This newsletter covers the business side of the education industry - venture funding, M&A, other financial transactions. Whiteboard Advisors also publishes a daily newsletter - What We’re Reading - of curated, industry-focused news clips and a weekly newsletter - Whiteboard Notes - which covers policy, industry trends, and insights from W/A CEO Ben Wallerstein.
Hello!
Special edition EdSheet! On Tuesday Reach Capital announced a $265M Fund V. I visited co-founders Jennifer Carolan and Wayee Chu in their office to talk about the new fund.
In addition to the interview, this edition will cover:
Fund V: $265M raised to deploy ~50 $1-10M checks in pre-seed through Series A companies at the intersection of learning, health, and work.
Reach’s history: Reach's arc - from a $12M philanthropic seed portfolio to almost $1B in assets under management (AUM) across five institutional funds - provides a useful mirror for the evolution of the education market itself.
Eleven Years of Reach
Before Reach was Reach, it was the seed fund at NewSchools Venture Fund.1 From 2012-2015 NewSchools invested $12M in 39 early-stage education companies, providing a formative experience for what became the Reach team.
The education world looked much different during this period. President Obama lamented that only 1 in 5 US students had high-speed internet in their classrooms and the “digital course” CD-roms in the back of textbooks were frontier technology for the industry.
Which made it a great time to start investing in EdTech.The NewSchools fund and Reach’s first two funds are full of what are now household names in education – Replit, ClassDojo, Nearpod, Newsela, Handshake, Outschool, Epic!, Lovevery, Seesaw, and Desmos, among others.
Fund III – a $165M vehicle announced in February 2021 – was a turning point for both Reach and the education industry.
For many education companies, 2020-22 was a high-water mark, buoyed by large-scale government subsidization via ESSER, that proved unsustainable. The end of those subsidies and the resultant comedown in revenue and valuations among traditional EdTech companies has been the basis for my negative outlook on EdTech Venture Funding for the past three years.
For Reach, 2021’s Fund III was both validation of the first two funds’ success and the start of the firm’s path to a new, more holistic investment mandate. They welcomed blue-chip LPs like Goldman Sachs, Sesame Workshop, and National Geographic (later adding the LEGO Foundation, the College Board, and the LA Police and Fire Pensions). And while they continued investing in classroom technology, partners across the firm started devoting more attention to school (Campus) and training (Stepful) alternatives, lifelong learning, and economic mobility.
This evolution continued with 2023’s $215M Fund IV – whose runaway hits include Coral Care and GPTZero – and crystallized with Fund V, whose focus is Learning, Health, and Work.
While the Wall Street Journal calls Fund V an “expand[sion] outside Edtech,” I think Reach’s Fund V mandate is a reflection of what EdTech should always have been. As an industry, we spent much of the 2010s and early 2020s debating the merits of classroom tools. This was – and remains – important, but misses the forest for the trees on all the things we could be doing to prepare our children and young people for the complexity of today’s world.
The problems Reach aims to solve over the next eleven years reflect this complexity. The recognition that one of the easiest ways to fail a test is to walk into it after eating a poor breakfast. That simulations may be the key to unlocking an entry-level workforce threatened by AI. And that even our traditional institutions are walking into a whole new world of operations.
I’m excited to continue following along with Reach’s journey and hope you enjoy my interview with Reach co-founders Jennifer Carolan and Wayee Chu.
A few words from founders in Reach’s portfolio
“Reach has been far more than an investor to us. Throughout the SchoolMint journey, they opened doors across the education sector, helped us recruit outstanding talent, and supported us through every stage of building the company. I've been an investor in Reach since their second fund and I'm excited to back this new fund as they support the next generation of founders.”
— Jinal Jhaveri, Founder and CEO of Schoolmint
Jennifer backed me and Liam when it was just us and an idea. Nobody was building a consumer company for kids then; the whole industry ran on procurement cycles and big salesforces. Reach got it because they start with what’s good for kids and families, and work back to the business. That was rare then, and it’s still rare today. Excited for them to give another set of founders the same shot.
— Sam Chaudhary, Founder and CEO of ClassDojo
Whiteboard Advisors not only provides policy and market-related diligence and advisory services, we track every financial transaction that happens in education — and keep a record of all deals that are publicly announced. If you are looking to learn more about Reach, other EdTech investors, and/or venture-backed EdTech companies, You can check out our Deals Database here:
Whiteboard Advisors is the leading policy-related diligence partner for education investors, advising on most major private equity transactions in education over the past 15 years. Our specialty is translating complex policy dynamics into insights that inform decision-making. Reply to this email to learn more.
1 NewSchools continues to exist today, but with a different investment mandate than Reach’s
