1Mby1M Virtual Accelerator Investor Forum: With Deborah Quazzo of GSV Ventures (Part 2)

Sramana Mitra: Our interest is primarily in actual seed and Series A. Let’s focus on that discussion. What do you like to see by way of proof points before you’re willing to write a check?

Deborah Quazzo: It’s interesting because we’re sector experts and we’ve been working in education technology for well over 20 years. I have a partner in Silicon Valley, Michael Moe, who wrote the original thesis for a Wall Street investment category around digital education in the mid-1990s.

It was early but it was a dead-on thesis. It’s taken until the last decade to get there, but because we’re sector experts, I think that we have a pretty strong pattern recognition of what works and doesn’t work. We’re certainly going to make mistakes.

We’ve made plenty of them and we’ll make plenty more, but as a result, we look at a framework we call the five P’s. People are the lead and are a foremost factor in how we invest and the ability of that team to shoulder a great idea forward. Other important factors are product, potential, predictability, and purpose.

We’re not an impact fund, but we do believe that companies with purpose will have higher financial returns in the long run. We do believe that every investment we make has to be in companies and teams that are looking to make massive impacts.

You see across our portfolio that the companies that we’re investing in are serving hundreds of millions of learners. What we’re looking for is a breakout idea within this pre-K-8 category that we’ve spent a whole lot of time in or a unique approach to go to market with a strong product.

We’re looking, first and foremost, at a great team paired with an investment thesis. If it’s early, it could be the thesis stage or one that’s gotten out there and got proof points from customers.

We’re willing to go in quite early based on a selective basis depending on the strength of the team and the strength of the conceptual idea. We’re willing to do that although we’re also investing in the A round, at which point you’re going to have proof points.

Sramana Mitra: Let’s talk a little bit about pattern recognition. Could you talk about some of the patterns that you’ve seen as success patterns and also some of the patterns that you have identified as failure patterns in this sector?

Deborah Quazzo: That’s a good way to think about it. I think Class Dojo is a great example in the K-12 market and we talked about Course Hero too. By the way, most of our companies end up with very large international components. Class Dojo now has more than 50% of users outside the US.

What we loved about Class Dojo is, it didn’t approach the market in the K-12 space in the traditional way. The traditional way is, you hire tons of salespeople. It’s very expensive, has high barriers to entry, very long sales processes into K-12 districts and schools, and very difficult to scale. Some people would have done it, but it’s a very rare bird that does that.

What we loved about Class Dojo was that it was a free offering for schools. It still is and always will be. They have a free offering for teachers in schools and administrators. They began monetizing last year.

That monetization is and always was planned through selling into the parent population. They never changed the dynamic of free distribution of the product into the schools, with teachers in schools within the monetization of parents who trust the brand having used it for many years with the school.

We think that’s a very powerful strategy. We’ve seen that not only in our portfolio but in several other companies that are seeing breakout performance in the K-12 space. They have found a go-to-market that is not the traditional go-to-market for that space.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Deborah Quazzo of GSV Ventures
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