WHITE PLAINS, N.Y. — Feb. 26, 2021 — Rethink Education has earmarked $5mm from Rethink Education III to invest in underrepresented people of color helping solve some of the toughest challenges from education to workforce development. The team has coined this initiative Rethink Equity, acknowledging that venture capital is hardly distributed on a level playing field. White men make up approximately 30% of the population yet receive 77% of all venture capital, whereas Latinx founders receive only 2% and African Americans receive only 1%, according to Crunchbase.
While this initiative is new, Rethink Education’s track record of investing in diverse founders dates back to the firm’s inception in 2012. Currently, 14% of Rethink Education’s portfolio is founded and/or led by Black and Latinx entrepreneurs.
“Our mission is to help all learners reach their full potential and make sure the founders solving those challenges are reflective of those who face the greatest barriers in education,” says Ebony Brown, who is leading this initiative.
After reviewing portfolio construction, the team discovered that many of their initial investments in Black and Latinx founders were deployed from Rethink Education Seed, a $15mm carveout managed in conjunction with Southern New Hampshire University, which completed investments in 2019.
“The investment strategy for Rethink Education III has moved upstream focusing less on seed and preferring companies with slightly more traction and product market fit. However, we don’t want to unintentionally deprioritize diverse founders in the process,” says Brown.
The average household income for Black families in America is $41,000. Many Black and brown founders lack the disposable income individually and among family and friends to bootstrap their companies to the viability needed to warrant VC funding.
The leading indicator for early-stage venture decisions is the credibility of the founding team. This is measured by a founder’s pedigree, track record of success (scaling companies or operationally) and ability to connect the dots between early traction and a large-scale market opportunity that is understood by investors they are pitching. Evaluation is most subjective at this stage and Black and Latinx founders are overwhelmingly screened out because their backgrounds and the problems they are solving don’t align with investors’ traditional proxies of evaluation.
“We want this initiative to grow beyond the capital commitment from Rethink Education to enhance diverse deal flow and collaboration across all of our strategies and broader networks,” says Brown.
Seed investments are made at the earliest stage of a company’s development. Initial funding, typically $250k to $750k, will be made available for promising seed-stage companies to help fund their preliminary operations, including research, development, prototyping and market testing. The team will specifically look for entrepreneurs in education who are mission-driven, have early evidence of product-market fit, demonstrate an innovative and scalable approach and show how their product can be distributed successfully. Eligible companies must include Black, Latinx and/or Indigenous founders or c-level leadership with significant ownership in the company. Companies solving problems in K12, higher education, career guidance and support, upskilling, reskilling & economic mobility are welcome to apply!
About Rethink Education
Rethink Education invests in early and growth-stage companies developing technological solutions to 21st Century learning. Launched in 2012, Rethink Education supports startups that are focused on learning outcomes by pursuing business models that are scalable, efficient, and unique. Rethink Education one impact investment strategy in the Rethink Capital Partners platform, the impact investment division within Seavest Investment Group that oversees and facilitates the development of four impact investment strategies that focus on financial and social returns. Follow Rethink Education on LinkedIn and Twitter.
Ebony Brown, Principal at Rethink Education, has always been passionate about leveraging resources for underserved communities. Most recently, she was the Director of US Ventures at Village Capital. Prior to this, Ebony was Education Director for the Social Venture Fund. Previously, Ebony spent time in her hometown of Detroit, managing charter schools at New Urban Learning and began her career as an Account Strategist at Google. Ebony holds an MBA from the University of Michigan’s Ross School of Business and a B.B.A in Finance from Howard University.