Delaware Street Capital

Andrew Bluhm makes his money buying distressed debt for hedge fund Delaware Street Capital, but these days, he's long on education. He invested $2 million to launch Otus, a software platform for classroom teachers that has been downloaded 10,000 times in about six months. Education technology is one of the hottest markets for startups right now. Other Chicago-area startups include ThinkCerca.com Inc. and Digedu Enterprises LLC. Chicago-based Otus LLC is headed by two suburban teachers, Pete Helfers and Chris Hull. Mr. Bluhm, a 48-year-old father of three who is the son of real estate developer and casino investor Neil Bluhm, got interested in education software three years ago. ScrollMotion Inc., a company he invested in, developed an iPad app for algebra for textbook publisher Houghton Mifflin Harcourt. "The improvement by students in those classes where it was used was significant," he said. "I was convinced the iPad was going to change education." CUSTOMIZED LEARNING The idea is that tablets can allow teachers to better customize assignments to match each student's pace and ability for one-on-one learning. "I've got three boys, 8 to 14, so I understand the issues in education," Mr. Bluhm said. "We can build something to benefit everyone." Mr. Bluhm, whose hedge fund Delaware Street has about $200 million in assets, was introduced by a friend to Messrs. Helfers and Hull, teachers at Elm Place Middle School in Highland Park. They had won a grant to use iPads in the classroom but wanted a single piece of software for various courses instead of wrestling with a hodgepodge of apps with different log-ins and passwords. "They were frustrated with the software available to manage and run their classroom," Mr. Bluhm said. "They'd developed their own thoughts. Chris and Pete had effectively designed it and laid out how it would work. We just had to develop it." Working with another company he had invested in, Chicago-based Synvata LLC, they built the software over the past 18 months. There's an app for Apple iPads and a Web-based version that works with Google Chromebooks. The software is free. "We're a social enterprise: The No. 1 issue is better education, not necessarily focused on maximizing profit," Mr. Bluhm said. Longer-term, he says, Otus can sell schools on data, integrating it into older computer systems for grade management and other functions. "There are significant revenue streams ultimately we can tap into," Mr. Bluhm said. "We'll demonstrate that using Otus is saving them significant dollars — in printing, content and software costs — and we'll share in the savings."