The business of education is big, varied, international and the toughest segment is probably K12. I have invested in several edtech startups as well as having founded and sold a couple of my own, so I have some experience with raising money and being pitched to.
Just because it’s education doesn’t mean it’s all sunshine and ginger beer. My favourite insult was when a teacher yelled, “He might be able to read a balance sheet, but I bet he can’t even spell pedagogy”! It was true… The most recent similar-to-but-different-from jibe doing the rounds of the London edtech community is about a company that was, I am led to believe, described in a recent speech as being, “the Theranos of edtech” (ouch). While insults and innuendo may smart, they are piffle compared to some of the dubious and to my mind, straight out illegal, machinations and scams I have seen.
What this creates is a healthy degree of skepticism about the investment decks and pitches I get on an almost weekly basis. My due diligence process is not complicated and would benefit from having access to deeper (but very expensive) data via a system like LexisNexis but instead I rely on my own rudimentary tools and sources along with instincts honed over 20 years in the business of edu. For example, a few years back I was pitched a company that looked interesting and who had already been through a well-known incubator and the usual round of edtech events and competitions. After meeting the founder and reading their deck it still looked interesting but something niggled in my brain. I dug deeper only to find the founder was a former teacher who had been banned for life (under another name). Eventually they admitted it and I came away thinking the ban was a denial of natural justice and if challenged could probably be overturned. I told the founder that I would not identify them but that there were really only two possible outcomes:
- keep pretending with the strong likelihood of being found out, the consequences of which would probably be the death of the business
- admit it, challenge the court ruling while telling their compelling story and ask for forgiveness, because they still had a huge amount to contribute to education
Sadly, they chose option one and while the company still exists I saw in a recent filing that after shortening their accounting period in 2018 they have recently extended it, making it impossible to know whether they are solvent or not.
I was reflecting on the rough and tumble of K12 when reading about WeGrow, the educational subsidiary of WeWork. Now for someone who thinks they have a pretty good knowledge of the sector I’d never even heard of WeGrow nor of the rumoured $100m that Softbank has invested in them (via their Vision Fund). My suspicion is that $100m is probably worth about $100 given the ructions at WeWork and Softbank certainly won’t be too worried as it represents less than 1% of the $10bn+ they have invested in WeWork. Also surprising is that Adam Braun, the founder of Pencils for Promise (also known as PoP) a US not-for-profit that builds schools in the developing world, is WeGrowth COO. Had I been doing better biz intel I would also have seen that WeWork acquired MissionU (in May 2018), where Braun had been the co-founder and CEO. MissionU raise $11.5m from the initial Seed round (Oct. 2016) to Series A (Sept. 2017) in the 20 months from founding to acquisition by WeWork. MissionU’s funders were serious edu investors including Learn Capital, Omidyar Network, John Doerr, Rethink Education and University Ventures.
Convincing anyone to give you $100m for any company is an incredible feat, especially for one whose strapline is ‘the future of education’. But when I looked at some of the titles of WeGrow’s staff, such as Manager of Wisdom Cultures and Creative Expression Manager, it was no surprise to see a paucity of activity in Braun’s Linkedin timeline over the last few months (maybe he’s been trying to figure out exactly what his staff actually do). Outside of K12, WeWork also own the Flatiron School which they acquired for $28m in 2017. Unlike WeGrow, Flatiron is an established business, but if WeWork keeps unravelling they will need to turbocharge their online delivery while they look for new owners and office space.
Back in mid 2018 Fast Company wrote that students at WeGrow will “start their day with a laughing circle or a meditation session” but right now it’s probably CEO Rebekah Neumann and COO Adam Braun who need these most as their company teeters on the edge of becoming not a Theranos of edtech, but quite possibly an unlamented non-unicorn.
Amongst all this turbulence (and more to come) it’s just be another day at the office in the business of education.