Education
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Why hasn’t digital learning lived up to its promise?
Tom Adams is the president of Quantic School of Business & Technology.
The fall semester is off to a rocky start. When schools were forced to close in the spring, students (and parents) struggled. As the new school year begins, affluent families are building pandemic pods and inequities abound, while surveys suggest that college students want tuition discounts for online classes.
To avoid a catastrophic loss in revenue, colleges are bringing students back to campus. At UNC-Chapel Hill, those plans were quickly reversed when 130 students tested positive for the virus just a week into the new semester. As cases skyrocket, UNC will not be the only educational institution or school district to move online again.
What is it about digital learning that has schools so keen on reopening despite the health and reputational risks? Why hasn’t digital learning lived up to its promise?
If I were asked 20 years ago, as the founding CEO of Rosetta Stone, what digital learning would look like today, I would have imagined a very different future. Online learning was exploding. Teachers and faculty were experimenting with now commonplace consumer technologies like speech recognition and virtual reality to create immersive learning experiences.
Sadly, most of these innovations never took hold in our schools and colleges, and remote learners today are left with edtech that feels like it is still trapped in the 90s.
Ironically, the business of edtech and digital learning has been booming. Billions of dollars have been invested in tools and platforms that promise to improve the learning outcomes and lives of students. But for all the investments, headlines and flashy IPOs, edtech has little to show in terms of transformative outcomes.
The United States continues to lag behind many other advanced industrialized nations in math, science and reading literacy. Schools at all levels grapple with pervasive equity gaps. And research shows that heavily investing in education technology has, so far, yielded virtually no appreciable improvement in student achievement in these core subjects.
The challenge stems from the fact that rather than making learning better, the education technology field has, for the most part, focused on reaching more students. In our rush to scale, we have largely ignored tremendous pedagogical innovation that has occurred over the last twenty years.
No matter how high-tech a digital learning solution might be, it means nothing if it doesn’t also reflect recent and emerging changes in pedagogy. In 2010, a study at the University of North Texas compared how students retain information literacy skills in a face-to-face class, an online class and a blended class. The researchers found that there was no difference in outcomes between the three kinds of classes. This is because all three used the same materials and pedagogical approach.
But in a digital environment, far more is possible. We can now create video-game quality simulations to evaluate complex skills like creativity or problem-solving. Shy students can take the form of learning avatars in online laboratories — or explore career paths first-hand, through virtual reality. We know more than ever about attention span and engagement, or the connection between socio-emotional development and academic outcomes.
Researchers have, likewise, gained a deeper understanding of the ways students’ minds work. We know more than ever about how students reason, process information and solve problems. We know what kinds of scaffolding is required to develop and master these skills. Learning is best when it is built around doing, and when the context is practical, allowing students to try their hand at solving problems even as they’re still learning. It’s best when it is individualized, with progress based on a student’s personal aptitude and proficiency as they move toward mastering the material. And it’s best when it is enriched with peer-based discussion, practice and collaboration.
Astonishingly, few mass-market digital learning tools are built or adopted with these pedagogical advancements in mind. While Zoom is a fine tool for live conversations in small groups, it has few tools to facilitate the kind of engagement necessary for real learning. Coursera has raised millions for simply replicating the old-fashioned experience of a teacher lecturing at the front of a classroom. Quizlet is but a virtual collection of flashcards; it can assess the learning of certain facts, but it is hardly useful for the acquisition of skills. These types of common digital learning tools are increasingly great at making educators’ jobs easier. They are great at expanding access, allowing teachers and schools to reach more students than ever before. But scale, ease and access are not sufficient to help students learn and build skills.
The frustrations of educators and learners alike reflect the fact that education technology functions as a digital proxy for our oldest methods of teaching. Simply listening to a lecture is not effective in the real world, and yet that largely remains the default mode of education online. The impact of COVID-19 has only exacerbated these long-standing shortcomings. To create the digital learning experience students deserve — to finally fulfill the untapped promise and potential of educational technology — we must create tools that reflect not only advancements in technology, but in what we now understand about how the mind works and how students learn.
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Forage, formerly InsideSherpa, raises $9.3 million Series A for virtual work experiences
Tech’s coveted internships were some of the first roles to be cut as offices closed and businesses shuttered in response to the coronavirus. A number of companies across the country, including Glassdoor, StubHub, Funding Circle, Yelp, Checkr and even the National Institutes of Health, either paused hiring or canceled their internship programs altogether.
For InsideSherpa co-founders Tom Brunskill and Pasha Rayan, the canceled internships were an opportunity. InsideSherpa, a Y Combinator graduate, hosts virtual work experience programs for college students all around the world.
College students, searching for a way to get job-ready, flocked to the platform from Northern Italy to South-East Asia, to all over the United States. Enrollments in InsideSherpa grew more than 86%, up to 1 million students.
The educational service successfully attracted student interest, and now, has landed investor interest. Today, InsideSherpa announced that it raised $9.3 million in Series A funding, led by Lightspeed Venture Partners . The startup has now raised $11.6 million in known venture funding. Other investors include FundersClub, Y Combinator and Arizona State University.
The financing will be used to grow InsideSherpa’s staff, with more engineering, product and sales roles. Along with the financing, InsideSherpa announced that it has rebranded to Forage.
Forage isn’t selling an internship replacement, but instead comes in one degree before the recruitment process. Students can go to the website and take a course from large companies such as Deloittee, Citi, BCG and GE. The course, designed in collaboration with the particular company and Forage, gives students a chance to “explore what a career would look like at their firm before the internship or entry-level application process opens,” Brunskill explains.
Forage is focused on partnering with large companies that employ upwards of 1,000 students per year via internships to help open up new pipelines. The corporate partners pay a subscription fee per year to post courses, and students can access all courses for free.
Popular courses include the KPMG Data Analytics Program, JPMorgan Chase & Co. Software Engineering Program and the Microsoft Engineering Program.
While Forage declined to disclose ARR, it confirmed that it was profitable heading into its fundraise, which formally closed in July.
Within edtech, flocks of companies have tried (and failed) to deliver on the promise of skills-based learning and employment opportunities as an outcome. The strategy of getting cozy with corporate partners isn’t unique to Forage, but the team views it as a competitive advantage. Of course, the effectiveness of that strategy matters more than the fact that it exists in the first place. Forage did not disclose efficacy information, but said that “some” corporate partners hired up to 52% of the cohort from their programs.
When Brunskill and Rayan first started Forage in 2017, they imagined a mentoring marketplace to connect students to young professionals. Three years later, much has changed.
“While students were interested in the product, they weren’t using it the way we intended,” he said. “Students kept saying to us ‘we just want an internship at company X, can you get me one?’ ”
While Brunskill doesn’t believe there’s any silver bullet solution to fixing education or recruitment systems, he remains optimistic in Forage’s future. After all, even if democratizing access to skills is the first step in a bigger race, it’s not an easy one.
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User-generated e-learning site Kahoot acquires Actimo for up to $33M to double down on corporate sector
Norwegian company Kahoot originally made its name with a platform that lets educators and students create and share game-based online learning lessons, in the process building up a huge public catalogue of gamified lessons created by its community. Today the startup — now valued at more than $2 billion — is announcing an acquisition to give a boost to another segment of its business: corporate customers.
Kahoot has acquired Danish startup Actimo, which provides a platform for businesses to train and engage with employees. Kahoot said that the purchase is being made with a combination of cash and shares, and works out to a total enterprise value of between $26 million and $33 million for the smaller company, with the sale expected to be completed in October 2020.
It may sound like a modest sum in a tech market where companies are currently and regularly seeing paper valuations in the hundreds of millions at Series A stage, but it also presents a different kind of trajectory both for founders and their investors.
This is actually a strong exit for Actimo, which had raised less than $500,000, according to data from PitchBook. And it puts Actimo under the wing of a company that has been scaling globally fast, finding — like others in the areas of online education and remote working — that the current state of social distancing due to COVID-19 is resulting in a boost to its business.
To give you an idea of the scale and growth of Kahoot, the company says that currently it has over 1 billion “participating players,” on top of some 4.4 billion users in aggregate since first launching the platform in 2013. In the last 12 months, some 200 million games have been played on its platform. In June, when Kahoot announced that it had raised $28 million in funding, it told us that 100 million games had been played.
In light of its growth and the future opportunity — even putting aside the progression of the coronavirus, it looks like remote work and remote learning will at least become a lot more common as a longer-term option — the company has also seen a rise in its valuation. With some of its shares traded on the Merkur Market in Norway, the company currently has a market cap of 18.716 billion Norwegian Krone, which at today’s rates is about $2.08 billion. That figure was $1.4 billion in June.
Kahoot’s targeting of the corporate sector is not new. The company has been building a business in this space for years. It says that in the last 12 months, it logged 2 million sessions across 20 million participating “players” of its corporate training “games,” with some 97% of the Fortune 500 among those users. Customers include the likes of Facebook (for sales training), Oyo (hospitality training and onboarding) and Qualys (for taking polls during a conference), among others.
Critically, while a lot of Kahoot’s audience is in education, it’s corporate that most of the revenues come in — one reason why it’s keen to grow that segment with more services and users.
The aim with Actimo, Kahoot says, is to build out a product set aimed at helping organisations with company culture — which, with many organisations now going on eight months and counting of entire teams working regularly outside of their physical offices, has grown as a priority.
Keeping a team feeling like a team, and an individual feeling more than a transactional regard for an employer, is not a simple thing in the best of times. Now, as we continue to work physically away from each other, it will take even more tools and efforts to get the balance right.
In that context, Actimo’s solution is just one aspect, but potentially an interesting one: it has built a platform where employees can track the training that they have done or need to do, engage with other co-workers, and provide feedback, and employers can use it to generally track and encourage how employees are engaging across the company and its various efforts. It counts some 200 enterprises, including Circle K, Hi3G and Compass Group, among its customers, and has current ARR of $5 million.
For comparison, Kahoot, in its Q2 financials published in August, reported ARR of $25 million, with invoiced revenue for the quarter at $9.6 million, growing some 317% on the same quarter a year before. The company has also raised some $110 million in private funding from the likes of Microsoft and Disney.
As Kahoot looks to find more than just a transient place in a company’s IT and software fabric — transience of attention always being a risk with anything gaming-based — it makes a lot of sense to pick up Actimo and work on ways of coupling the platform with its other corporate work. You can also imagine a time when it might create a similar kind of dashboard for the educational sector.
“We are excited to welcome the Actimo team to be part of the fast-growing Kahoot! family,” said Kahoot CEO, Eilert Hanoa, in a statement. “This acquisition will further extend Kahoot!’s corporate learning offerings, by providing solutions tailored for the frontline segment, as well as to solidify company culture and engagement among remote and distributed teams in companies of all types and sizes. This continues our expressed ambition to also grow through M&A by adding strategic capabilities that we can leverage across our global platform.”
“We are thrilled to join forces with Kahoot! in our mission to develop next-level solutions that connect remote employees and boost employee engagement and productivity,” said Eske Gunge, CEO at Actimo, in a statement. “Being part of Kahoot! and with our experience from working with innovative and ambitious enterprises across industries, we can together set a new standard for corporate learning and engagement.”
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Extra Crunch Friday roundup: Edtech funding surges, Poland VC survey, inside Shift’s SPAC plan, more
I live in San Francisco, but I work an East Coast schedule to get a jump on the news day. So I’d already been at my desk for a couple of hours on Wednesday morning when I looked up and saw this:
What color is the sky this morning pic.twitter.com/nt5dZp5wWc
— Walter Thompson (@YourProtagonist) September 9, 2020
As unsettling as it was to see the natural environment so transformed, I still got my work done. This is not to boast: I have a desk job and a working air filter. (People who make deliveries in the toxic air or are homeschooling their children while working from home during a global pandemic, however, impress the hell out of me.)
Not coincidentally, two of the Extra Crunch stories that ran since our Tuesday newsletter tie directly into what’s going on outside my window:
As this guest post predicted, a suboptimal attempt I made to track a delayed package using interactive voice response (IVR) indeed poisoned my customer experience, and;
Sheltering in place to avoid the novel coronavirus — and wildfire smoke — is fueling growth in the video-game industry, perhaps one factor in Unity Software Inc.’s plan to go public ahead of competitor Epic Games. In a two-part series, we looked at how the company has expanded beyond games and shared a detailed financial breakdown.
We covered a lot of ground this week, so scroll down or visit the recently redesigned Extra Crunch home page. If you’d like to receive this roundup via email each Tuesday and Friday, please click here.
Thanks very much for reading Extra Crunch; I hope you have a relaxing and safe weekend.
Walter Thompson
Senior Editor
@yourprotagonist
Bear and bull cases for Unity’s IPO
Image Credits: Nigel Sussman (opens in a new window)
In a two-part series that ran on TechCrunch and Extra Crunch, former media columnist Eric Peckham returned to share his analysis of Unity Software Inc.’s S-1 filing.
Part one is a deep dive that explains how the company has grown beyond gaming to develop multiple revenue streams and where it’s headed.
For part two on Extra Crunch, he studied the company’s numbers to offer some context for its approximately $11 billion valuation.
10 Poland-based investors discuss trends, opportunities and the road ahead
Image Credits: Edwin Remsberg (opens in a new window) / Getty Images
As we’ve covered previously, the COVID-19 pandemic is making the world a lot smaller.
Investors who focus on their own backyards still have an advantage, but the ability to set up a quick coffee meeting with a promising investor is no longer one of them.
Even though some VCs are cutting first checks after Zoom calls, regional investors’ personal networks are still a trump card. Tourists will always rely on guide books, however, which is why we continue to survey investors around the world.
A Dealroom report issued this summer determined that 97 VC funds backed more than 1,600 funding rounds in Poland last year. With over 2,400 early- and late-stage startups and 400,000 engineers in the country, it’s easy to see why foreign investors are taking notice.
Editor-at-large Mike Butcher reached out to several investors who focus on Warsaw and Poland in general to learn more about the startups fueling their interest across fintech, gaming, security and other sectors:
- Bryony Cooper, managing partner, Arkley Brinc VC
- Anna Wnuk-Błażejczyk, investor relations manager, Experior.vc
- Rafał Roszak, investment director, YouNick Mint
- Michal Mroczkowski, partner, Market One Capital
- Marcus Erken, partner, Sunfish Partners
- Borys Musielak, partner, SMOK Ventures
- Mathias Åsberg, partner, Nextgrid
- Kuba Dudek, SpeedUp Venture Capital Group
- Marcin Laczynski, partner, Next Road Ventures
- Michał Rokosz, partner, Inovo Venture Partners
We’ll run the conclusion of his survey next Tuesday.
Brands that hyper-personalize will win the next decade
Image Credits: cnythzl (opens in a new window) / Getty Images
Even for fledgling startups, creating a robust customer service channel — or at least one that doesn’t annoy people — is a reliable way to keep users in the sales funnel.
Using AI and automation is fine, but now that consumers have grown used to asking phones and smart speakers to predict the weather and read recipe instructions, their expectations are higher than ever.
If you’re trying to figure out what people want from hyper-personalized customer experiences and how you can operationalize AI to give them what they’re after, start here.
VCs pour funding into edtech startups as COVID-19 shakes up the market
Image Credits: Nigel Sussman (opens in a new window)
For today’s edition of The Exchange, Natasha Mascarenhas joined Alex Wilhelm to examine how the pandemic-fueled surge of interest in edtech is manifesting on the funding front.
The numbers suggest that funding will far surpass the sector’s high-water mark set in 2018, so the duo studied the numbers through August 31, which included a number of mega-rounds that exceeded $100 million.
“Now the challenge for the sector will be keeping its growth alive in 2021, showing investors that their 2020 bets were not merely wagers made during a single, overheated year,” they conclude.
How to respond to a data breach
Image Credits: WhataWin (opens in a new window) / Getty Images
The odds are low that someone’s going to enter my home and steal my belongings. I still lock my door when I leave the house, however, and my valuables are insured. I’m an optimist, not a fool.
Similarly: Is your startup’s cybersecurity strategy based on optimism, or do you have an actual response plan in case of a data breach?
Security reporter Zack Whittaker has seen some shambolic reactions to security lapses, which is why he turned in a post-mortem about a corporation that got it right.
“Once in a while, a company’s response almost makes up for the daily deluge of hypocrisy, obfuscation and downright lies,” says Zack.
Shift’s George Arison shares 6 tips for taking your company public via a SPAC
Image Credits: Eric Burger/EyeEm (opens in a new window) / Getty Images
There’s a lot of buzz about special purpose acquisition companies these days.
Used-car marketplace Shift announced its SPAC in June 2020, and is on track to complete the process in the next few months, so co-founder/co-CEO George Arison wrote an Extra Crunch guest post to share what he has learned.
Step one: “If you go the SPAC route, you’ll need to become an expert at financial engineering.”
Dear Sophie: What is a J-1 visa and how can we use it?
Image Credits: Sophie Alcorn
Dear Sophie:
I am a software engineer and have been looking at job postings in the U.S. I’ve heard from my friends about J-1 Visa Training or J-1 Research.
What is a J-1 status? What are the requirements to qualify? Do I need to find a U.S. employer willing to sponsor me before I apply for one? Can I get a visa? How long could I stay?
— Determined in Delhi
As direct listing looms, Palantir insiders are accelerating stock sales
Image Credits: Patrick T. Fallon/Bloomberg (opens in a new window) / Getty Images
While we count down to the September 23 premiere of NYSE: PLTR, Danny Crichton looked at the “robust secondary market” that has allowed some investors to acquire shares early.
“Given the number of people involved and the number of shares bought and sold over the past 18 months, we can get some insight regarding how insiders perceive Palantir’s value,” he writes.
Use ‘productive paranoia’ to build cybersecurity culture at your startup
Image Credits: JakeOlimb / Getty Images
Zack Whittaker interviewed Bugcrowd CTO, founder and chairman Casey Ellis about the best practices he recommends for creating a startup culture that takes security seriously.
“It’s an everyone problem,” said Ellis, who encouraged founders to promote the notion of “productive paranoia.”
Now that the threat envelope includes everyone from marketing to engineering, employees need to “internalize the fact that bad stuff can and does happen if you do it wrong,” Ellis said.
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Toucan raises $3M to teach you new languages as you browse the web
Toucan has developed a Chrome browser extension designed for anyone who wants to learn a new language but hasn’t found the motivation or the time.
Once installed, the extension scans the text of any (English-language) website you’re visiting and will automatically translate some of the words into the language you’re trying to learn. If you mouse over the word, you’ll see the original English word. Think of it as a browser-based version of language flashcards.
The startup was founded by CEO Taylor Nieman, CTO Shaun Merritt and CPO Brandon Dietz. Today, it’s announcing that it has raised $3 million in seed funding led by GSV Ventures, with participation from Amplifyher Ventures, Wonder Ventures, Golden Ventures, Halogen Ventures, Vitalize Ventures and strategic angel investors.
Nieman’s past roles include business development roles at Headspace (where Dietz was a senior product manager), startup studio Science and car leasing startup Fair.com (where Merritt was an iOS developer). She told me that one thing she learned from across all those experiences is “habit formation — how hard it actually is to do anything that steals people’s time.”
Dietz made a similar point, arguing that while language learning software like Rosetta Stone and Duolingo has had its share of success, “It’s just such a high ask to get people to change their behavior and go to this one website,” particularly on a daily basis.
So Toucan is designed to help users learn a new language (it currently supports Spanish, French, Italian, German and Portuguese) while they browse the web as they normally would, without having to change their behavior.
Image Credits: Toucan
Nieman said the extension can be used to solidify and expand your vocabulary as you take digital or in-person classes. Or if you’re not taking classes, you can still use Toucan on its own, and it can help you achieve (as Dietz put it) “that magic moment of realizing you know a few words in other people’s languages.”
To ensure accuracy, the company works with teams of translators, including college professors and students, while also employing natural language processing to understand the context in which words are appearing. Users can also report words that are incorrectly translated.
And Toucan is experimenting with fun ways to promote itself, including the ability to “own” a word, so that for a week, your name appears anytime a word is translated by Toucan. In fact, the Toucan team has gifted me the word “writer” — but since ownership is currently free, I guess it’s not a bribe?
Eventually, the company could charge people and businesses to own (a.k.a. sponsor) certain words. In addition, users can sign up for a premium subscription that gives them access to additional vocabulary. Dietz suggested that Toucan will continue exploring different business models, but he said the team is committed to “accessible” education and will keep “a large chunk” of the offering free.
Looking ahead, Toucan is planning to add new languages and to launch browser extensions for Firefox and Safari. And eventually, Nieman said the startup could apply the same approach to other subjects, “history or science or math or general knowledge.”
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VCs pour funding into edtech startups as COVID-19 shakes up the market
A few weeks back, The Exchange looked into the pace of edtech exits, noting that over time, the sector has delivered rising exit volume. All startup verticals want to demonstrate a history of liquidity, so you might imagine that even before the COVID-19 pandemic, edtech fundraising was rising due to its improving exit profile.
The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
And dollars invested into edtech startups did increase, with 2018 and 2019 recording historically elevated results concerning edtech venture capital deals and venture capital dollars invested.
However, with COVID-19 pushing more students to learn from home and forcing schools to invest in new tooling and other digital capabilities that support remote-learning, a strengthening exit market and a market shift toward edtech services has led to an explosion in venture capital investment in the sector.
According to CBInsight’s data concerning the state of edtech venture capital activity, startups in the sector have already surpassed their 2019 venture capital dollar tally and are on track to set a new record in 2020, besting even 2018’s elevated result. Whether more total edtech deals will be closed in 2020 is less clear, but if current pace holds, 2020 should come somewhat close to 2018’s edtech deal count.
What’s driving the huge boom in edtech’s venture capital results? Let’s dig into just that.
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Edtech startups find demand from an unlikely customer: Public schools
School district technology budgets are tight. But Kami CEO and founder Hengjie Wang wanted to make his company’s digital classroom product a go-to tool anyway.
He landed on trying to disrupt the printers.
Wang found that school districts spend an average of $150,000 every year on printed materials. Kami helps teachers digitize worksheets so students can digitally annotate them. Doing the math, Wang says Kami can save districts an estimated $80,000 by getting rid of the need to print handouts every day.
“Districts are apprehensive on paying for tools unless you can also save them money at the same time,” Wang said. With this tactic, the number of school districts using Kami doubled between March and July, going from from 9,987 districts to 17,915 districts. Sales for the startup, which was founded in 2013, grew over 2,000%. Today, Kami is a cash-flow positive business that sells to schools and parents.
When it comes to wide-scale and equitable adoption for edtech startups, success can often hinge on landing contracts that extend to an entire school network. However, budget cuts and red tape have often limited a company’s ability to grow. During the pandemic, consumer edtech startups such as live tutoring or question and answer services have soared now that more kids are learning from home.
However, a second surge in edtech might be upon us. As schools seek to reopen with a hybrid learning solution, Kami and other startups are finding opportunity in one of the hardest institutions to sell to: K-12 school districts.
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12 Paris-based VCs look at the state of their city
Four years after the Great Recession, France’s newly elected socialist president François Hollande raised taxes and increased regulations on founder-led startups. The subsequent flight of entrepreneurs to places like London and Silicon Valley portrayed France as a tough place to launch a company. By 2016, France’s national statistics bureau estimated that about three million native-born citizens had moved abroad.
Those who remained fought back: The Family was an early accelerator that encouraged French entrepreneurs to adopt Silicon Valley’s startup methodology, and the 2012 creation of Bpifrance, a public investment bank, put money into the startup ecosystem system via investors. Organizers founded La French Tech to beat the drum about native startups.
When President Emmanuel Macron took office in May 2017, he scrapped the wealth tax on everything except property assets and introduced a flat 30% tax rate on capital gains. Station F, a giant startup campus funded by billionaire entrepreneur Xavier Niel on the site of a former railway station, began attracting international talent. Tony Fadell, one of the fathers of the iPod and founder of Nest Labs, moved to Paris to set up investment firm Future Shape; VivaTech was created with government backing to become one of Europe’s largest startup conference and expos.
Now, in the COVID-19 era, the government has made €4 billion available to entrepreneurs to keep the lights on. According to a recent report from VC firm Atomico, there are 11 unicorns in France, including BlaBlaCar, OVHcloud, Deezer and Veepee. More appear to be coming; last year Macron said he wanted to see “25 French unicorns by 2025.”
According to Station F, by the end of August, there had been 24 funding rounds led by international VCs and a few big transactions. Enterprise artificial intelligence and machine-learning platform Dataiku raised a $100 million Series D round, and Paris-based gaming startup Voodoo raised an undisclosed amount from Tencent Holdings.
We asked 12 Paris-based investors to comment on the state of play in their city:
- Alison Imbert, partner, Partech
- Alexandre Mordacq, partner, 360 Capital Partners
- Emmanuel Delaveau, partner, Partech
- Boris Golden, partner, Partech
- Jean de La Rochebrochard, managing partner, Kima Ventures
- Paul Bolardi, associate, AXA Venture Partners
- Shiraz Mahfoudhi, Speedinvest
- Guillaume Dupont, founding partner, CapHorn
- Martin Mignot, partner, Index Ventures
- Bartosz Jakubowski, principal, Alven
- Pierre Entremont, founding partner, Frst Capital
- Pierre-Eric Leibovici, founding partner, Daphni
Alison Imbert, Partech
What trends are you most excited about investing in, generally?
All the fintechs addressing SMBs to help them to focus more on their core business (including banks disintermediation by fintech, new infrastructures tech that are lowering the barrier to entry to nonfintech companies).
What’s your latest, most exciting investment?
77foods (plant-based bacon) — love that alternative proteins trend as well. Obviously, we need to transform our diet toward more sustainable food. It’s the next challenge for humanity.
What are you looking for in your next investment, in general?
Impact investment: Logistic companies tackling the life cycle of products to reduce their carbon footprint and green fintech that reinvent our spending and investment strategy around more sustainable products.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
D2C products.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
100% investing in France as I’m managing Paris Saclay Seed Fund, a €53 million fund, investing in pre-seed and seed startups launched by graduates and researchers from the best engineering and business schools from this ecosystem.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Deep tech, biotech and medical devices. Paris, and France in general, has thousands of outstanding engineers that graduate each year. Researchers are more and more willing to found companies to have a true impact on our society. I do believe that the ecosystem is more and more structured to help them to build such companies.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Paris is booming for sure. It’s still behind London and Berlin probably. But we are seeing more and more European VC offices opening in the city to get direct access to our ecosystem. Even in seed rounds, we start to have European VCs competing against us. It’s good — that means that our startups are moving to the next level.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
For sure startups will more and more push for remote organizations. It’s an amazing way to combine quality of life for employees and attracting talent. Yet I don’t think it will be the majority. Not all founders are willing/able to build a fully remote company. It’s an important cultural choice and it’s adapted to a certain type of business. I believe in more flexible organization (e.g., tech team working remotely or 1-2 days a week for any employee).
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and hospitality sectors are of course hugely impacted. Yet there are opportunities for helping those incumbents to face current challenges (e.g., better customer care and services, stronger flexibility, cost reduction and process automation).
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Cash is king more than ever before. My only piece of advice will be to keep a good level of cash as we have a limited view on events coming ahead. It’s easy to say but much more difficult to put in practice (e.g., to what extend should I reduce my cash burn? Should I keep on investing in the product? What is the impact on the sales team?). Startups should focus only on what is mission-critical for their clients. Yet it doesn’t impact our seed investments as we invest pre-revenue and often pre-product.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
There is no reason to be hopeless. Crises have happened in the past. Humanity has faced other pandemics. Humans are resilient and resourceful enough to adapt to a new environment and new constraints.
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To reach scale, Juni Learning is building a full-stack edtech experience
Juni Learning connects kids with math and science tutors, but co-founder Vivian Shen would prefer not to be lumped in with other edtech startups, despite the sector’s pandemic-born boom.
“We’re not just in the middle to take a few percentage points off of each side and pretend like we’re delivering value,” said Shen. “That’s not scalable.”
Semantics aside, Shen’s words underscore a truth about live tutoring businesses: Anyone can start one. All it takes is smart friends, eager students and a platform to bring them together.
The low barrier of entry has given rise to a slew of new startups. Some view edtech as a marketplace play, others go the gig economy route, and some are trying to make tutoring as simple as calling an Uber — on-demand and only when you need it.
Juni Learning, co-founded by Shen and Ruby Lee, is entering a fragmented and fatigued market full of better-funded and well-known startups. The startup views itself as a consumer play instead of an edtech startup and raised a $10.5 million Series A back in February to prove it can take a slice of the market.
With only 4,000 active subscribers, Juni Learning is bringing in $10 million in annual run revenue (ARR), compared to $2 million of ARR in March, according to my calculations.
So how is it faring?
A word of warning
In 2005, Andrew Geant was thinking about two-sided gig economy marketplaces. He applied the model to tutoring, thinking he could grow a business from connecting students and tutors online to meet offline. So, Geant and Mike Weishuhn, both recent Princeton graduates, founded Wyzant.
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Course Hero, a profitable edtech unicorn, raises rare cash
Like any successful founder, Andrew Grauer had bright, long-term ambitions for Course Hero from the moment he launched it in 2006.
He started the business to create a place where students could ask questions and get answers similar to Chegg, which launched 15 months before Course Hero . But as he slowly built it, he was tempted by a larger question: “What would a university look like if it was built by the internet?”
And so, the Redwood City-based startup itched at that nebulous goal throughout the years. Course Hero tested and failed products: free curated e-courses, in-person tutoring and teacher advice and ratings.
Clarity only came when Grauer realized that the core goal Course Hero launched with — giving students a place to ask and answer questions — wasn’t simply one product that should be fit into a broader suite of services. Instead, it was a thesis around which to build products. So, the startup began looking for different ways and formats to organize knowledge and questions and answers.
“That was a breakthrough insight,” Grauer said. The startup stopped launching other business verticals and decided to stick to Q&A as its core — and only — business. It sells Netflix -like subscriptions to students looking for access to learning and teaching content. Teachers and publishers can put course-specific study content on the platform.
Image Credits: Getty Images/manopjk
In 2020, Course Hero is a profitable business with annual run revenue upward of $100 million.
Today, Course Hero tells TechCrunch that it has raised a new tranche of capital in a Series B extension round of $70 million. The round is now totaling $80 million, bringing Course Hero’s total known venture capital to date to $95 million.
Its $80 million Series B round is one of the largest U.S. funding deals of 2020, and brings Course Hero’s valuation to $1.1 billion.
From a high level, the new raise is not surprising. Other edtech companies have also recently added on more capital to their balance sheets to meet remote learning demand amid the coronavirus pandemic.
But in Course Hero’s case, the new capital comes as a stark contrast to how the business functioned before 2020. After launching, the startup waited eight years to raise a $15 million Series A. Now, after going another nearly six years without raising venture capital, Course Hero has closed two rounds in this year alone.
Grauer tells TechCrunch that the capital will be used for operations, product innovation and feature development. It also plans to use the capital for future acquisitions (in 2012, Course Hero bought an in-person tutoring business).
Course Hero’s change of heart with venture capital boils down to the company meeting new scale demands. Last year, it passed 1 million subscribers on the platform. Now, it is eyeing “many millions” of students, the co-founder says.
Paraphrasing Bill Gates, Grauer said, “We do overestimate what we can do in just three years. And we dramatically underestimate what we can do closer to 10 years.”
Any edtech company that raises money off of current momentum in remote education will have to face the reality of what it is like to grow when remote learning is no longer a necessity. In other words, when the coronavirus pandemic ends, will these same platforms still find surges in usage?
“That’s the risk and reward of raising capital,” Grauer said. He added that “if you raise too much money early on, you can get misaligned expectations based on different time horizons set up by different terms of incoming shareholders or investors.”
Course Hero sees tailwinds in a dynamic that has been brewing since before the pandemic and will likely grow during and after: the growth of “nontraditional students” enrolling in and participating in higher education. Grauer noted that more than 40% of students work 30 hours or more per week. Over a quarter of students are parents, and of that quarter, over 70% are single moms.
“Because that’s the reality, and because we can make an affordable subscription and the economics can work, Course Hero is aligned to serving the majority, the real majority, and that’s the beauty of opportunity,” he said. There is a freemium model, but on an annual plan, a subscription costs $9.95 per month. On a monthly plan, a subscription costs $39.99 per month.
It’s not an opportunity the company hopes to expand into, it’s a reality of its diverse customer base. An internal data analytics survey of Course Hero shows that 58% of students that subscribe work at least part time. Over 25% of subscribers are 35 years old or older, and 22% of subscribers are parents.
Looking ahead, Course Hero hopes to continue to broaden its multisided marketplace.
In July, the business announced it is launching Educator Exchange, which allows college faculty to make money by uploading study materials for fellow teachers or students.
The “direct-to-faculty” relationship could pacify earlier tensions between the platform and teachers by giving the latter a way to monetize on how Course Hero “open sources” creative content on the point of copyright infringement.
Grauer compares Course Hero’s long-term vision to that of Google Maps, in that the platform can make recommendations of content based on other people’s usage.
But we’re not talking recommendations for the closest gas station. Based on how a user learns, Course Hero can recommend a specific professor who has a specific syllabus on a topic in which the user is interested.
“We’ve seen that specificity level differentiates us from others,” he said. “It helps students when they’re doing their real work, that one homework, that studying for one test. And I think that’s where the magic is for us.”
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