As Enterprise Capital Runs Dry, Girls Ed-Tech Founders’ Struggles to Increase Funding Come Into New Focus

Amanda Bickerstaff was as distant from the Bronx as you may think about.

It was 2019, and the ed-tech CEO was main an expert studying companies firm in Melbourne, Australia, and was tasked with spinning its service mannequin right into a tech-driven providing -– in addition to discovering the funding to do it.

Remodeling the corporate and elevating funds to do it will be the largest problem she confronted since leaving her job as a biology instructor at a struggling public faculty within the Bronx 12 years earlier. It was there she noticed a few of the system’s most urgent issues firsthand and was pushed to make a bigger influence within the instructing and studying area.

However now she was up in opposition to a brick wall.

Bickerstaff wasn’t only a CEO who occurred to be a girl, she was the CEO of an organization with three founders who additionally occurred to be girls. And all 4 of them got here face-to-face with the real-life expertise typically represented by stark statistics, like the truth that solely 2 p.c of enterprise capital within the U.S. went to all-female based groups in 2023.

The group confronted the identical dynamics in Australia, the place simply 4 p.c of smaller-scale enterprise exercise was directed towards solely women-founded corporations in 2023, per a state of the trade report. On the time Bickerstaff was elevating funding in 2019, the determine was lower than 1 p.c.

Girls within the training sector are outnumbered in management positions by their male colleagues. Within the first story of this two-part collection, EdWeek Market Transient explored the hurdles girls face in trying to rise by means of their organizations, and the way some executives have overcome these obstacles.

However the challenges for ladies within the training trade don’t finish after they attain the C-suite. Many additionally say they face tough odds — and in some circumstances, open skepticism about their management talents — through the vital strategy of trying to lift capital essential to develop their corporations.

This story explores the fundraising journeys of girls in management positions of training corporations, and the way they broke by means of.

Prying Open Doorways

Bickerstaff had grown accustomed to what she seen as patronizing feedback and dismissive attitudes from buyers. One potential funder made some extent to critique Bickerstaff’s management after getting a glimpse of her packed schedule.

“He stated, ‘Nicely your calendar is actually messy, that’s an indication of a disordered thoughts.’” Bickerstaff recalled. “That is somebody who was going to take a position. I used to be simply so greatly surprised.”

The identical potential investor additionally predicated a minor $50,000 funding on the corporate making main operational adjustments, she stated.

Regardless of the headwinds girls entrepreneurs face in elevating capital, manyfounders have risen to management positions within the Ok-12 trade, achievements that a few of them, like Bickenstaff, hint partially to the foundational understanding of colleges they gained as classroom educators.

The outlook for ladies founders attempting to lift funds to gas these concepts nonetheless, is in danger. Throughout all industries, the proportion of girls securing enterprise funds has dropped to simply 2 p.c in 2023, the bottom it’s been since 2016 in line with Pitchbook, erasing small good points seen through the peak of tech funding growth within the late 2010s. Almost 21 p.c of funding went to groups with each female and male founders, and the remainder went to solely male groups.

Total, the training trade is experiencing a dramatic contraction in enterprise capital funding, with complete {dollars} invested dropping to $1.8 billion globally — the bottom fundraising complete in a decade —down from $3 billion in 2023, in line with the analysis agency HolonIQ.

The panorama has additionally grown harder as a result of districts throughout the nation are slashing budgets to satisfy monetary shortfalls after federal ESSER funding ends, leaving them with far fewer {dollars} to spend on startups’ merchandise.

The tip outcome? An training trade the place most of the individuals who have a deep understanding of its most urgent issues and revolutionary concepts about how one can to deal with them have fewer avenues than their male friends to carry these options to life.

The Bootstrapping Possibility

Anne Spear is within the thick of it.

Because the CEO and Founding father of Plan Ahead – an early-stage startup that works to assist small Ok-12 districts develop, execute, and monitor strategic plans — she has bootstrapped her firm to a degree the place she’s discovered product market-fit. Reaching that milestone is commonly a prerequisite to securing funding from ed-tech buyers – and for Spear, it’s now setting the stage for a funding spherical within the close to future.

She’s additionally going into the method totally conscious of the obstacles that ladies face in securing investor help. As a tutorial researcher, Spear has studied gender and training, and gender and management, and is aware of the statistics properly.

“There may be deep, deep structural racism, sexism, and ageism within the startup area,” she stated, pointing to knowledge on the small portion of VC funding going to corporations led by girls.

Spear, who helped construct out training analysis and consulting agency Hanover Analysis’s strategic planning advisory enterprise, created Plan Ahead after she noticed how tough it was for the small districts to afford to create correct, evidence-based strategic plans and implement them successfully.

“There was actually an ‘Aha!’ second after I was attempting to consider how one can higher facilitate bringing in knowledge into [district strategic plans] in order that they have been extra correct, and I simply realized that expertise might do it,” she stated.

She launched the corporate in the course of this 12 months with lower than $35,000 in working capital. The progress the startup has made in securing district purchasers means she’s set to not solely break even, however exceed her early targets.

“That’s enormous, particularly as a result of we’re very a lot a product that’s priced to small districts,” she stated.

Reaching these targets, nonetheless, has required exhaustive work and sacrifices on behalf of her group, Spear stated, and he or she’s wanting towards fundraising as a solution to create a extra sustainable operation shifting ahead.

“Financing can typically really feel like a short-term downside, however it units up who you might be, the product you’ll have, and the kind of firm you’ll be. So we’re very diligent about that,” she stated. “We’re a fierce group. We aren’t a determined group.”

Whereas she is aware of elevating cash in ed tech could be a wrestle for any firm founder, she stated she has skilled and understands the “-isms” in launching an organization. However she chooses to not concentrate on them.

A detailed mentor of Spears as soon as instructed her that she didn’t know what a room stuffed with males considered her when she walked right into a room – and he or she didn’t care.

“‘I stroll into the room, and I’m myself. And that’s labored for me,’” Spear recalled the lady saying. “I’ve adopted that.”

Lakshmi Balachandra, a Babson School professor who research entrepreneurship and its intersection with gender, stated girls founders are anticipated to imitate male conduct traits all through the pitching course of, comparable to having a extra forceful persona.

On the similar time, girls can’t be seen as coming throughout as too rigid or demanding, she stated.

“It’s exhausting if you’re a girl in a management function,” she stated, including that the expertise is twice as burdensome for ladies of coloration who face one other layer of bias, whether or not express or implicit. “You’re strolling a stability beam. There’s no proper solution to be.”

Harder Period for Ed Investing, Total

The enterprise capital ecosystem within the ed-tech area is in the course of a shift post-pandemic — one that would problem the expansion of early-stage startups and efforts by girls founders to safe capital, buyers within the area stated.

Generalist buyers that entered the area through the Covid-era, attracted by low rates of interest and districts’ desperation for tech-centric instruments, are actually exiting, many after being burned by overpaying for overhyped startups that didn’t ship on their lofty targets, stated Amy Nelson, managing accomplice at education-focused VC agency Rethink Schooling.

In some methods, that shift is nice information for ed-tech specialist corporations like hers, she stated, since they’ll have the ability to ink offers with out having to lure founders with unrealistic valuations.

But as a result of skilled ed-tech buyers higher perceive typical outcomes and are going to be disciplined about how they deploy their funds, that would tighten entry to capital, general, together with for corporations based by girls.

There will probably be good corporations that “are going to be capital-starved and should not have the ability to make it, notably those who need to increase type of subsequent development fairness,” Nelson stated.

It could actually assist when girls like Nelson are making choices about which training investments to help.

The extra girls who’re making funding choices, the extra women-founded corporations that get funded, analysis reveals: A Kauffman Fellows report launched a number of years in the past discovered that ladies buyers are twice as prone to again feminine founders

Many ladies main education-focused VC corporations arrived in these positions by way of the teacher-to-entrepreneur pipeline. The training trade stands out amongst different tech-centric fields on the subject of gender parity due partially the massive variety of girls who start their training careers in instructing. Buyers and entrepreneurs within the area stated dominance of that workforce creates a big pool of potential feminine firm founders, who in flip can set out on the trail to take roles as entrepreneurs, CEOs, after which post-exit, buyers.

About 39 p.c of the founders CEOs in Rethink’s portfolio are girls, she stated, and they’re “persevering with to see and communicate with many very robust girls CEOs and founders as we’re fascinated with our future investments.”

The agency doesn’t concentrate on gender-equity quotas, she stated — it invests in nice concepts. And people nice concepts typically come from, and are finest executed by, founders who’re attempting to resolve issues they’ve confronted each day.

“We discover in training that there’s a large quantity to be stated for having expertise,” Nelson stated. “It’s a must to perceive their ache factors. It’s a must to perceive their limitations and the way they consider buying choices.”

She is cautious to warning, nonetheless, that elevating enterprise capital will not be the one path an ed-tech startup can take to develop and scale. Firms which have labored to bootstrap their development, are capable of construct resilience and keep lean, which may finally assist construct a stronger, extra sustainable firm for the lengthy haul, she stated.

Assembly prospects’ wants and bringing in income must be the highest precedence, adopted by constructing fundraising to help these goals, she stated.

“Elevating cash ought to by no means be the objective,” she stated. “It must be in service of the enterprise that you simply’re attempting to construct.”

The Trainer-Entrepreneur Pipeline

Emily Foote is aware of the teacher-to-venture capital pipeline properly.

The accomplice at Osage Enterprise Companions, a Philadelphia-based early-stage VC agency targeted partially on the training area, grew up just some blocks from Metropolis Ave, a predominant site visitors artery in Philadelphia and a visually jarring dividing line between town’s rich Principal Line suburbs and its most under-resourced neighborhoods.

The disparity between the training she obtained within the suburbs, and the dearth of alternatives for associates just some blocks away drove her to pursue instructing, the place she noticed up-close the mammoth points colleges have been wrestling with each day.

Seeking to tackle these points on a broader scale, Foote earned a legislation diploma and began training particular training legislation. On the similar time, expertise was advancing at a tempo the place she might see the potential it held to deal with a few of the extra intractable points she encountered as a instructor.

In 2011, Foote started working with a former professor of hers from legislation faculty who had begun creating a video-based microlearning and evaluation firm with assist from a Small Enterprise Innovation Analysis grant from the Nationwide Science Basis.

The co-founders finally raised greater than $1 million in SBIR grants over a number of rounds to fund the startup, then referred to as Apply. (It was initially based as AppreNet.)

Her expertise within the classroom was invaluable in constructing the product, she says, one thing she sees typically in corporations based by former lecturers.

“There’s a precept we like, of desirous to again enterprise builders which have lived the issue, and so many ladies reside the issues we see in training,” Foote stated.

Apply went on to lift greater than $8.3 million in seed, Sequence A, and bridge funding rounds. It was finally acquired in 2017 after receiving an unsolicited provide from Instructure, which Apply had initially reached out to as a possible investor within the bridge spherical earlier that very same 12 months.

Foote’s success in fundraising and promoting the corporate got here with its challenges, together with these generally skilled by girls.

Previous to elevating certainly one of their rounds, Foote confided in a seed investor and mentor that she was pregnant. The investor, a girl, was fast to inform her to not point out the information to potential buyers.

Foote, not wanting to place her group or fundraising efforts in danger, adopted her recommendation. In the end, the investor the corporate negotiated a cope with supplied a stage of help that was “fantastic,” and was conscious of the being pregnant earlier than time period sheets have been signed, Foote recalled.

Now, as an investor, she faces completely different dynamics, together with being one of many solely individuals on her group with out an MBA or a monetary consulting background, each of that are frequent within the VC world.

She tries to lean in on her distinctive strengths and push past her personal, preconceived limits.

“I’ve to remind myself to not attempt to assimilate to different individuals’s strengths, in order that I really feel comfy in a room of sameness after I’m the opposite,” she stated.

Constructing Their Personal Networks

As a substitute of attempting to interrupt into the previous boys membership, Foote and different girls within the ed-tech investing area have labored to ascertain their very own: ElleCap.

ElleCap is a community of girls within the training investing area who collect with the only real goal of scaling influence for the businesses and entrepreneurs they work with, stated Foote, who has helped arrange ElleCap.

It was based out of a casual gathering on the ASU+GSV Summit, and has grown to a corporation of greater than 200 individuals who get collectively at trade occasions to community, share concepts, and construct enterprise alternatives.

Networks are “an enormous half” of being profitable in securing funding, she stated. ElleCap has greater than delivered a return on the time she’s invested into it. By individuals she’s met within the group, she’s secured offers, related her portfolio corporations to development buyers, and obtained worthwhile recommendation and help.

The ladies who belong to the group “count on nothing again however will assist one another,” Foote stated. In a “very aggressive trade,” it’s a community that delivers “experience to raise one another up.”

Deborah Quazzo, managing accomplice of GSV Ventures, got here up in an period the place, for ladies entrepreneurs and buyers alike, there simply “actually wasn’t numerous mentoring,” she stated.

Her intuition, and that of many ladies within the training sector, is to be useful and promote others who’re attempting to clear the identical profession hurdles that they as soon as did.

“Actually we see in training there’s a really pure tendency of the neighborhood to mentor one another and help one another,” Quazzo stated. “And there’s numerous sisterhood.”

For her, the clearest manner for ladies to succeed as founders and finally make a leap into investing if that’s their objective, is to construct profitable corporations.

Rising and scaling a startup within the Ok-12 area has by no means been simple, she stated, and present market circumstances make the duty much more arduous. However the successes she has seen have come as a result of girls founders and leaders delivered outcomes for his or her buyers.

“I feel equality comes with returns,” she stated, “and returns are onerous in training.”

Bickerstaff, the ed-tech CEO who beforehand ran the Australian startup, is attempting one thing new along with her newest enterprise.

After leaving Australia and her CEO function in 2022, she spent six months touring earlier than diving again into ed-tech — simply as generative AI was starting to form trade.

Her new firm, AI for Schooling, grew from these efforts and is at present targeted on offering skilled help to districts on generative AI, together with creating insurance policies {and professional} studying plans for educators.

The corporate landed its first paying district buyer in June, and has since labored throughout 33 states, and has helped co-write AI steering for Chicago Public Colleges and Houston Unbiased Faculty District. Its web site providing free AI skilled instruments for districts and educators is approaching 1 million natural visits this 12 months.

Bickerstaff, influenced by her earlier fundraising makes an attempt, has been intentional about not searching for exterior funding, no less than for the second.

For now, she doesn’t need to. AI for Schooling hit $100,000 in income on bootstrapping this 12 months — technically turning a revenue as she and her co-founder delayed taking a wage — and are within the black for the 12 months. The launch of their first business-to-consumer product, a digital train-the-trainer module, was so profitable they needed to shut registration after eight days.

“We have now no exterior, competing priorities, and in addition not one of the nonsense of elevating,” she stated. “To manage your future as an entrepreneur, particularly a feminine entrepreneur, is a extremely optimistic factor.”

Her boss, for now, isn’t an investor, she stated –- it’s lecturers and college students like those she taught within the Bronx.