Ingram-backed CEO Kent Fuka

QUERIUM CORPORATION, a two-year-old Austin edtech startup, won a minority-stake investment from Tennessee's ICG Ventures and has raising further capital very much in mind.

ICG Ventures is a unit of La Vergne, Tenn.-based Ingram Content Group, which in turn is a subsidiary of $2BN+ Ingram Industries, privately held and based in Nashville.

Querium, which offers a mobile learning and assessment software platform, announced yesterday that ICG Ventures and undisclosed other investors recently invested a total $800K for minority stakes in Querium's Series A3 raise.

Querium Co-founder and CEO Kent Fuka told VNC that the ICG Ventures investment is Querium's first institutional or strategic capital.

News of Ingram's Austin play came just a day ahead of news today out of that city that another prominent Nashville entrepreneur has bet on a healthcare technology startup there. More on that, later in this story.

Looking ahead, Fuka said Querium contemplates soon raising another $600K in a Series A4 Angel tranche. And, he acknowledged the company is likely to pursue a $1.5MM-2.0MM Series B raise during the second half of this year.

Since its inception in 2013, Querium has raised $1.5MM in three rounds. Apart from Fuka and Co-founder and Chief Marketing Officer Patti Smith and ICG Ventures, the company's investors include about 10 experienced high net-worth investors, the CEO said.

Though Querium is the type company that can reach IPO scale, an exit to a strategic bidder is the most likely scenario, said Fuka, who added that major edtech players are "very acquisitive," with 75% of 2014's sector transactions involving strategic acquirers, rather than financial buyers.

Asked whether Ingram might eventually be a bidder, Fuka said only that Ingram naturally has "a huge interest in adding complementary technologies..."

Ingram prolifically executes U.S. and cross-border industry partnerships, but only infrequently does it announce direct investments. Meanwhile, a recent CB Insights report shows EdTech venture and equity financing rose to $1.87BN in 2014, up 55% YoY. (See The New York Times' recent story.)

John Ingram

A year ago, ICG Chairman and CEO John Ingram, who is also chairman of Ingram Industries, said in announcing his company's acquisition of Silicon Valley-based CourseSmart, an e-textbook company, "We are creating an extensive global sales channel for publishers and bringing the best in digital learning technology and accessibility to the higher education community."

The CEO told this reporter in 2013, following his remarks before an audience at Lipscomb University, that he is the primary contact for Ingram Content M&A approaches. ICG Ventures' Chief Venture Capital Officer David Roland has not yet responded to an interview request for this story.

Though his dayjob involves leading very large organizations, John Ingram has in recent years displayed steady interest in the entrepreneurial sector.

Among other early-stage interests, Ingram is chairman of the Nashville Entrepreneur Center (and chair of the EC's current search for a successor to EC CEO Michael Burcham); a member of the advisory board of FCA Venture Partners, an affiliate of Clayton Associates (CA); a co-founder of CA's Bullpen Ventures, a Seed-investment partnership; and, according to previous coverage, an owner of FLOCO LLC, aka FLO {thinkery}.

Ingram Content's earlier buys included 2011's purchase of VPG Integrated Media, a provider of e-textbook applications and e-whiteboard content, plus state-of-the-art video, audio, and animation production services for edupublishers. Also, Ingram in 2006 announced its acquisition of VitalSource, a converter of textbook content into an electronic format.

Fuka said that, with direct Ingram assistance, B2B player Querium plans to focus heavily on licensing its technologies to publishers and to testing companies, and it has targeted the community-college sector for early entry. Fuka confirmed that the firm also sees for-profits schools as an important market.

Querium has developed what Fuka said he firmly believes is a unique artificial-intelligence "engine" that helps students work through problems in step-by-step fashion, for rapid grading, with options for access to tutoring and coaching. The platform allows learning and testing to be interactive and adaptive, providing quick feedback to students and vital analytics for educators. Some features of the platform assist in averting and detecting cheating in virtual coursework.

Its offerings currently cover Math and Computer Science, but 14 additional subject-areas will be added, step by step. It has thus far sold exclusively in Texas, but this year will begin its nationwide rollout.

Asked about competitors, Fuka said Querium's AI engine differentiates it markedly, and he sees no direct competitors. He acknowledged Australia-based Mathspace as a notable player.

Jackie Shrago

Jackie Shrago, a prominent Nashville technology and education executive since at least 1975, told VNC today that consolidation among major companies in the edtech and edupublishing sectors has inevitably made it difficult for small edtech startups to thrive without a strategic partner.

And, Shrago said, assessment and content are two of the most compelling industry segments for leadership-minded strategics. For that reason, she noted, Nashville companies that had their origins in edtech infrastructure -- such as Education Networks of America (ENA, acquired in 2011 by Atlanta-based MSouth Equity Partners) -- have in recent years given increased attention to supporting assessment, creating content partnerships and other initiatives.

Shrago's career has often placed her in the middle of the innovative Nashville edtech sector, the expanse of which latecomers may not fully appreciate: Among her earlier edtech-oriented roles at Vanderbilt University and in industry, Shrago served alongside then-former Vanderbilt Chancellor Joe Wyatt in creating Thinklink Learning, an education assessment startup that in 2006 was sold and became part of the Discovery Education subsidiary of Discovery Communications, parent of The Discovery Channel, etc. Earlier, Shrago was among those who played supporting roles in advancing learning-technology developments emanating from the former Learning Technology Center within Peabody College at Vanderbilt University.

VNC research shows Pearson and CTB/McGraw-Hill are among consolidators that are also involved with multi-state assessment consortia that are grappling with challenges in the wake of waves of federal education reform.

Ingram is not Querium's only strategic partner. A year ago, Querium launched TSI Math Prep, a program to help students prepare for the Texas Success Initiative (TSI) Assessment. It subsequently announced related partnership with Austin-based Sapling Learning, a division of Macmillan Publishing.

Querium lists members of its board of directors as including, in addition to Fuka: Frances Cairns, founder and CEO of the mobile college-community platform Campus Quad; Drew Duncan, a long-time Angel investor; and, James M.O. Rubin, M.D., whose credentials include being Founder/CEO of TAVHealth, an Austin-based healthcare engagement platform provider. Fuka, himself, holds board seats in both Campus Quad and in Thinkwell, an online video learning platform provider.

Charlie Martin

Notably, Rubin was also among co-founders of Tenzing Health, a health management services company, while part of a group led by Nashville entrepreneur Charlie Martin, whose other creations have thus far included Vanguard Health Systems (since merged with Tenet), among many others.

Martin's Martin Holdings (fka The Martin Companies) and its Martin Ventures are active investors: The Austin Statesman reported today that Martin Ventures is among investors in a $1.4MM raise by Austin-based eRelevance, a patient-engagement platform provider.

Rubin was earlier Founder/CEO of revenue cycle management solution provider Medical Present Value (sold to Experian in 2011 for a reported $185MM). Fuka, who was then a principal in Austin-based VC, CenterPoint Ventures, was a board member of Medical Present Value.

Fuka said Querium relies for legal services on sole practitioner Christopher Brown of Austin. Brown was previously general counsel for a FinTech company, NetSpend. Foghorn PR is Querium's agency.

Fuka, now 58, began his career as a teen-ager with Data General, and his LinkedIn profile shows his earlier involvement in a half-dozen or more startups. He was once part of the management team of Austin-based Tivoli Systems. VC-backed Tivoli IPO'd in 1995 and was sold to IBM in 1996.

Fuka is a native of the Chicago area. He wife is a native of Sparta, Tenn., and graduated from Tennessee Tech, at Cookeville. VNC