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The educational technology market is going through another upcycle. I learned that recently while writing about Education.com and Flashcard Friends (our coverage) recently. Now DreamBox Learning has revealed its web site for teaching young kids a variety of subjects through games.

Bellevue, Wash.-based DreamBox has an online site in beta testing now with four different games for kindergartners through second graders. The company announced today it has raised $7.1 million in funding from angels.

lou-gray_dreambox.jpgIt makes sense to go after this market now, given the more engaging technologies available on Flash-based web sites. Thanks to safe online game sites such as Club Penguin (bought by Disney for $700 million last year) and Webkinz, parents are also allowing their children to play online at younger ages, said Lou Gray, CEO and co-founder of DreamBox.

Nolan Bushnell, the father of video games and founder of Atari, said a few years ago that education could benefit as much from video game technology as home entertainment had. The problem was that many “edutainment” companies got started in the 1980s and 1990s with unrealistic expectations for the CD-ROM packaged software business. Many of them went bust. Then the distance learning companies took off with the Internet, but most of those are too boring for the young in comparison to games.

Now there are dozens of companies pursuing what Bushnell had in mind. According to a study by Ambient Insight, venture capital is flowing into the learning technology industry at the highest rate since 2001.

The site is in beta now and will launch in the fall of this year. Kids can play hundreds of different lessons. The themes for the game adventures include: pixies, pirates, dinosaurs and pets. The children select an animated avatar and then play a variety of adventures that teach concepts in math. Other subjects will be added over time.

There are a variety of start-ups in the educational technology market, including textbook manufacturers who are starting distance-learning sites and JumpStart World, which focuses on young kids. In video games, a movement known as “Serious Games” has been under way for several years to create games with purposes beyond entertainment.

“The kids can go off on a million different paths, depending on their own pace of learning,” Gray said. “We give them individual hints and can track their progress.”

The company was founded in February, 2006, and has 21 employees. Founders include Gray and Ben Slivka, chairman and former head of Microsoft’s Internet Explorer team.

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