1Mby1M Virtual Accelerator Investor Forum: With Mark Selcow of Costanoa Ventures (Part 5)

Sramana Mitra: Quizlet reminds me of Course Hero which is a company that we have covered extensively as well.

Mark Selcow: I’m not as familiar with Course Hero but the world of online mastery and online learning is pretty rich.

Sramana Mitra: Course Hero is doing tremendously well. Now you may want to check out Course Hero. Actually, you’ll find a couple of great interviews about Course Hero on the 1Mby1M blog.

Mark Selcow: I will say I believe in this umbrella of Future of Work where Skedulo fits. Another investment where I’m on the board of is called Springboard which is upskilling people for digital careers. Quizlet fits there.

Sramana Mitra: Online education.

Mark Selcow: Yes, that’s right. It’s not just EdTech in the conventional sense. It’s for people, especially younger people like millennials. They change jobs more frequently and technology is changing. They need to gain and acquire these skills more rapidly.

Sramana Mitra: The big success of that subscription model of EdTech is Pluralsight, which we started covering a long time ago. They have been phenomenally successful even as a public company. So it’s a trend that is validated.

Mark Selcow: Yes, it is for real.

Sramana Mitra: Now if you look back on the last 12 to 18 months of your deal flow, what do you see? What trends do you see?

Mark Selcow: This is probably the norm. We see fewer traditional business functions in SaaS. We see more software where data is at the center of the value proposition. So there might be functionality on top, but there is access to a proprietary data source like we can access radiology systems. We have this rich visual image library and then their software on top of it, AI or ML, for example. I see this in FinTech in underwriting models where we’re not just a lender. We have a data strategy that’s unique in terms of the underwriting and therefore how we lend.

What’s special is less of the functionality and more of the access to some proprietary source of data. So we see more and more of that. We’re really excited about that as a trend.

Sramana Mitra: We’re following that one as well. We’ve covered quite a few companies in that space. Lendio is doing a meta of all the various small business lending stuff. Earnin and PayActiv are doing consumer lending to people against paychecks.

Mark Selcow: This is true in insurance and insurance tech as well. There are new categories to be insured. How do you ensure Uber drivers? How do you insure autonomous vehicles? There are new models applied to old businesses. Then there are new businesses.

Cyber-insurance is a classic example that’s fairly crowded now, but it’s still insurance. Somebody has to go find the customers and sell them. Someone needs to figure out how much risk appetite there is and how to price effectively.

You still have claims you need to process. So some things don’t change. But the availability of new types of data can really transform these sectors. We’re really interested in that.

Sramana Mitra: Terrific. Is there anything else you want to add to this conversation before we wrap up?

Mark Selcow: Right where we started up front about these companies in Australia, we’re seeing more and more really exciting companies coming from other cities and other geographies. It’s thrilling because it will get easier.

Before you know it, people stay instead of leaving. Then people go and move their company there because that’s the nucleus. We’re really excited as investors. We actively want to invest outside of Northern California because we think the talent is everywhere.

I just think that’s really important. We would continue to encourage people to reach out to us and all the other people in the Valley ecosystem. 

Sramana Mitra: Yes, we’re also very excited about that trend. One of the best examples of this virtuous cycle is Utah. Utah has produced a number of wonderful companies and has had good exits and good ideas. Utah is really booming right now from an ecosystem point of view.

Mark Selcow: I used to go to Salt Lake all the time at my second company. There’re a lot of call centers in Salt Lake City and all around Utah because of the language. There’s a light accent. The language skills are great. It feels like a great workforce in Utah.

So there’s all this talent to draw on for technology. It’s like that Atlassian effect in Sydney. You have really interesting companies in Salt Lake City. Then there’s a natural effect that follows it. That’s great.

Sramana Mitra: Terrific. It was a great conversation. Thank you for your time.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Mark Selcow of Costanoa Ventures
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