Jennifer Carolan, Shauntel Garvey, Wayee Chu and Esteban Sosnik (from left to right) cofounded Reach Capital to back mission driven edtech startups founded by entrepreneurs who are close to the problems they are looking to solve.
Reach CapitalReach Capital has backed more than 120 companies since 2006, among which are billion-dollar startups like Handshake and ClassDojo.
Edtech venture capital firm Reach Capital announced Monday that it has raised $215 million to invest in tech startups that are focused on addressing gaps in education. With the new fund, its largest yet, it plans to back companies located in the U.S. and abroad, especially in Latin America.
Shauntel Garvey, cofounder of Reach Capital, says that for years her firm has successfully spotted startups at the helm of technological disruptions that have spilled into the American classroom. From the introduction of iPads as a learning tool for K-12 students to the rise of AI-based teaching assistants, Reach Capital has financed companies that have helped teachers and students use these devices and technologies in efficient ways, she says.
Its portfolio includes Handshake, which helps college students find jobs and is now valued at $3.5 billion, the $1.7 billion on-demand tutoring platform Paper and collaborative coding tool Replit, which recently partnered with Google to build a product similar to Microsoft’s AI-based coding assistant GitHub Copilot. Another highlight investment for Reach Capital is communication app ClassDojo, which is used by 50 million students, teachers and parents.
The San Francisco-based venture firm has funded 120 edtech startups total. Some of them have since been acquired by larger companies like Renaissance, Turnitin and Chegg or have billion dollar valuations themselves.
Spun out of nonprofit New Schools Venture Fund in 2015 by cofounders Jennifer Carolan, Wayee Chu, Esteban Sosnik and Garvey, Reach Capital focuses on seed, Series A and Series B rounds. With $570 million in total funds raised to date, Reach Capital is smaller when compared to other edtech venture firms like Owl Ventures, which has about $2 billion in assets (its portfolio includes Masterclass and Indian edtech unicorn Byju’s) and Learn Capital, which has more than $1 billion in assets and has backed online learning companies Udemy and Coursera.
With a team of 15 diverse partners and employees, Reach Capital has been ranked as one of the most diverse investment firms in the country. Garvey says the composition of her team has helped diversify the founders Reach Capital has invested in.
Of the more than 100 founders that have received money from Reach Capital, nearly 36% are women, close to 16% are Latinx and 4% are Black. In comparison, the industry average is dismal: Last year, women-led startups received just 2% of total capital invested in VC-backed startups and Black founders got about 1%. “People who are writing checks are oftentimes going to have a bias and invest in people that look like them,” she says. “What helps change that is actually diversifying the check writers.”
While Reach doesn’t have a revenue benchmark for prospective companies, Garvey says the firm looks for early signs that a product will be adopted by customers. Sometimes that could mean traction that a startup’s product has received on Twitter, she says. “We want the tools that people are using for teaching and learning to mimic the tools that we use in our everyday lives,” says the MIT and Stanford graduate.
The firm also announced its first founders fund through which 40 participating founders can invest in and mentor founders of other startups. Garvey says the new fund will help create an ecosystem and network for founders and investors. “The goal is to introduce venture capital to a broad set of people who may have never gotten access to this asset class before while also strengthening the ecosystem of edtech entrepreneurs,” she says.
