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I'm going to really quickly introduce you to who Owl Ventures is,
why we're excited about what we're doing, and
then highlight a few companies that I think speak to the agenda today.
But I won't dwell too long.
So we're a venture capital fund that invests exclusively in education
technology at 600 million under management that makes us the largest in the world,
which is exciting to us.
And tragic for
[LAUGH] the volume of dollars going into education innovation, right?
It's massively underfunded in our opinion.
Firm was founded in 2014, we work with stereotypical LP's,
we do not call ourselves an impact fund, though we track the social impact
outcomes, and we'll talk more about that in a second with incredible rigor.
Though the comments that Roy was making around the dangers of
branding yourself as impact are very real.
So we do not do that.
We're a typical venture capital fund we invest 5 to 35 million
on initial checks we lead series A, B and C rounds.
We joined the board of every company we back.
We back 33 companies to date.
We're a small team, everyone from here up is an FTE at our firm.
These are advisors we work with.
Last four people we are hired are, three or four are first-generation immigrants.
We take diversity very seriously.
It speaks to the end audience, the customers have the link back up.
It's my perspective that if you have a board of directors that is not
representative of the end users of the company's product,
you're doing a disservice or you're going to have profound blind spots.
So we work hard to emulate that.
There are clear benefits to being a sector focused fund,
especially in a market as nuanced as K 12 education.
So, needless to say, it's not a big surprise to us that generalist
adventure funds aren't flooding in to fund K12 curriculum companies.
It's a very hard market, there is big benefits to being focused on it.
That being said, we work, these are the logos of firms that you all will
recognize that have followed us into our deals.
So we are attracting the best investors in the world to inch their
way into the space, which is a big win, in our perspective.
There are benefits that accrue to being a sector focused fund,
one is sourcing advantage and in two is a very profound information advantage.
When we look at a K through five, adaptive math learning platform.
We've looked at the 65 others and we can hold their outcomes claim in
context to the incumbents and their competition.
And we're not wasting time re-learning that every time.
So there's a lot of reason why sector focused funds make a lot of sense.
I'm a big believer in that.
Okay, why are we doing this?
If we look at the total volume of capital being spent on an annual basis
globally in education, it stands darn close to healthcare spending.
About six and a half trillion will be spent on education globally in 2019.
That's adjacent to somewhere between 8 and 10 trillion spent globally on healthcare.
If you think of the market cap creation that that 8 and
10 trillion of healthcare spending has generated for the healthcare space, and
you hold education as a similarly scaled, same ZIP code of total spend, the market
cap creation education is completely irrelevant when held next to healthcare.
That is weird and that's going to change.
That's our perspective.
That's our investment thesis.
EdTech is massively complex.
This is meant to be complicating [LAUGH] The sub sectors and
expertise that one would need to have to invest casually in EdTech.
We think makes it almost it's very challenging sector to slowly
wade your way into, hence the need for sector focused funds.
That being said, these broad themes that are pervasive in venture speak
today digitalization, personalization, talent, data and AI.
Our portfolio is crossing all of these broad technology company themes.
Really quickly a few of the catalyzing data points reasons why today is
a great time to be investing in this space.
98% of American classrooms have broadband that's a low number.
It's probably higher than that today.
This is new, right?
This is less than 10 years old.
10 years ago, I would venture to say that number of sub 5%.
E-rate as Peter alluded to, this was under the Obama administration.
They determine they could dip into this e-rate pool of funding which is
a tax on all of our telephone bill to extend telephone lines in a rural
communities where there was no economic rationale to do that.
That pool of money has built up and that was used to underwrite and
subsidize broadband deployment in every classroom in America.
That has happened.
So the infrastructure to deliver software at scale to schools is done.
This stat is shocking.
30% of graduate students take courses fully online.
Again, I would venture to say 10 years ago that was sub 5%, probably sub 1%.
That's a big and
undeniable phenomenon that is broadening access to elite education.
If you are a family caregiver in Phoenix, Arizona,
you can now get an MBA from the University of Michigan online.
That's an amazing thing that is now new and happening.
And then this, this is sort of a throwaway comment, but
It's very relevant to how we think about training.
This sort of more than most jobs available on 23rd 2030 don't exist today.
I don't have hard data to back that up, but it's something that we
subscribe to as we get too prescriptive on where we're training folks.
This is what's happening in the post E-rate world.
What is happening to the existing publishers over the last five years?
What's happening to some of our startups on the right?
Pearson, the largest curriculum company in the world last year sold their US K-12
curriculum business.
They're exiting the market.
That's how bad it has gotten for them.
HMH similar implosion, McGraw Hill just merged with Cengage that's an admission
of failure basically, for those of us who are in the market.
The publishers are dying quickly.
These startup companies that are accessing the market in different ways,
as a byproduct of teachers being able to discover product schools being able to
adopt product very quickly, easily.
Software companies are booming.
[COUGH] And the market's responding, right?
So, no surprise, Amazon is not going to roll over and
let Apple own distribution of content in schools.
Google is not going to roll over and let Amazon or
Microsoft dominate this market, right?
So, it's our belief Microsoft, Google and Apple have all within
the last 18 months launched hardware specifically for use in schools.
Chromebook being the dominant device.
It is our belief that they're the core assets to fight
over in in EdTech will be content and software.
So while these companies haven't gone out and
bought a bunch of software companies yet.
Certainly the financial investors in the world, the TPGs, the Carlyle Group,
the Silverlakes of the world are betting they will.
I would venture to say there's not a private equity firm in the world that's
not looking hard at education right now.
Many have put their foot in the ground with billion dollar platform.
Initiatives already we sold a company of Carlyle Group last year we
sold a company CPG last year.
The row in the middle of these are some of the publicly traded at tech companies that
again, all of those are new IPOs.
Two more slides and we'll talk companies.
[COUGH] The talent that's coming into EdTech is fundamentally different
than it was five years ago.
So Sue Decker is fun example to talk about.
President CFO of Yahoo she launched a EtTech company last year.
Matt Glotzbach the number two person at YouTube in charge of their subscription
monetization business model left to go become the CEO Quizlet and on and on.
That's a trend that's coming and continuing.
International when we started our fund in 2014, we were totally US focused.
It was our belief that this EdTech ecosystem would
gravitate towards Silicon Valley as the types of talent would be local.
We're seeing that to not necessarily be the case,
our portifolio is probably 40% Silicon Valley,
the rest equally scattered throughout the US and now globally.
I think an interesting phenomenal to note.
One more thing I'll say EdTech is not just curriculum and assessment.
Hazel Health is putting telemedicine portals in K 12 schools and
showing massive reduction in apps and student populations,
particularly chronically absent students.
It's a good example of healthcare overlapping with EdTech.
Raise me they are a scholarship discovery platform.
Average scholarship discovered by students on that platform last year was $26,000,
that's the average.
Many students are discovering free full rides that they would otherwise not
tap into.
So long winded way of saying these other very hot and
ventured categories are now benefiting students in schools.
[COUGH] This is our fun performance.
It's relevant.
I'll talk about a few, if you guys were LPs, we'd spend a lot of time on that.
But, [LAUGH] I'll talk about a few companies that I think speak to
the initiative of the conference.
One company we backed out of Houston, Texas.
This is a create a science curriculum business that
was spun out of Rice University called accelerate learning.
They are delivering superior science curriculum for
less than 25% of the cost of a textbook.
And so it's an example of student test scores on their state star exam in Texas.
This is the the summative exam for science in Texas.
Seven percentage point lift across our students at a fourth of the cost, right?
So that's one example of how we're impacting students at scale.
A Mirror technology, Picture and Amazon Alexa that listens to second graders read.
Every second grader in the United States will have doubles exams
done which Is an evaluation of reading progress at second grade,
which we know is a very important indicator of of student success.
This device can do that using Amazon Alexa style technology and
eliminates error, it eliminates bias, which is rampant for that test and
as a result, it's catching students that need interventions early.
Impossible to do without technology.
Hazel health I mentioned that one that is putting telemedicine portals and
US K 12 schools, [COUGH] predominantly urban schools and so
they are extending full doctor healthcare into communities that otherwise
would have very little or very expensive access to that healthcare.
The impact on student attendance is dramatic, so
dramatic that it makes it an ROI positive investment for the school district.
It's an amazing company.
Another company Labster, this is a company that's
building virtual wet chemistry and biology labs.
So if you want to become a scientist,
one of the gating factors to becoming a scientist is 10s if not 100s,
mostly per scientist, hundreds of hours in physical wet labs.
Those facilities, minimum $10 million CapEx investment in most cases and.
Stanford labs will be well over $100 million CapEx investment.
If you're born in Africa, South America, most of Asia,
you don't have access to white labs and you're not going to.
And so this is a way to deliver that type of education to places that otherwise
wouldn't have access to it.
And then last company I'll talk about, I mentioned it briefly,
is a company called Raise Me based in San Francisco.
2 million high school students are registered on Raise Me.
What it does is it allows a student starting in ninth grade to build.
I like to think of it as a LinkedIn profile but
call it an achievement profile.
I am a caretaker for a family member, I work a job, I got these grades,
I did these activities that will algorithmically unlock scholarships that
that student qualifies for, of which there's over 270,000 different scholarship
opportunities, available in the US trying to match yourself to what you qualify for
is virtually impossible without technology.
So that's a really easy example of how just as matching discoveries
can unlock profound advantage to disadvantage students.
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