Impacting Education by Investing in Human Capital
Schools need substitute teachers, volunteers, and professional development
by Dr. Rod Berger
Graham Forman has been an early-stage investor and entrepreneur for almost 20 years and he is the founder and managing director of Edovate Capital. Edovate is a seed and early-stage venture capital company that invests in innovative startups in the education market. They look to partner with people and fledgling companies who have products or services that will transform education, and they have an impressive track record in choosing their investments. He will be a panelist for sessions at the 2019 Future of Education Technology Conference (FETC) in Orlando, Florida from January 27-30. I sat down with Graham recently to talk about the trends he is seeing in the education marketplace, how the startups who are successfully meeting the needs of educational institutions are doing it, and where he sees the education markets going in the future.
Graham says that since the financial crisis, the number of people he has seen who have started their own business has exploded. They have an idea or see a need, and with software and coding experience it doesn’t take a whole lot to get started. “We’ve seen an explosion of mission-driven entrepreneurs in education, which is really exciting,” he says. “I think we’re also seeing more capital invested in education than ever before. Last year, it was well over a billion dollars of venture capital.”
But with that being said, Graham says that it’s much harder if you’re an education technology entrepreneur to raise money at the seed stage or at the Series A stage than it was just three or four years ago. Coupled with the notoriously tightly-funded budgets available, potential customers are wary of unproven programs and untested curriculum. “Somebody who is looking for something that’s already working and already proven might be a customer later,” Graham says. “I would argue that a better early customer is someone who ─ in my lingo ─ is trying to prototype something that is sort of a poor man’s version of what you already do quite elegantly.” If you find a school or district who has already made an in-house investment to solve a problem that they’ve struggled with, but they’re not giving up on trying to solve the problem, and you come along with a more elegant and efficient way to do it, that’s a really good early customer. “But that’s not easy to find,” Graham laughs.
Finding your first customer or two is very difficult, and Graham notes that there are a couple of reasons for that. “Number one, there’s just more startups out there than there were before and there’s not a corresponding increase in capital,” Graham states. “Number two, it might take a little longer to build a professional relationship in education selling to schools and districts. They are a lot different than if you’re selling to consumers or to businesses.” Graham says that they are still very good businesses to build because they tend to be long-term partnerships, but it does take some patient capital to nourish the relationship and build trust.
Graham is of the opinion that to start; it’s smart to take a state-specific approach and concentrate on one regional market. “It’s really hard to get the first customer, and it’s hard to get the second customer, but it’s a little bit easier,” Graham says. “In my experience, once we got to about five in a state, it started to get a little bit easier.” The goal is to make two or three of them highly referenceable, thus building a reputation in the market. “Going from five to ten happens more quickly because you have a track record and reputation in that state, and that helps you sell,” Graham notes. “Those new customers have peers that they trust and will give and take recommendations.”
Right now and into the near future, Graham says the most significant growth he has seen is around the theme of human capital and the shortages in it. He says he’s seeing it all across education right now, pockets where there are not enough qualified people to do the work. School districts, both rural and urban, are struggling to get enough substitute teachers, so Edovate invested in an on-demand substitute workforce model company called Swing Education. There are very few literacy coaches and reading specialists for all the readers who need to be reading at a third-grade level, so they made an investment in a company called BookNook Learning, a platform that enables a volunteer to act as a guided reading coach. Professional learning, developing teachers, and the teacher voice in the professional learning process is a huge and still emerging market, so Edovate invested in Kick Up, a company that’s helping school districts get smarter about the types of professional learning investments they make.
“I’m very eager to find entrepreneurs who are focused on those human capital shortages because they’re real across education,” Graham states. “The stats say that 75% to 80% of the money that districts spend is on human capital, and there are all kinds of problems that schools need to address and find solutions for.”
“Education is underfunded,” Graham concludes. “We have a very strong labor market and economy right now. It’s very tight. And that puts school districts, I think, in quite a challenging position when it comes to talent and human capital. They need all the help they can get.”
About Graham Foreman
Graham Foreman is the founder and managing director of Edovate Capital, a venture capital firm that invests in impact-focused education technology companies. He’s also the co-founder of the edGarage, which is a co-working space and services platform for education entrepreneurs. He lives in Denver with his wife and two children and considers himself a fast, strategic thinker and a slow triathlete. Follow Graham on Twitter.
Graham Foreman will be a panelist for two sessions at the Future of Education Technology Conference (FETC 2019) from January 27th-30th, 2019 in Orlando, Florida. The conference will bring together thousands of educators and technology leaders for an intensive, highly collaborative exploration of new technologies, best practices and pressing issues. Registration is now open.
Graham will be a panelist at the following sessions: