Sramana Mitra: What is very successful?
Bobbi Kurshnan: What do you define as very successful?
Sramana Mitra: What I’m trying to gauge is are these going to be self-sustaining venture-funded companies. Is it going to be possible for these companies to grow at a rate where it makes sense for angels and VCs to invest in them?
Bobbi Kurshnan: No, if I don’t see a company that goes from minimal revenue to a run rate $100,000 a month in three years, then I’m not seeing a model that works.
Sramana Mitra: Are you saying that these companies that you’re talking about are showing that kind of a run rate?
Bobbi Kurshnan: They’re showing that they can get there. Whether that happens depends on a lot of assumptions. I want to take them from the first half a million to a million and a half in year two to five million in year three.
Sramana Mitra: This is what I’m questioning. Maybe they can get to $5 million not in three years but in five years. But they’re not these hyper growth companies. I guess I have a huge question mark whether EdTech companies should be venture funded.
Bobbi Kurshnan: I think you can ask the same thing about a lot of industries. I think it’s very difficult to grow an EdTech company. I’m not looking for a company that will go out and do an IPO. I’m not looking for a company that’s going to a revenue of $100 million. It’s not going to happen.
I’m looking for a company that can be significantly brought into the $50 million to $75 million range, which I’ve done. I’m looking for companies that are going to have a double bottom line. I don’t know if you read my blog in Forbes a few weeks ago where I talked about the fact that the way we’re looking at EdTech companies is wrong. It’s a different criteria of what success is.
Sramana Mitra: Right. I think I agree with you that you need a different style of investors to invest in EdTech. It’s not the traditional VCs. For traditional VCs, success is about getting from zero to $100 million in five to seven years. I don’t think EdTech can do that by and large. Maybe there are a few exceptions here and there, and I don’t now which ones they are. They are not in K-12. There are some exceptions in Pluralsight and Lynda.
Bobbi Kurshnan: I have a K-12 company that’s on that track.
Sramana Mitra: Let’s talk about that. That’s what’s interesting to learn about.
Bobbi Kurshnan: I have a company called Raise. It’s providing college access and scholarships to colleges based on giving out micro-scholarships early on. We put money in when it had just raised $11 million on a $40 million pre-money. It has grown to revenue of $5 million in two years. I have a couple of others in the same space that are doing pretty well. I have a robot company that’s looking at robotics learning in curriculum. It’s bootstrapped. It’ll probably do around $9 million this year.