edtech | April 12, 2023

Reach Capital bets on ‘unbundling’ of schools with $215 million fund

David Bank
ImpactAlpha Editor

David Bank

ImpactAlpha, April 12 — San Francisco-based edtech investor Reach Capital has closed its fourth fund, along with a sidecar fund to allow its portfolio of founders to support other education entrepreneurs.

“We have a thesis around the unbundling of schools,” Reach’s Wayee Chu told ImpactAlpha. “This portfolio approach is very exciting for new entrepreneurs building in this space and it’s going to be a much more personalized way to support your classroom.”

The firm, which has its roots in New Schools Venture Fund, has grown with the edtech market to attract pension funds and other institutional investors. “We leveraged those anchor impact investors to validate our model and to prove that we can actually generate returns and fund incredible founders and companies,” said co-founder Esteban Sosnik.

The new fund will continue Reach’s expansion into mental health and workforce development, as well as geographically, particularly in Latin America. 

Bottom-up

Reach has backed more than 130 startups since 2018. Among its handful of unicorns are Outschool, ClassDojo, and Handshake. Sosnik said portfolio companies like Newsela and Nearpod have used a “free to teachers” approach to demonstrate demand and effectiveness.

“Once they get a number of classrooms adopting them, they go and sell it to the school or the district,” he said.

Covid-related disruptions and state-level mandates in response to the teen anxiety epidemic have driven demand for mental health services. Rhithm, which helps school officials get a check on students’ mental health, was acquired by private-equity backed Securly last year. Clayful provides on-demand life coaching for elementary and middle-school students.

“Teachers are feeling like they’re playing the role of health care provider and educator at the same time,” Chu said.