Yale University for undergraduate degrees and law school.