2024 may end up being the year of the venture studio for the edtech industry. Just as accelerators became all the rage back in 2010, education venture studios seem to be the latest trend in 2024.
Half accelerator and half incubator, venture studios (sometimes called startup studios, innovation studios, or innovation labs) are organizations designed to help early stage ideas, companies, or products take flight, surrounded by a rotating cast of subject matter experts.
Here’s one description of what venture studios do from the venture studio Atomic VC:
“We found and fund companies: Atomic brings ideas, capital, resources, and talent together—partnering with co-founders to build the best ideas into great companies.”
In some cases, venture studios have preconceived ideas about the companies they want to exist in the world, and then they basically recruit founders to start them. In other cases, venture studios lend significant resources to build, finance, and accelerate the growth of startups, usually acting in a far more hands-on way, and over a longer period of time, than traditional accelerators.
In 2020, we were only aware of a handful of venture studios relevant to edtech: Entangled (acquired by Guild), Cambiar, and the AI Fund. But in 2024, at Edtech Insiders, we’ve been tracking over a dozen venture studios, many of which are popping up this year in tandem with AI’s holy sh*t moment.
Simultaneously, a good number of edtech accelerators have shut operations, including: Socratic, Startl, Imagine K12 (a YC offshoot), and Kaplan’s Edtech accelerator (powered by Techstars). And, for a deep cut, does anyone remember the edtech games accelerator launched by Zynga and New Schools’ Venture Fund called Co.lab? It happened.
Edtech Venture Studios: Why Now?
The edtech sector, especially in the context of the current wave of AI innovation, has several needs that the venture studio model can help solve, as well as specific advantages that the model can provide. These include:
Diverse Teams to Scale Impact
Scaling impact in education (arguably the core goal of most edtech) requires tight, cross-sector, functional collaboration, including product, business, education and R&D. The emergence of education venture studios is driven by the recognition that expertise from different domains is necessary for successful innovation in edtech. Venture studios serve as hubs where early-stage ideas, companies, or products can thrive with the guidance of multiple subject matter experts from diverse backgrounds.
DistributionAdvantages
Distribution is increasingly important to any startup, especially at the earliest stages, and a venture studio with distribution advantages can help a venture succeed and compete with incumbents. Studios with connections to students, teachers, schools, charter networks and school districts offer a significant advantage in terms of co-developing edtech products, getting early users to facilitate rapid iteration, and, perhaps most importantly in today’s profit-centric environment, gaining traction by reaching their target audience faster.
For example, the Edtech venture studio Array is founded by Norman Atkins and Dave Levin, two hugely influential figures in education with direct access to multiple charter networks, like KIPP (co-founded by Levin) and Uncommon Schools (founded by Atkins).
AIAllows Faster and Cheaper Companies
Artificial intelligence, among countless other disruptions, has significantly reduced the barrier to jumpstart new products and companies, allowing a venture studio to help build companies with far fewer resources needed (especially human resources, and potentially funding) - see our piece on “MicroCompanies”. Advancements in AI continue to accelerate the underlying innovations that can accelerate growth, from agents who can autonomously develop products/software and entire companies to AI influencers (the underlying tech) that can market products.
More Flexibilityto Engage
Flexibility is an advantage that studios have in both who they serve and how they operate. Education venture studios provide a supportive environment that enables early-stage ventures to explore and test new product ideas without the same constraints typically found in traditional accelerator programs.
Studios, unlike some traditional VCs or accelerators, have the flexibility to serve ventures at various stages from just an idea to an already scaled venture working to test new product ideas
Studios don't have the same aggressive timeline, equity requirements, and batching as a classic accelerator "program”
This makes venture studios more flexible in how and when they choose to focus on incubating an idea, providing studios the ability to maximize opportunities around founder, timing, market conditions and more.
Operate at a Lower Cost
Compared to incubators, education venture studios offer a cost-effective option for entrepreneurs. Studios can operate without the same overhead due to the flexibility of their programming (for example, not needing to run structured programs that batch founders) and low technical operating cost. They eliminate the need for the extensive infrastructure and resources that are typically associated with incubators, thereby reducing the financial burden on startups. This affordability factor makes venture studios an attractive choice for those looking to launch their ventures without incurring significant expenses or seriously diluting their equity.
Cultural Momentum
Venture studios sound cool and are having a moment.
We’re not saying people are starting studios purely for that reason, but the idea of venture studios seems to have captured the zeitgeist for founders, investors, operators, and others, witwith the number of startup studios in all sectors doubling to nearly 900 between 2018 and 2023.
Edtech Venture Studios to Watch
In the edtech space, we’ve been following a number of interesting venture studios (and innovation studios, and innovation labs), several of which have spun out of larger education organizations. Here’s a list of organizations that have caught our eye:
Cambiar Education: Non-profit venture studio founded by Christina Heitz focusing on educational equity (full disclosure, Alex and Ben are advisors at Cambiar)
LearnerStudio: Non-profit edtech venture studio founded by Kim Smith (also incubated at Cambiar)
Diffusion Venture Studio: Venture Studio run by Henry Hipps and Peter Bergman, PhD, focusing on scalable Education & Workforce technology ventures (incubated at Learning Collider)
Next for Startup Founders: Venture studio (they call themselves an accelerator) run by John McDonald with a focus on family choice and designed for underserved founder communities
Promise Venture Studio: Nonprofit venture studio run by Gabe Hakim, focused on early childhood.
Array Education: Innovation Studio run by Norman Atkins, Dave Levin and Eric Scott Lavin (Uncommon, Relay, KIPP), focused on “prepar(ing) young people to pursue paths of their choosing post high school”
Blue Ridge Labs: Nonprofit innovation lab focused on combating poverty (Spun out of Robin Hood Foundation)
Workshop Ventures: For profit venture studio founded by Simplisafe founders Chad and Eleanor Laurans focusing on scalable impact in education.
Brass Ring Impact: Investment firm and venture Studio led by former Edtech CEO Miriam Altman-Reyes, focused on helping underrepresented founders closing global equity gaps in educational, workforce, and economic attainment., entrepreneur who formerly built Kinvolved (exited to Powerschool, announced in 2022)
AERDF: Nonprofit organization, trying to model itself after the Defense Advanced Research Projects Agency (DARPA) except in Education, founded by Auditi Chakravarty and focusing on research-based innovation, including supporting companies.
AI Fund: For profit venture studio founded by Andrew Ng that creates AI companies, including some notable companies in Edtech such as Workera and Fourthbrain.
Entrepreneurs reading this may be asking themselves whether a venture studio is a good fit for their companies. Ultimately, this is a very personal decision — potential entrepreneurs should weigh mission fit, team chemistry, and launch angle — to what degree will a studio experience deliver leaps forward around growth, product, or business model? After all, at its core, the idea is that venture studios should derisk ideas and increase the likelihood of success, but this depends strongly on the particular advantages of any given studio.
There are also a wide range of equity / investment structures involved in venture studios- some studios take no equity and provide no direct funding, while others include seed funding and an equity stake. Compared with starting on one’s own, studios can be a great place for founders to build conviction, leverage a team of experts, and test the market.
Venture Studios Outside Edtech
Of course, the vast majority of venture studios are outside of edtech. You can check out a list of dozens of studios in several fields at the link. Most take a sector-specific thesis (like fintech or healthcare, etc) with the goal of leverage go-to-market, compliance, and talent advantages.
Some studios have even attracted a large amount of external capital and brand name investors, like Atomic, founded by Jack Abraham, which has raised $750 million to date and includes notorious investors like Peter Thiel and Marc Andressen.
But, it’s worth taking a quick jaunt outside of our sector to explore a couple of different models of venture studio:
Thesis-Driven Venture Studios
Both Idealab and SHV take a deep thesis and idea-first driven approach to incubating ideas.
Idealab
Started by Bill Gross over 25 years ago (in 1996, before the dot com bubble), Idealab was one of the early venture or startup studios; in its history, it has explored over 5,000 ideas, resulting in 150+ companies (including the likes of Twilio and Coinbase) and 45+ exits. To learn more, here’s a great video series of 25 lessons they’ve learnt about startup incubation from the last 25 years.
Sutter Hill Ventures (SHV)
Sutter Hill Ventures also has an incredible track record of incubating companies. A venture firm originally founded in 1962 by Bill Draper and Paul Wythes, SHV began incubating companies when Mike Speiser joined and has since incubated companies with over $100 billion in value, including Snowflake, Pure Storage, Sigma Computing and more. Here are two excellent posts detailing their focused approach to incubation and track record: one and two.
Founder-First Venture Studios
Founder-first strategies focus on finding high potential individuals and empowering them to build outstanding companies.
Antler (2017) and Entrepreneur First (EF, 2011) took a founder-first approach, with a bet that a community of founders can spark new ideas & companies.
When Alex and Ben actually first met at the now defunct OnDeck, it was actually known for its sector agnostic founders program
And today with the rise of micro-companies (see prior edition of EdTech Insiders) more studios are betting that great founders can find traction in multiple verticals, potentially at the same time!
Venture Studios: What’s Next?
The impact potential is high for venture studios, but the investment model can be significantly more challenging for venture studios as they often have far less equity in the new ventures. It’s likely that most venture studios that will succeed financially will be philanthropically funded or closely tied to other successful business models or organizations.
Our best guess is that a few venture studios will join Cambiar as enduring organizations with a compelling track record of success, just as we’ve seen a handful of accelerators and incubators sustain and scale.
To succeed, we believe education venture studios must:
Have a Strong Thesis: Have a very strong thesis at the intersection of product, business model, distribution, defensibility and impact.
Have Access to Talent: Have very strong networks and ability to attract top-flight founders and talent.
Be Opportunistic: Incubate and invest opportunistically across the pipeline of opportunities that they build and are exposed to.
Take Advantage of their Operating Model: Leverage their flexible model and advantages over incubators and AI to run lean while incubating their first ventures and building a track record.
Craft Investment Terms Carefully: The terms must be attractive to founders as well as to follow-on investors, while still leaving enough for the studio to be commercially viable.
Lastly, we believe the most successful edtech venture studios will focus, focus, focus.
That means potentially focusing on spaces where studios have the greatest advantage when it comes to thesis, access to talent and advising, or distribution opportunities.
That means potentially focusing on fewer ideas at once (especially at first), or on a specific niche within the wide world of Edtech.
As the Venture Studio landscape evolves we will keep you updated, and if you are interested in joining one of the studios above, please tell them EdTech Insiders sent you!
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Upcoming Event: Common Sense Summit on America’s Kids and Families
On January 28-30, Common Sense Media will host the inaugural Common Sense Summit on America’s Kids and Families, a national conference taking place on Pier 27 in San Francisco. The Summit will bring together advocates, researchers, policymakers, and other experts to take stock of America’s kids and families and explore solutions to the most pressing issues across four topic areas: kids and technology, youth mental health, and early childhood and K-12 education.
Speakers include Founder and CEO of Khan Academy, Sal Khan, President of the Harlem Children's Zone, Geoffrey Canada, and former Secretary of State, First Lady, and lifelong child advocate, Hillary Rodham Clinton.
Learn more about speakers, event details, and register to attend at the link below.
Common Sense Media has been generous to offer Edtech Insiders community members free registration to this conference! Use discount code “CSCOMP” at checkout for free registration! We hope to see you there!
This edition of the Edtech Insiders Newsletter is sponsored byTuck Advisors.
Tuck Advisors is a trusted name in education M&A. Founded by serial entrepreneurs with over 25 years of experience starting, investing in, and selling companies, we believe founders deserve M&A advisors who work as hard as they do. If you receive any UFO's™, unsolicited flattering offers, be sure to reach out to us at confidential@tuckadvisors.com. We can help you determine if it's a hoax or if it's real.
A bipartisan set of legislators introduced an “Artificial Intelligence Literacy Act” in Congress this week as an update of the Digital Equity Act of 2021.
The bill sets the stage for a national movement (and a number of grants) going to the emergent field of “AI Literacy”, which attempts to counteract the imminent AI skills gap by improving equity of access to AI opportunities to both teachers and students, often through universities, K12 schools, libraries and nonprofits. (link)
The Congressional definition of “AI Literacy” as defined in the recent bill
The bill outlines potential grant opportunities for schools, community colleges and other educational organizations, especially those serving underserved populations.
K-12 grant opportunities include:
“to provide teachers training and certification to support artificial intelligence literacy efforts in schools”
“to facilitate the attendance of teachers at professional development courses, workshops, and conferences related to artificial intelligence education, including professional development related to artificial intelligence course design and fee-based professional development;”
“with respect to schools without resources for computer science education, to use best practices to develop and design computer science course materials needed for artificial intelligence education; “
“to support partnerships with the private sector to facilitate artificial intelligence education”
“to equip schools with labs to provide students hands-onartificial intelligence learning experiences;
“to develop virtual learning platforms that facilitate remote and individualized artificial intelligence education opportunities”
2. Powerschool Goes to India
US Edtech powerhouse Powerschool seems to be doubling down on its presence in India, both from an infrastructural and hiring perspective (link)
3. Gen AI “Shaking Up” Edtech: Morgan Stanley
Morgan Stanley suggests that Generative AI has the potential to ‘shake up’ education. (link)
“Generative AI could actually enhance the overall learning experience, by cutting down on administrative work and maximizing human interaction, as well as by reskilling or upskilling workers whose jobs have been affected by the technology,” says Brenda Duverce, an analyst on the Morgan Stanley Sustainability Research team. “These and other efficiencies could bring $200 billion in value to the global education sector by 2025, which could ultimately translate to higher revenue and lower costs for the best-positioned EdTech companies.”
This is a rare occurrence for Edtech companies indeed, in which the only Edtech ‘celebrity’ CEO that tends to be featured in popular media is Sal Khan (and once in a while, Chip Paucek or Jeff Maggioncalda). One read: Meta is working overtime to get the word out about the new Oculus Quest 3 and what it can do, and education is one of the verticals they are featuring- and specifically, Immerse, which makes a great poster child for the space.
5. 2024 Predictions from the Talent Lab
The good people over at the Talent Lab substack put out a nice ‘predictions’ post this week, with predictions from AI to K12 to HE to IPOs. Definitely worth a read!
An announcement from friend of Edtech Insiders Hailey Carter of the Edtech MBA Fellowship and Owl Ventures:
Edtech MBA Spring Fellowship
Are you an edtech company? Do you want to gain access to top, edtech-focused MBA students for a Spring'24 ten-week, high-impact project for your company?
135+ edtech-dedicated MBA and graduate students have already applied - excited to work for a company like yours to drive growth and impact in the edtech industry! Many are former educators and school leaders, who without access to edtech companies through the fellowship, may have their resumes overlooked. (Hailey, EdTech MBA Founder & President, experienced this first-hand.)
We understand time is our most limited resource. We only have ~4,000 weeks in our lives, but this fellow may change the trajectory of your business, and you may change their life. Consider spending <1.25% of your work week with a Fellow - this is all it takes to change a life (30 minutes / 40 hours - and we all know you work more hours than that 😊)
Kai Frazier is a former educator and the founder of Kai XR. She emphasizes the potential of augmented and virtual reality in education to close the opportunity gap, especially in under-resourced communities. Kai XR provides a platform where students from various backgrounds, including juvenile detention centers, can take virtual college tours, learn about advanced science, and explore historical figures.
Kai's Journey and Motivation
Kai's motivation stemmed from her experiences as a middle school history teacher, where she identified a stark gap in access to educational resources. The idea for Kai XR originated from the challenges her students faced in accessing field trips and the limited technology available in schools.
"I saw two huge problems. One, it was very challenging to get my students to visit field trips...and my school had very limited tech." - Kai Frazier
The Evolution and Impact of Kai XR
Kai XR evolved from an idea to a full educational platform offering 100+ virtual field trips aligned with educational standards. It includes a maker-space where students can create their virtual models, enhancing project-based learning across various subjects.
"Now (Kai XR) has evolved into a full educational platform where students can go on 100+ virtual field trips…" - Kai Frazier
The Role of Educator Experience in Kai XR
Kai emphasizes the importance of her background as a teacher in developing Kai XR. She believes that many tech tools overlook fundamental pedagogical principles necessary for effective learning. Kai XR integrates these principles, ensuring the technology serves as an enabler rather than a replacement for foundational learning strategies.
"As a teacher, I am very clear that these Metaverse technologies, they are a tool... a lot of these tech tools really throw (teaching principles) away and start completely new." - Kai Frazier
Challenges and Opportunities: VR in Education
Kai XR's approach to integrating VR into education is about balancing technological innovation with educational needs. The platform is designed to be teacher and student-friendly, promoting engagement and critical thinking. Kai stresses the importance of having structured and contextualized VR experiences that align with educational goals.
"Everything's standards-aligned... it really increases classroom engagement for students." - Kai Frazier
Future Aspirations and Advice
Kai is optimistic about the future of VR and AR in education. She advises educators to keep abreast with technological advancements and consider the practical implications and opportunities these technologies offer for enhancing education.
"How do we apply (VR/XR) to the world that we live in?... I think the kids deserve opportunities to think for themselves and see how they can apply the technologies." - Kai Frazier.
Curious to Learn More?
You can listen to our full interview with Kai Frazer, as well as interviews with many other edtech founders, investors, and thought leaders at The Edtech Insiders Podcast! Check it out, and as always, we’d love to hear what you think!
Our latest reporting on funding, mergers, and acquisitions comes from Matt Tower’s publication EdTech Thoughts. Matt does an incredible job of covering the latest funding, news, industry updates, and more! If you love Edtech Insiders, be sure to subscribe to Matt’s newsletter as well.
