Spotlight: AI in Education
It’s impossible for us to close the books on 2023 without addressing this year’s most prominent theme: AI. As you may recall from our previous conversations, evaluating the potential and risks presented by AI in education has been top of mind for us at Rethink Education. We do not want to enter a system where the children of high-income families are taught by people and the children of low-income families are taught by AI. Instead, we look to AI to enhance human capabilities, giving people more time for creative thinking and problem solving over manual, tedious tasks.
New Investment
This past summer, we made a single commitment to a company that does just that: MagicSchool.AI.
What made MagicSchool stand out for us was the authentic mission of the CEO, Adeel Khan. Adeel discovered his passion for leadership at age fourteen and has been an educator his entire adult life. He has worked as a teacher, an administrator, a school founder, and a trainer of teachers. So, when he started MagicSchool, he knew exactly what problems he wanted to focus on solving for teachers.
MagicSchool saves teachers time in dozens of ways, including generating parent communications in different languages, generating assessments aligned with the Next Generation Science Standards, and producing versions of a text at different reading levels.
Adeel believes that despite the dazzling, uncanny capabilities of generative AI, the use of someone else’s large language model is not a business advantage or a defensive moat. We agree.
Generative AI is a commodity available to every business, including incumbents. To build a useful, defensible business that brings something new into the world, one must go beyond the use of generative AI. User experience, workflow, collaboration tools, data privacy, and guardrails addressing regulatory requirements are all features that can help differentiate a product.
Yet several newer startups that were founded to build products using generative AI appear to have started with the capabilities of AI first and then gone looking for a problem to solve. At Rethink Education, we prefer entrepreneurs who start with an urgent desire to solve a particular problem.
We have been investing in AI-driven startups for over a decade. For example:
- Fund I company Intellus Learning used AI for curation, absorbing syllabi, and repositories of articles so it could then suggest particular articles that would be useful in teaching topics on the syllabi.
- In October, Fund III company AllHere, which uses AI and humans to power its chat function, took to Capitol Hill to join leading EdTech companies in a commitment to the responsible use of AI in K-12 education. AllHere is among two studies featured by the Software & Information Industry Association (SIIA) in its Principles for the Future of AI in Education framework.
- Additionally, we have had a thesis centered on nudging and behavior modification since 2013, and we now have four companies using behavioral AI to improve retention and engagement.
Today, every single company in our portfolio is using generative AI for multiple purposes. But that alone is not how any of them will achieve a durable competitive advantage and offer a unique contribution to the world.
New Investment
That brings us to sharing another new investment we made in Q3, Backpack Healthcare, which is working to address the critical issue of the children’s mental health crisis in the U.S.
- Reports indicate that approximately 7 in 10 public schools reported an increase in students seeking mental health services.
- Since the onset of the pandemic, 51% of psychologists have noted higher rates of teens seeking therapy.
Recognizing the urgency of the situation, Backpack Healthcare is a critical intervention tool that offers accessible and high-quality mental health support for youth, focused on the formative ages of 6 to 17.
The digital telehealth platform delivers online therapy, bibliotherapy (a therapeutic approach employing storytelling to support a patient’s mental health), and medication management services, to ensure a comprehensive approach to pediatric mental health care.
Unlike its competitors, Backpack’s strategy specifically focuses on providing services to children on Medicaid, which accounts for 50% of children in the U.S. Traditional competitors often overlook this population because commercial insurance reimburses at higher rates than Medicaid. However, Backpack Healthcare has an innovative and cost-effective staffing model that uniquely positions them to address this gap, providing quality mental health services to those in need while still maintaining financial viability.
This issue is personal to Backpack founder Hafeezah Muhammad, who recognized the gap in treatment when seeking services for her six-year-old son during the pandemic and struggling to find a provider that accepted Medicaid.
Backpack strategically partners with community organizations, health care systems, state governments and public schools to find children who need mental health support. This approach recognizes the interconnectedness of community support and education in addressing the mental health needs of youth.
We are honored to partner with Backpack as they seek to combat the child mental health crisis and serve children who usually do not get access to high-quality therapists.
Exits and Distributions
In addition to new investments, we’re pleased to report on some new exits and distributions.
Our portfolio company Formative was acquired by Newsela. Formative, the real-time assessment platform that allows K-12 teachers to easily track student progress and improve learning outcomes, will help Newsela, the leading K-12 instructional content platform, provide a comprehensive instructional solution that engages students and accelerates learning.
Another one of our portfolio companies, Empowered Education, was acquired by ISSA, a company owned by Tailwind Capital.
Other Portfolio Updates
16 Rethink Education portfolio companies were named to HolonIQ’s list of the 200 most promising EdTech startups in North America, including: Pathstream, Vivvi, Ingite Reading, Campus, Stellic, Mainstay, AllHere, EnGen, Guild, Proof of Learn, GetSetUp, Acadeum, Amira Learning, Wonderschool, Hone, and MagicSchool AI.
Four of our portfolio companies (ADPS, CareAcademy, Cinematic Health and Mentor Collective) were named to the INC 5000 list of the Fastest Growing Private Companies in America.
APDS announced its rebranding to Orijin to revitalize its dedication to changing corrections for good, while staying consistent with its mission to prepare justice-impacted individuals to earn sustainable employment.
Team Updates
The past few months have been filled with conferences, events, and exciting new developments for the Rethink Education team!
We welcomed a new member to our growing Rethink Education team, Monique Malcolm-Hay. Monique joined in August as a Senior Associate and will support deal sourcing, diligence, portfolio management and reporting across Rethink Education’s funds. Monique joins us after graduating from Stanford University Graduate School of Business with an MBA and MA in Education. Her prior experience includes PwC, Future Fit AI, and the Stanford GSB Impact Fund.
Rethink Education worked with UNICEF and Tideline to contribute to the development of the UNICEF Child-Lens Investing Framework, a new approach where investors intentionally consider child-related factors to advance positive child outcomes while also minimizing harm. Aligned with our systems change approach to catalyzing EdTech investments for underserved populations, the framework allows for us to connect child lens and social equity more directly at the investment level.
Partner Ebony Brown attended the Kauffman Fellows Africa VC Summit in Nairobi, and shared her insights on investing in education and workforce training solutions in the continent.
Managing Partner Matt Greenfield and Senior Associate Bridget Duru joined hundreds of other innovators working to transform the education landscape at EdTech Week. Matt shared insights on ‘The Current and Future State of Early EdTech Investment’ and Bridget on ‘Overcoming Challenges for Underrepresented Funders and Managing Partners’ along with judging a K-12 pitch competition.
Managing Partner Andre Bennin has been all over the globe speaking on panels like ‘Investing in Technology for the Future of Work’ at EdEx MENA in Dubai and ‘Investing in the Future of EdTech’ at the Peru Venture Capital Conference in Lima.
A Look Ahead into 2024
Stay tuned for more exciting updates to come in 2024, including more thought pieces, portfolio founder deep dives, and more. We wish you a happy and healthy holiday season and New Year ahead!
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