V Is for VC: Sesame Street Creator Launches $10 Million Venture Fund for...


V Is for VC: Sesame Street Creator Launches $10 Million Venture Fund for Child Development

By Tony Wan     Feb 1, 2016

V Is for VC: Sesame Street Creator Launches $10 Million Venture Fund for Child Development

Beginning in 1969, Big Bird, Elmo and their furry Muppet pals took to television to regale children with lessons on love, fear and why it’s important to share your cookies. Now to reach kids on today’s mobile and digital devices, the creators behind Sesame Street are looking for help—from startups.

Sesame Workshop is launching a venture arm—Sesame Ventures—that will invest in companies focused on providing educational, health and social welfare services for children. Together with Collaborative Fund, the two New York City-based groups have launched a $10 million “Collab+Sesame Fund” to help entrepreneurs scale their startups.

Calling Sesame Street “an original disruptor” for its success in using television to educate kids, Jeff Dunn, CEO of Sesame Workshop, tells EdSurge in an interview: “I believe we are at another such inflection point with tablets and mobile technology to educate kids in a meaningful way.”

Dunn recognizes, however, that Sesame Street isn’t Silicon Valley, and the winning formula that made the television series a household name may not apply to mobile devices. “We can be on the cutting edge of creativity and education,” Dunn says, “but to be on the cutting edge of technology—that’s not our spot. History tells us that it’s not established players that create new solutions. It’s new companies and startups.”

According to Collaborative Fund’s founder and managing partner, Craig Shapiro, the Collab+Sesame Fund aims to make 10 investments over the next three years. Many of them will be at the seed level, he tells EdSurge. “The earlier the better,” Shapiro adds. The Collaborative Fund team has a penchant for getting in early when it comes to edtech deals; they have already participated in funding rounds for AltSchool, Codecademy and Skillshare.

Sesame Workshop and Collaborative Fund are each chipping in $5 million to the fund. Sesame Workshop’s contribution comes from its endowment, which includes proceeds from the nonprofit’s sale of two children’s TV shows—Noggin and Sprout. (Sesame Workshop execs say that money from its recent television deal with HBO “goes directly and only to paying for the production of the TV show.”)

Sesame Ventures joins a growing flock of mission- and money-focused education investment firms looking for the right mix of founders, products and business acumen. The past year has seen four new additions—Owl Ventures, Reach Capital, University Ventures and Zuckerberg Education Ventures—and a couple of existing firms that are raising new money to continue making investments. (Sesame Workshop has also chipped in to some of these funds.)

Where most edtech investors focus on services that attempt to deliver specific student outcomes—better test scores, fewer dropouts, higher graduation and job attainment rates, for instance—Sesame Ventures aims to look more broadly. “The purpose of this fund is to look at a bunch of categories outside of education,” Shapiro tells EdSurge.

Areas of focus for Sesame+Collab Fund. Source: Collaborative Fund

There are plenty of non-instructional needs just as critical to a child’s well-being and academic achievement. After all, it shouldn’t take a blog post from the Centers for Disease Control and Prevention to recognize that “health-related factors such as hunger, physical and emotional abuse, and chronic illness can lead to poor school performance.” And many of these needs, notes Shapiro, “don’t have as much access to capital” as edtech startups have had.

Dunn says this fund’s “holistic” vision aligns with Sesame Workshop’s mission statement of “helping kids grow smarter, stronger and kinder.” He avoids describing Sesame Ventures as another “edtech” fund. In fact, “we want to be more than just an education fund. Whole-child development requires a whole range of needs beyond education that contribute to their well-being.”

Beyond cash, Dunn believes Sesame Ventures offers research expertise, business networks, and ultimately “a brand that is really significant that can convene people and open doors. There are very few people who won’t take our phone calls,” he observes. Dunn adds that he and his colleagues will be seeking active roles in each venture; every portfolio company will be assigned a Sesame Workshop executive as a personal mentor.

At the same time, Dunn says he’s a “pragmatic” investor who will be “expecting people to generate financial returns.”

Finding revenue and success as an education startup, however, is often a long, arduous process—and by no means a guarantee. Many early-stage entrepreneurs can relate to the beginning line of Kermit the frog’s most popular song: “It’s not that easy being green.” The folks behind Sesame Ventures say they can help.

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