Twin Cities startup Cascade Reading wants to use technology to reimagine the skill and boost comprehension for struggling learners.

Cascade is not publishing books or creating its own content. Instead, existing material goes into the Cascade system for its patented algorithm to rearrange in a column format readers can scan from top to bottom instead of left to right. It's no longer a block of text. Given the vertical display, the words look like lines of poetry that appears to cascade down the screen.

A Gallup analysis of U.S. Department of Education data in 2020 found 54% of American adults read below a sixth-grade level, but Cascade believes its tech can improve literacy. The company studied fourth and fifth graders in the Milwaukee area and found students performed better on comprehension assessments after using Cascade. They also found that students with the lowest reading scores said they felt more confident using Cascade. More than half of the students said Cascade helped them to read more carefully.

Another study found people with the first language of Korean or Mandarin fared better with English comprehension when using Cascade. Cascade recently completed three different studies, including an eye-tracking study at the University of Illinois, Urbana-Champaign that Jack Dempsey, Cascade's director of research, said will help improve the product by understanding "how the eyes are moving across text."

Julie Van Dyke is chief scientist for Cascade as well as a senior scientist with Haskins Laboratories, part of the Yale Child Study Center. She has been doing reading research for 25 years. She said there's a chance Cascade could help people with reading disabilities, such as dyslexia or developmental language issues.

"People who have difficulty with comprehension are going to have the best benefit from Cascade because it's giving these visual cues to the way the sentence is structured," Van Dyke said.

She added: "It's really allowing kids to not be so stressed about reading."

Edtech boom

The onset of COVID-19 helped drive a boom for "edtech" companies like Cascade, but today's market is much tougher.

"The timing is difficult. Unless you're an AI-based company, I'm not sure if there's ever been a worse market," said Phil Hill of Arizona-based Phil Hill & Associates, known as publisher of the On EdTech newsletter.

In 2021, edtech had $20.8 billion in global venture capital investment. In 2023, that figure dropped to $3 billion, down more than 85%, according to New York-based HolonIQ, a data and analytics firm that tracks the education sector.

At the same time, challenges can create tougher, savvier companies.

"Some of the most successful companies are ones that were created during these difficult markets," Hill said.

Chad Johnson, managing partner for Minnetonka-based Cherry Tree & Associates, an investment banking firm, said the Twin Cities has a cluster of edtech companies. Bloomington-based Renaissance started in 1986 with Accelerated Reader, a program designed to motivate students to read.

"It continues to be a need in schools," said Todd Brekhus, chief product officer for Renaissance. "I think it's exciting to see companies like Cascade and others that are starting to innovate."

Cherry Tree has invested in many education companies including Capella Education Co., a locally founded online university that Virginia-based Strategic Education now owns.

"I think what they have is very promising and intriguing," Johnson said of Cascade Reading.

Just the start

Founded in 2020, Cascade operates 100% virtually. That makes sense, since the technology is dependent on the capabilities of digital devices.

"Digital text is here to stay," Cascade co-founder Michael Gorman said.

Cascade hasn't drawn any revenue yet but it plans to strike partnerships to build the business. One of the many remaining questions is the the cost to use the product. Gorman said prices will depend on how his business partners use the product.

"We are now engaged in commercialization discussions," Gorman said.

Gorman is not an inventor or educator. He's co-founder and managing director of Eden Prairie-based Split Rock Partners, a venture capital firm that has invested in technology and health care companies. Split Rock has no connection to Cascade, which has one angel investor.

"Michael Gorman is a smart, thoughtful leader. His data-driven decision-making ensures precision in every business move, and his knack for seeing around corners has been invaluable to Code42′s growth. We're grateful for Michael's counsel, and I have no doubt his expertise will lead Cascade Reading to success too," said Joe Payne, CEO of Minneapolis-based cybersecurity firm Code42, in a statement.

Split Rock has invested in Code42, and Gorman has been on its board of directors for more than 12 years.

"As far as we know, there's nothing like us‚" said Mark Lacek, Cascade's co-founder. "We see the market as global. We think it applies in any language."

Correction: A previous version of this story inaccurately identified Bloomington-based Renaissance's program designed to motivate students to read. It is Accelerated Reader.