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Screen grab from the SMARTeacher game Prodigy.

There's a problem with most educational software products for children, says Rohan Mahimker. They're not engaging enough.

This observation, along with his memories of a "tedious" after-school tutoring program, is what drove Mr. Mahimker to develop an educational game as part of a fourth-year project at the University of Waterloo. After graduating, he founded SMARTeacher, along with co-creator Alex Peters, and the pair began to look for ways to commercialize their work.

Mr. Mahimker says their resulting math game, Prodigy, has more than 12,000 users in Ontario and it has seen growth rates of around 50 per cent a month since it was released in July. It integrates problem solving with concepts from popular video-game properties such as World of Warcraft and Pokemon.

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SMARTeacher is one of many companies betting on the disruptive power of technology in the education sector.

Joseph Wilson, education lead at Toronto's MaRS Discovery District, says the non-profit innovation hub is working with more than 140 educational ventures. The former high-school teacher says at least 12 to 15 of those startups, including SMARTeacher, have high growth potential.

"People are realizing that the old, one-way, industrial model of education doesn't fit with the new world of technology," he explains. "Status quo education systems are starting to feel the pinch."

Bruce Adams, senior manager in the education sector of Deloitte's strategy and operations group, says tablets are already having a disruptive effect and he expects high schools to increasingly find ways to incorporate students' own mobile devices in their classes. "What happens outside of the classroom is driving change," he adds.

With education budgets shrinking, Mr. Adams says school boards are looking for products that will save them money or streamline back-office functions. "Things are changing so quickly" in the education sector, Mr. Adams says, "the agility of a small business can be helpful."

But the slow sales cycles of large educational institutions and school boards can be frustrating for businesses, says Mr. Wilson, and many of them are finding greater success with consumer products marketed to parents and students.

That's the approach taken by SMARTeacher. Its core product is free to use, with additional game-play features unlocked for a subscription fee. According to Mr. Mahimker, the business model was a "huge selling point" when dealing with public schools. "We're offering them a massive value proposition."

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John Leyzer, principal of organization leadership at Ontario's Hamilton-Wentworth District School Board, which has consulted on the Prodigy software and participated in pilot projects, agrees with that assessment. "What we like about this is that there's a completely free version. We really look for universal access."

Toronto-based Top Hat Monocle originally marketed its web-based classroom-response system to universities, but it soon realized it needed a new approach, says chief operating officer Andrew D'Souza. The company pivoted and began selling subscriptions to students.

With users at more than 300 North American universities, Mr. D'Souza says administrators are now beginning to approach them. The ability to illustrate the effectiveness of a product, he adds, is essential for success in the education sector. "No one's going to spend money on things that aren't proven. You can't schmooze your way in."

With the U.S. ed-tech market estimated to be worth almost $8 billion a year, many entrepreneurs in the sector, including Mr. Mahimker, are looking for opportunities south of the border. But Mr. Wilson says Canadian education companies are seeing opportunities even further afield.

"There's a lot of interest from developing countries, especially China, the United Arab Emirates and India," he says. "Canada has a great reputation among educators and policy makers."

Large textbook publishers such as Pearson and McGraw-Hill are recognizing the potential for disruption and they have opened their own startup accelerators. Pearson has partnered with some smaller companies, including Top Hat Monocle and adaptive learning platform maker Knewton, and it recently purchased online learning services company Embanet.

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According to Mr. D'Souza, venture capitalists are also starting to take notice. While ed-tech companies have traditionally seen less interest from investors than other startups, Mr. D'Souza says that's changing. "There's starting to be some excitement."

Some ed-tech companies, including SMARTeacher, are also taking advantage of government grants to fund startup costs and research. This fall, SMARTeacher plans to launch its next product, a biofeedback wristband that will be able to sense a child's emotions and adjust game-play accordingly. Through granting programs, SMARTeacher was able to partner with universities and colleges, which helped it develop the wristband.

"I think emotional sensing is going to be the future of educational technology," Mr. Mahimker says. "Emotions are very tied in with how we learn."

Mr. Mahimker says the product's ability to respond to emotion is not only unique, it will help children who struggle with math overcome their frustrations.

"A lot of kids say they hate math at an early age and spend their whole life saying they hate math and never get good at it."

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