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Google Capital comes out of stealth with third investment

FORTUNE — In recent years, Google (GOOG) has made a concerted push into education, marketing Chromebooks in K-12 schools and promoting its Google Play for Education initiative to offer easy access to learning apps and content.

Now Google Capital, the company’s previously stealth growth fund, is accelerating those efforts with a $40 million investment in Renaissance Learning, an educational company whose student evaluation tools are used in 40,000 schools. The deal values the company at $1 billion.

The investment is only the third by Google Capital, which is run by David Lawee, the former head of M&A at Google. With the Renaissance investment, Lawee is speaking publicly about the fund for the first time. Previously, Google Capital invested in SurveyMonkey as part of a large debt and equity round by the online surveys provider, and in Lending Club, the peer-to-peer lending platform. Both investments were made in 2013.

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Renaissance was founded in the 1980s and is best known for its Accelerated Reader products. Previously a publicly traded company, Renaissance was bought by private equity investor Permira Funds for $440 million in 2011. In recent years, the company has developed products to help further the Common Core standards, a set of rigorous learning goals promoted by the Obama administration as a replacement for the assortment of state standards. Jack Lynch, chief executive of Renaissance, said the investment from Google, which will become a minority shareholder, was attractive even though the company did not need the cash.

“There are incredible opportunities to collaborate with Google,” Lynch said in an interview. Lynch said Renaissance could help with instructional materials for Google Play for education. “In addition to that, Google Apps are free in K-12, so there is an entire generation of kids who are learning to use Google Docs instead of Word,” Lynch said. “There are a number of touch points between Google Apps and what we do.” Lynch said the investment by Google is one of the largest investments in an educational company in the last year.

In addition to Lawee, Google Capital includes Scott Tierney, who joined from Steelpoint Capital Partners in 2011, and Gene Frantz, who joined recently from TPG Capital.

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“For many educators, the question is not whether to embrace new technology, but how to embrace technology in a way that makes teachers’ lives easier and meaningfully boosts student achievement,” Frantz said in a press release. “Renaissance Learning is at the forefront of this educational movement, and their ability to use data to support effective teaching and drive student growth is unparalleled.”

Like its corporate cousin, Google Ventures, which focuses on early stage investments, Google Capital’s principal mandate is to evaluate investments based on their potential for financial returns. But people familiar with the company say investments like the one in Renaissance, which can also promote a strategic interest of the company, are welcome as well.