Sesame Ventures: Big Bird means big business for Edu-tech [Interview]

What is the Sesame Street number of the day? $10 million, according to its most recent venture. That’s how much the children’s television series has invested in Collab+Sesame Fund: a new early stage investor for child development and education-based startups.

The long-running educational television series, launched in 1969, has turned its attention to venture capital, with the aim of providing funding of up to $1 million for tech startups competing in a busy space.

Bert & Ernie’s educational journey

Jim Henson’s educational puppetry for decades has captivated young audiences – with iconic characters such as Kermit, Big Bird and Elmo – teaching basic counting and spelling to kids. The non-profit organization, Sesame Workshops, works behind the production of a number of educational children’s programs, helping to improve literacy and numeracy rates across the globe. And they have seen impressive results spreading awareness of gender issues in Egypt, HIV/AIDs in South Africa – and driving literacy scores up by 67% in Bangladesh.

Partnering with Collaborative Fund, Sesame Workshop has created a new enterprise – Sesame Venture. The latest addition to the Sesame portfolio will provide finance for startups dedicated to the development of the young. More specifically this includes; education and media, food, health and wellness, family support and social and emotional development businesses.

“We’re not doing this to extend the brand,” said Sesame Workshop CEO and President Jeffrey Dunn. “We’re doing this to help kids.”

Indeed it seems that while educational tech in general is a burgeoning scene, reaching children of a younger age in somewhat more difficult.

Edu-tech in schools

There exist a range of tech companies set on using digital tools to change the lives of children. However, raising the capital to get off the ground is hard in an industry with little monetary return on investment.

3,900 apps and software services in the US provide support in math, reading, and classroom management, according to LearnTrials findings, reported by the New York Times. Investments into the field of edu-tech in 2015 jumped to $2.98 billion, up from $1.86 billion the year before. However, the bulk of VC is reportedly going into “startups largely focused on higher education or job-related skills – businesses that feed a market of colleges, companies and consumers willing to spend more.”

This isn’t to say the public school uptake of edu-tech for the young has been slow. Higher government subsidies to improve internet speeds support this movement. Facebook CEO Mark Zuckerberg has even added his own two cents – or make that $20 million – to help this development. And many districts have used finance to also provide increased accessibility on tablets and computers.

Google has shown its supports of this initiative through lowering Chromebooks prices. And Apple has incorporated a strong educational focus in its iOS 9.3 upgrade, incorporating new features for school use. The new Shared iPad functionality means multiple students can use one device – creating profiles for each individual. And school staff can overview student progress, and even launch and lock usage to specific apps. Being able to distribute educational content for class study also opens channels for improved information sharing.

As new technologies emerge, and the market uptake increases, acquiring the capital to launch new innovations that improve the learning experience, from a young age, is increasingly important. Sesame Ventures is a great step for these innovators, however for the majority of tech startups raising capital is still a challenge.

As a result educational startups are, according to the NYT, “hedging their bets by expanding beyond schools to corporations, professionals, and even parents.”

Sociable spoke to Hi Mama Inc.?Founder and CEO Ron Spreeuwenberg, sharing his experiences as a startup looking to crack the educational sector.

What opportunity is there for innovation in the edu-tech industry, and how easy is it for startups in this industry to raise VC?

The K-12 educational space is difficult to break into. I do believe that it is a reasonable place to test ideas, especially with the piloting model which is quite common in the industry. Once a concept has been proved to add value, startups need to think about tangential markets, or unique business models in order to be interesting enough to gain VC attention.

?In the education space entrepreneurs face difficulties in scaling their product due to typically long sales cycles, and fragmented school districts. What we see happen more frequently is that small or medium sized startups may struggle to get interest from investors, and in some cases are forced to pivot their strategy.

How can online educators better work with public schools?

HiMama works with child-care and early learning programs. While the market is extremely fragmented, the sales cycle is much shorter because the buyer is often an owner or operator of a child care facility, and can make decisions on the spot. This is a great advantage over selling to K-12 school districts where purchasing decisions can take months, however means that scaling a business is a slower incremental process. Many educators also target parents directly, to promote their creations designed for home-use.

How do schools/pupils measure and judge the success of new technologies and apps?

While improved learning experiences should be the primary goal of any educational tools, schools and child care facilities also value apps that drive efficiency and make their lives easier. Startups should remember this too when looking to provide greater value, and attract attention.