New U Venture Partners is getting a new partner. And along with that comes a new name and a broader investment thesis.
The education technology investment firm first launched in January 2020 as a partnership between Western Governors University and EPIC Ventures, and raised over $52 million for its first fund. So far it has made eight investments, mostly in adult and workforce training programs such as coding bootcamp Kenzie Academy and APDS, which provides educational services for incarcerated learners.
In early May, EPIC Ventures transitioned from being a subadvisor that helped manage the fund to a consultant role, says Andre Bennin, managing partner of New U Venture Partners. That necessitated bringing in another person to help him run the show.
The first person he called? Maia Sharpley.
Juvo Ventures co-founder and managing partner Maia Sharpley
Sharpley was most recently a partner at Learn Capital (and the only woman on its core investment team). She joined in 2018 after serving as an executive at different education organizations including Kaplan, Charter Schools USA and the New York City Department of Education, where she worked under then-chancellor Joel Klein. At Kaplan, she managed its online higher-ed business and its edtech startup accelerator, and started a scholarship fund for undocumented students.
With Sharpley’s experience and connections, the firm is also expanding its investment focus to pursue opportunities in K-12 and across the globe. To signal that change, Benin says a new name was also necessary—one less tied to colleges and higher education, as “New U” suggested.
They came up with Juvo Ventures, after the Latin word for helping and supporting.
Through her work at Learn Capital, which is among the most active investors in the edtech industry, Sharpley was a board observer on six of the firm’s portfolio companies. “Her coming onboard brings the missing piece of the puzzle with her expertise in K-12 and early childhood,” says Bennin.
Sharpley, who is now co-founder and managing partner at Juvo, says it will also look at overseas markets, although this effort will not be focused on the usual suspects in China and India, which are already home to many highly-funded edtech startups.
Juvo is still investing out of the original $52 million that was raised, and is in the process of raising a bigger fund. For now, it will continue to invest between $1 million and $5 million in companies raising Series A and later stages, as was the case when it was operating under the old brand.
Asked about her decision to join Bennin, Sharpley says “it wasn’t about leaving Learn, but about going toward Juvo… Being able to start something new and build it from scratch was what really excited me. It lets me scratch that entrepreneurial itch.”
Juvo Ventures co-founder and managing partner Andre Bennin
With Sharpley and Bennin at the helm, Juvo Ventures joins the ranks of new minority-led venture capital funds to emerge in the education sector this year. Zeal Capital Partners, which has committed to making diversity core to its investment thesis and activities, launched last month. Juvo does not have such an explicit mandate, though Bennin says that “the makeup of our team will lead to decisions that will help underserved founders.”
Western Governors University, which remains the biggest investor in Juvo Ventures, signed off on the changes. “Talent is equally distributed, but opportunity is not. That is true for learners, and it’s also true for entrepreneurs, many of whom have been overlooked by venture funders because they don’t have the traditional profile,” said WGU president Scott Pulsipher in a statement.
Wary of ‘Potemkin Village’ Valuations
Spurred by the adoption of digital tools as schools closed and students are learning at home, the edtech industry this year has been flush with private capital, new and old. Established edtech investors are raising new funds—sometimes two at once. A surge in new users, accompanied by revenue, has helped companies raise more money—even those that already hit “unicorn” valuations. That in turn has attracted new funders who were once wary of the education market.
Through October 2020, education and workforce-development companies across the world have raised $10.3 billion in venture capital across 505 deals, according to a report based on Pitchbook data. Those numbers already dwarf full-year totals from previous years.
An influx of new capital is always welcome by venture capitalists. But having seen bad bets in the past, Sharpley says she is concerned about the “frothier valuations” that have accompanied some of the deals they’ve seen. “You have to fundamentally understand the different sub-sectors of education, understand how they are regulated. Business models matter. Unit economics matter.”
“There may be some Potemkin Villages out there, and you have to look under the hood to make sure that you’re not overpaying,” adds Bennin, who previously led investment activities for Strada Education Network.
Sharpley says she’s personally interested in the early-childhood market, which has been in the spotlight and is increasingly garnering public support, but where many service providers are struggling to stay afloat. Venture-backed startups in this vertical have had to downsize and close shop shortly after the pandemic hit.
One of the problems may be a misalignment between investors’ expectations and the market reality. “Early childhood is heavily underinvested, but I think we really need to understand and explore what business models work,” she says. While a handful of companies are thriving, she notes, “for the most part the business models that generate the returns that venture capitalists prefer—they’re not quite there.”
source: Read More, EdSurge Articles