Mark Zuckerberg, Silicon Valley Investors Bet $100 Million on AltSchool


Mark Zuckerberg, Silicon Valley Investors Bet $100 Million on AltSchool

By Tony Wan and Mary Jo Madda (Columnist)     May 4, 2015

Mark Zuckerberg, Silicon Valley Investors Bet $100 Million on AltSchool

AltSchool, the startup that’s building a network of “micro-schools” across the country, is attracting major venture capital.

The San Francisco, CA-based company closed a $100 million Series B round from a host of Silicon Valley's blue bloods: Founders Fund and Andreessen Horowitz led the round along with Mark Zuckerberg and Priscilla Chan's donor-advised fund at Silicon Valley Community Foundation. Additional investment came from Emerson Collective, First Round Capital, Learn Capital, John Doerr, Harrison Metal, Jonathan Sackler, Omidyar Network and Adrian Aoun. The round also includes a new debt facility to fund school expansion.

The Wall Street Journal reports that $75 million comes in the form of equity financing; the rest in debt financing. This is the third largest edtech funding of the year, following a $200 million round for SoFi and a $186 million Series B for in January (which was acquired for $1.5 billion a few months later). AltSchool has now raised a total of $133 million.

Founded in 2013, AltSchool currently operates four “micro-schools” in San Francisco that focus on delivering a project-based curriculum supported by custom-built technologies for admissions, family communications, procurement and personalized learning plans for students. Classes, which are not divided into grade or age groups, are limited to 25 students and teachers can make over $100,000 per year. Yearly tuition hovers around $20,000, although financial assistance is available.

We visited one of the schools in February and here’s the follow-up NBC feature. Wired also profiles AltSchool’s “skunk works of a school.”

By 2016, AltSchool plans to open four more schools, including one in Brooklyn, NY, that will support up to 500 students. The funding will help the company expand to 20 schools over the next few years. AltSchool currently employs 115 employees, a third of whom are educators.

EdSurge sat down with AltSchool founder Max Ventilla to hear his thoughts on spreading his model--and how this funding is going to help him do that.

EDSURGE: Thanks for sitting down with us, Max. First up, you’ve gotten this large chunk of change. What is the money going to go towards?

VENTILLA: It’s going to three things, in order. Predominantly, the largest amount of it is going to fund internal R&D, like engineering payroll and product design. That’s the major expense--growing that team and continuing to work on all the things that comprehensively constitute what we consider to be the platform you need to be able to bring in all of those outside technologies, content, and functionalities.

Second, we’re growing the footprint of our existing schools. There, we will stay predominantly private--it represents the kind of sector in which we can innovate the fastest… that’ll be expansion of both our existing locations as well as new geographies. We’ll expand to a city every year or so while we about double the number of overall schools that we have year over year.

The third thing it’ll go towards, which is pretty exciting for us, is going beyond just the first-party schools we operate and really working with others to have them open AltSchool-like schools--ideally public schools. We would not only provide hardware, software, and structured content, but I think more importantly, all of the administrative services so that there are no local administrators. And over the longterm, that’s not just about helping others start schools; it’s also about helping existing schools that really want to modernize but have no mechanism to do that.

When we visited AltSchool, we witnessed resources being put into a central hub, and schools functioning like independent spokes of a wheel. But at the foundation of this, you’re creating this operating system that buoys every school, with tools like the My.AltSchool platform and AltVideo. What is that operating system comprised of? What is that blend of hardware and software?

We started AltSchool very intentionally without a notion of what we intended to build… We learned from our first campus’s educators about the bottlenecks. We ultimately landed on four pillars. The first is all about us opening schools: it’s real estate tools, tools to manage admissions and to be intentional and rigorous about composition, teacher hiring tools. Then, the second pillar is all about school operations--on-demand documentation, wearables to make sure that kids are in the same proximity of teachers outside the classroom, etc. Then, there’s the learning management pillar. That comprises of the playlist tools, personalized learning plans… tools to better understand where a student is in their learning progression.

The final piece is the parent and community experience, where parents should have this ability to know what’s working and what’s not working in their students’ experience. They have an app where they can manage everything, from pick-up and drop-off times to reporting how a student is feeling that day.

What would it take to successfully spread those tools to other districts?

It’ll take years and years and years. With the whole approach here, the vast majority of new funding is coming from folks like Mark and Priscilla Chan, and Emerson Collective, and John Doerr’s Foundation, that not only have a very long timeline, but are explicitly interested in the impact side as well as the financial return. What that lets us do is meet the incredible difficulty of this challenge, which is to help modernize existing schools in the U.S. with a lot of time and resources.

None of the things we’re doing at AltSchool make sense if you don’t take a longterm view. You would never try and develop something that impacts public schools by first opening a lot of private schools if you didn’t think it was more important to do it right than to do it quickly. We don’t believe that you can really iterate and validate something as complicated as a new model for education at scale (when, frankly, you haven’t had a new model at scale in more than a century) without using that model yourself and modifying.

Over this coming year, we’re going to start basic pilots, but it will be a good five years before we have something that even the most suitable districts can use to really transform how they operate.

What do you think could be potential snags that would make it more difficult to spread a model and platform like this?

There’s a long answer to that. There’s literally a whole table where we’ve looked at everything we’ve built in the operating system, and said, “Do you want to do this in a charter school setting? What are all the things that you would need to change?”

There’s nothing too dramatic. We would deal with assessment differently. We have different notions of the best way to involve parents, such as with ridesharing. That’s going to be much more important in a public school realm, where you can’t assume that families are able to transport their kids in the same way… I do think that what we’re building is relevant for even the most traditional of districts.

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