In a victory for one of Minnesota's most promising start-ups, Naiku, an education technology firm, has received $320,000 in funding.
The investment was a vote of confidence from experienced investors and a bright spot in a challenging environment for Minnesota start-ups. Some entrepreneurs have considered leaving the state, saying investment dollars have dried up.
The news also represents an unusual triumph because the Minneapolis start-up isn't in the medical technology sector, which typically captures the most venture capital funding in the state. The founders also had no experience leading a start-up.
The company's $320,000 investment came from 3C Capital, Omphalos Venture Partners and individual investors.
Naiku is a Web testing platform that allows students to explain their difficulties with specific test questions. For instance, using Naiku, a teacher can assess how many students in their class got a test question wrong and why. So far, 40,000 students have used the product.
Charlie Kyte, one of the individual investors who participated in the funding round, said he believes Naiku's product has the potential to relieve teachers of a lot of time-consuming work and give them much better information faster on how their students are learning.
"We think they have a good idea in a space in the market that's not being covered right now," said Kyte, a member of 3C Capital, an angel investment group.
Naiku launched last year at a time when venture capital investments in Minnesota were at their lowest level in 15 years. Earlier this year, Naiku's founders were worried about fundraising. Since the majority of venture capital investments in the state usually go to medical device companies, there were concerns that local investors wouldn't take a chance on education technology.
But Naiku's founders, Corey Thompson, Adisack Nhouyvanisvong and Kevin Sampers, believed they could make it work.
"We received a lot of great feedback from some of the investors in the community that got us ready," Thompson said.
So far, 35 schools have used Naiku, which means "teacher" in Lao. Naiku sells its platform for $5 a student as part of an annual subscription rate.
Naiku has also received local awards. It won the high-tech division for the Minnesota Cup, a statewide entrepreneurial contest and was selected to participate in Project Skyway, a Minneapolis-based tech accelerator.
Naiku said it would use the money toward marketing its product in Minnesota, Wisconsin and Iowa.
"It's going to help us prove our plan," Thompson said.