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Start-Up makes millions getting students to use cellphones in class

Power Pitch

This school season, the battle between professors and social media distractions may be over. One start-up decided to join students where most of their attention ends up - on their smartphones! A startup called Top Hat has created a mobile platform that allows students and teachers to interact on their mobile devices during class. The mission: use mobile devices boost student engagement and improve learning. The company’s big idea has scored over 10 million dollars, and some big name universities are already on board.

“We believe the classroom is broken and we’re using mobile devices to fix it,” said Andrew D’Souza, COO of Top Hat.

CNBC gave D’Souza 60 seconds to prove it. Click the video and see if our judges pass or fail D’Souza’s pitch.

Pencils Down, Smartphones Out

Top Hat aims to make learning more engaging and interactive.

“Professors put in a ton of time and effort preparing these lectures but they have no way to know how much of that content is actually getting into the heads of their students. Now using Top Hat they can ask a question, students respond right away on their mobile phones, and immediately that professor knows how much of that class understands what was just taught,” D’Souza explained in his pitch.

D'Souza believes the students actually have an incentive to show up and pay attention because they're being assessed in real time.

So how does Top Hat work?

Professors who use the service for their classes connect with their students through a app they can download onto their mobile devices. The platform allows professors to put questions to every student in a lecture hall instantaneously and students armed with the app can reply just as quickly.

"It's a real time mobile learning system," D'Souza said. "It's a platform for engaging large audiences of people on their technology. And that can be on their laptops, tablets, smartphones even simple SMS cell phones. And the idea is rather than the lecture being a one way content delivery mechanism we really want to enhance engagement and provide that real time feedback."

D’Souza explained that professors can see exactly who has responded to a given question and whether or not it's correct.

“When students know that they are going to be held accountable for the material being presented and will be asked a question about it in 10 minutes, students are a lot more likely to pay attention rather than be Facebook stalking or browsing Instagram.” D’Souza told CNBC.

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D’Souza said classes using Top Hat show attendance rates increase at an average 20 percent, and grades increase 3-5 percent.

But Power Pitch panelist Luke Williams, Executive Director of the Berkley Center for Entrepreneurship and Innovation at NYU Stern Business School, was concerned about the startup's competition. "I'm not sure if this is an app that other people can easily do...I'm not sure if the system that's behind this is actually making it all work and making it differentiate on the market."

Top Hat is not the only player in the space. Socrative offers a similar service allowing professors to assess students through apps on smartphones and laptops. Edmodo, another mobile app, enables teachers to have classroom discussions online, share videos, post homework, and give polls to check for student understanding. However, both Edmodo and Socrative focus more on K-12, while Top Hat focuses on higher education.

How does Top Hat make money?

Top Hat works on a subscription model, if a professor adapts the platform students pay a $20 fee for the semester. In some cases, universities pay TopHat a fee to license the platform for the entire student body.

Top Hat has a partnership Pearson (PSO), a top player in the textbook publishing world. Professors using Pearson textbooks can offer Top Hat to their students at a discounted price and deliver Pearson content in class through Top Hat.

"By the end of this fiscal year, we're projecting $5-10M in revenue" D'Souza told CNBC.

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D'Souza has plans to also take Top Hat outside the classroom and into a corporate setting, using the app for employee trainings and workshops.

Since its launch in 2009, 450 universities are using Top Hat, including Harvard, Stanford, Duke & Johns Hopkins, with a total of 350,000 active students. Headquartered in Canada, Top Hat recently opened branches in San Francisco, Chicago and Sydney, Australia. The company has raised 10.6 million from investors including Emergence Capital, iNovia Capital, SoftTech VC, Felicis Ventures.

Watch D’Souza’s Power Pitch for yourself and see how he was graded by CNBC host Mandy Drury @MandyCNBC and Power Pitch panelists: Luke Williams from @NYUStern, and @Greylock partner Josh Elman @joshelman.

--Additional reporting by Joanna Weinstein

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