In an experiment unique to California and probably the nation, Silicon Valley's business-sponsored Challenge 2000 project is applying the venture-capital model to education, and kick-starting the effort with $21 million in private investments.

Hundreds of community members, educators, and business people are working with 10 school districts and 55 schools serving 34,000 students. Renaissance teams, groups of volunteers, educators and companies (among them Hewlett Packard and Apple) are paired with elementary, middle and high schools in the same geographic area.

"The school teams come up with a business plan and present it to the Challenge 2000 board of educators and business people, as if they were approaching venture capital investors," explains Paul Wheaton, communications director for the parent organization to Challenge 2000.

In return for money, computers and loaned executives, the school teams must come up with a unified plan to improve literacy or science and math learning. They must directly involve students, parents, educators and business partners; and they must have a method to measure the outcome.

"The board can pull the plug on its investment any time during the next five years, if it decides that the school team isn't living up to its goals," says Wheaton. "That's different from typical education grants, which don't hold schools to specific results."

Among other projects, Challenge 2000 has invested in a book publishing "company" that teams high school, middle school and elementary students, and an intensive Internet-focused program for at-risk kids, which has resulted in "dramatically reduced discipline problems and higher test scores," according to Carol Welsh, Challenge 2000 program manager.

The campaign came just in time. Last year, according to the California Department of Education, a test of reading skills showed that two-thirds of Silicon Valley's 10th-graders could not incorporate critical thinking, questioning and analysis of text. Feeder schools funneling students to the same middle and high schools had different objectives for student performance, and most schools had seldom communicated with other schools.

All of this led Ed McCracken, chief executive officer of Silicon Graphics, to ask, in a newspaper op-ed piece: "Are we educating young men and women who are equipped to work in Silicon Valley?" Or will the people who grow up in Silicon Valley, a center for fancy research and high-tech manufacturing, "not be eligible for the jobs?"

While a 1995 survey by the Field Research Corporation found that 39 percent of people polled in the Silicon Valley region believed that schools had gotten worse over the previous five years, more than 86 percent said they were willing to be involved in improving the schools. And 71 percent said they were willing to increase local taxes to improve education.

"That suggests to me," wrote McCracken, "that if our schools and school boards will make stronger cases for bond issues, our citizens may be willing to foot the bill."