New Markets Venture Capital Partners closed a $160 million fund aimed at supporting investments from schools through postsecondary career preparation.
The new fund, New Markets’ fifth since it was founded in 2002, will back education companies that provide personalized learning and data-driven intervention, said Mark Grovic, co-founder and general partner at New Markets.
The goal is to support projects that show where students are academically “in real time,” Grovic said in an interview. “You don’t have to wait for end-of-year assessments, you can do formatives assessments without pulling kids out of class. You start to know each level everybody’s at. Data-driven interventions and individualization are some of the most exciting themes for us.”
New Markets, based in Fulton, Md., is investing in companies that currently have revenues between $2 million and $50 million, but which have high-growth potential to reach $50 million to $200 million.
The aim is also to flip the companies’ cashflow from negative to positive within three years, Grovic said. New Markets leads syndicates on roughly 70 percent of its deals, usually kicking in an average of $10 million for a $20 million to $40 million funding round.
The firm’s recent investments and exits include Credly, PresenceLearning, LearnPlatform, SignalVine, Kickboard, Mursion, StraighterLine, Whiteboard Advisors, Galvanize, and Graduation Alliance, which the firm reported totaled more than $1 billion in market value. The investments returned more than $100 million to the previous fund’s limited partners, it said.
Many of those limited partners have returned to invest in the new, oversubscribed fund, which the firm started raising in 2020. It’s brought on new investors as well. The investors in the new fund include family offices, large-impact investment funds, endowments, public companies, and academic publishers.
“The way we successfully raised the money is by building authentic relationships with people where we’re all kind of working on the same problem,” he said. “They see us as a team member where we learn from each other.”
Part of New Markets’ focus in its past investments has been workforce development, and trying to help students who start high school but don’t end up working in a position that requires a bachelor’s degree.
“We’re doing the investments that focus on that large part of the market,” he said. “And when you’re trying to solve that problem, [the answers are] 3rd grade literacy, 6th grade math, college readiness in high school.”
Research shows reaching benchmarks at those ages means students are more likely to persist in college and secure a decent job, Grovic said. The firm is focused on finding where students fall through those cracks. It has sought to make efficacy it’s guiding principle, he added.
“We find companies that solve those problems in a measurable way, and those tend to work out for us economically,” he said.
New Market’s new fund comes as global ed-tech venture capital levels have plummeted from pandemic-era highs, according to a January report from education market intelligence firm HolonIQ.
Venture capital investors poured $10.6 billion into ed-tech companies in 2022, it found, representing a 49 percent drop from the $20.8 billion invested in 2021, and $16.1 billion in 2020.
Overall funding figures still came in above pre-pandemic funding levels, which stood at $7 billion in 2019.
In the U.S., total venture capital investment figures are still two and a half times larger than pre-pandemic funding levels, the report stated, with $4.2 billion invested in the country’s ed-tech sector in 2022.
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