GSV Ventures Raises $180M Fund in Search of Global Edtech Opportunities
With an investment fund, a conference and a constellation of advisory services, GSV may be the closest thing to an omnipresent brand in education investing. But even after over a decade of making and facilitating deals, the Chicago-based firm still sees other untapped opportunities and areas for growth.
Specifically, across the ocean.
“We’ve been spending a lot of time on Zoom over the last nine months” with entrepreneurs in India and Southeast Asia, says Deborah Quazzo, co-founder and managing partner of GSV Ventures. “We think those markets have a lot of raw talent of entrepreneurs, and a rising middle class that makes for a strong underpinning” for education and economic growth. She’s looking to bring on an investment partner later this year to focus on doing deals in India.
And that commitment is matched by a new tranche of capital—specifically, $180 million—for GSV Ventures’ second investment fund.
This money will support edtech deals at the seed, Series A and later fundraising stages. Some of it has already been invested in startups including Class Technologies, which is building an instructional video platform on Zoom; Guild Education, which works with companies to provide educational opportunities to their employees; and Photomath, an app that shows students how to solve math problems, step by step, just by taking a picture.
And why stop at two funds? The Chicago-based firm is already raising for Fund III and expects to have its first close later this year.
Over the past couple years, GSV Ventures has been expanding its horizon beyond the U.S. and has recently invested in companies in India, Indonesia, Jordan and South Africa.
Despite having invested in dozens of edtech startups over the past decade, Quazzo says there are no shortage of intractable problems remaining in education. These include “a huge change in assessments and how people demonstrate mastery” in ways other than through standardized testing, she notes.
There are also new technologies that have yet to meet their potential, she adds: “There is some skepticism around AI and machine learning, but there are substantive pieces of technology being built, and education is just in the first inning of productively applying them to improve teaching and learning.”
The GSV brand includes an array of asset management, advisory and financial services and funds. There’s even an MBA program. There’s also the ASU GSV Summit, which Quazzo runs and is now known in the industry as the place where deals get done. In the past, GSV has also invested in non-education companies through another fund, GSV Capital, which rebranded in 2019 and is no longer part of the network.
GSV Ventures launched in 2016 with a $97 million fund, and has since invested in 65 edtech companies. Its portfolio includes “unicorns” like Coursera, one of the original MOOCs that is reportedly exploring options to go public.
Several past GSV investments have turned into a big payday. Among them: Turnitin, the plagiarism checker acquired for $1.75 billion in 2017. Its most recent win: Nearpod, which will be sold for $650 million to Renaissance Learning. That latter deal, says Quazzo, “offers an important signal that the K-12 market can support big businesses.”
Quazzo’s longtime business partner and GSV Ventures’ co-founder, Michael Moe, has long been bullish on the education industry. In 1996, he wrote a thesis, “The Dawn of the Age of Knowledge,” which forecast changes to the sector just as the internet was beginning to become broadly available. That thesis has since been updated several times. Most recently, Moe framed the forthcoming disruption to education caused by the pandemic with an anachronistic reference:
“The Coronavirus has instantly forced 1.6B students and teachers online. We have a B.C. (Before Coronavirus) world transitioning to A.D. (After Disease),” said Moe in a prepared statement. “When Covid-19 forced 1.6B students and teachers online almost overnight, we passed the point of no return for educators, education technology and investors.”
Moe is also CEO of Class Acceleration Corp., a special purpose acquisition company (SPAC) that raised $225 million to buy an education company and take it public.
Could Moe’s SPAC acquire one of GSV Ventures’ companies?
Quazzo didn’t rule out the possibility, and noted that even if it did happen, it would not present a conflict of interest.
“We are not a majority shareholder in any company,” she says. All major decisions, about acquisition offers or any other major business opportunity, is put to a vote, “and we, like any other venture fund, have just a minority percentage of the votes.”