When U.S. Secretary of Education Arne Duncan opened the Race to the Top competition to individual school districts two weeks ago, he said he wanted to spur innovation "at the classroom level and the all-important relationship among teachers and students." Now, a coalition of 16 education startups and policy organizations, herded by the nonprofit NewSchools Venture Fund, are saying the competition gets innovation wrong. They're planning to send Duncan a letter Friday.

"We … enthusiastically offer our support for the latest Race to the Top-District Competition that prioritizes personalized learning," the letter begins. "We worry that the competition as currently conceived may not maximize return on our $400 million federal investment."

The coalition is concerned that the competition looks at innovation upside down: Instead of rewarding school districts for sharing ideas and innovating, it rewards "comprehensive personalized learning applications that may prove extraordinarily difficult to implement."

Launched in 2009, Race to the Top has required states that choose to compete for a slice of $4.35 billion in stimulus money to prepare plans that satisfy the Obama administration's education reform criteria, which include encouraging charter schools and linking students' standardized test scores to teacher evaluations. Recently, Duncan opened a $400 million funding round to individual school districts and groups that manage charter schools.

The coalition wants to modify the Race to the Top competition by creating a "toolbox" that would allow schools to try out various technological tools, provided by educational developers, to reach student performance goals. The toolbox would be made available on an open data platform to schools and teachers. After the project period ended, the developers of the most effective tools would receive more money.

The coalition suggests this round could lead to more useful classroom improvements if it gave extra points to districts that partner with teacher training programs and that work with nonprofit organizations "to implement and scale personalized learning solutions."

"This is big investment in a very nascent field," said Benjamin Riley, the group's policy director, referring to Race to the Top's funding. "There's an awful lot being asked from school districts. We want to give every opportunity for partnership."

They also want to change the application process. According to the letter, the process requires applicants to set forth personalized learning plans, which can be stifling and run "the risk of creating another layer of bureaucracy." Riley said the current process encourages the designing of personalized learning "from the top down" as opposed to "the way we innovate in Silicon Valley."

"We don't want personalized learning to become a bureaucratic nightmare that teachers learn to hate if they hear that word," Riley said. "We don't want this to become another paper bureaucratic checklist they have to get through their day."

NewSchools Venture Fund, a San Francisco-based group co-founded by venture capitalist John Doerr -- and later supported by Netflix CEO Reed Hastings -- describes itself as a "nonprofit venture philanthropy firm." It helps investors find worthy educational entrepreneurs to support, such as charter schools like KIPP. In more recent years, the group has funded technology-based products, such as Khan Academy and ClassDojo, two software applications that help teachers manage classrooms. The organization invested $7.1 million in the spring of 2012 and $2.47 million the previous winter.

The group has close ties to the Education Department: In 2009, Duncan scooped up NewSchools Venture Fund's chief operating officer, Joanne Weiss, to become a senior adviser for Race to the Top. She's now his chief of staff.

Other signatories to the letter include the National Alliance for Public Charter Schools; the Silicon Schools Fund; MatchBook Learning, a group of consultants who help overhaul schools; and Tom Vander Ark, a former schools superintendent who has overseen startup ventures like Edmodo and Open Education Solutions.

The Education Department did not immediately respond to requests for comment.

UPDATE -- 7:30 p.m. Justin Hamilton, the press secretary of the Education Department, responded with this e-mailed statement late Friday evening:

We need to take classroom learning beyond a one-size-fits-all model and bring it into the 21st century and we think a district level race to the top competition will do just that. We appreciate public feedback on this important reform initiative and will take a close look at each comment and suggestion.