Global Investors Launch New Edtech Funds: Exceed Capital and HighGrade...

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Global Investors Launch New Edtech Funds: Exceed Capital and HighGrade Ventures

By Tony Wan     Mar 21, 2018

Global Investors Launch New Edtech Funds: Exceed Capital and HighGrade Ventures

The global education technology industry is no stranger to dedicated investment funds, and now there are a couple more names to add to the list.

Last week, Yogome, a Mexico-based provider of educational content and games, raised $26.9 million in a Series B round. The dollar amount raised eyebrows, to be sure, but so did the lead investor: Exceed Capital.

Exceed may be the new kid in the school of education technology investors. But the team is anything but green. It’s led by Victor Hu, who co-founded Goldman Sach’s education technology division and helped facilitate 60 education transactions over the past five years. His colleague, James Tieng, was previously a principal at Quad Partners, a private equity firm that specializes in education deals.

“At a time when our overall productive capacity as human beings is being called into question, and when learning and knowledge is theoretically more accessible than ever before, we want to find the product, services and platforms that enable people to reinvent themselves,” says Hu, Exceed’s CEO, in an interview with EdSurge.

So far, Exceed has secured a nine-figure commitment (that’s hundreds of millions) from a non-U.S. family fund, according to Hu. He declined to disclose exact figures but says his team will be raising additional capital later this year.

Exceed will focus on making investments for companies in the “growth equity” stages, says Hu, which generally translates to those that have enough traction and revenue to raise Series B rounds and beyond. The group will invest up to $20 million initially in each company, with additional capital reserved if subsequent rounds are raised. For the rest of 2018, Exceed is looking to do as many as 5 deals, he adds.

Exeed’s focus is purposefully vague, spanning tools that prepare learners for the future of work, to services that apply machine learning technologies to education. “We really want to cover the entire learning spectrum from pre-K to lifelong learners, from consumers to enterprises...every part of the pipeline that helps build human capital,” says Hu.

Equally broad is Exceed’s network of advisors whose experience span the globe, including Louise Rogers (former CEO of UK-based TES Global) and Hesong Tang (former head of M&A at Baidu, the Chinese internet juggernaut). Others CEOs on the advisory board include Chip Paucek (2U), Tom Davidson (EVERFI) and Dennis Yang (former chief of Udemy).

“There’s no question in our minds that China is one of the most important markets for the education space globally,” Hu offers. “We’ll be looking at companies and entrepreneurs there, and we’ll be helping to bring companies to the Chinese market and vice versa.”

Wherever an edtech company operates, Exceed says it’s looking for those that show the ability to scale, along with an acute understanding of the revenue models that work in the region (whether one is selling to institutions or direct to consumers).

During his years at Goldman Sachs, Hu says he’s seen “lots of folks that are solving problems with a feature. But it’s not easy to build beyond a feature into a product into a platform into a company.” He’s also met many entrepreneurs who have tried to “bring a business model borrowed from another sector and apply it in education.” In both cases, he says, “you wind up with suboptimal results.”

For edtech entrepreneurs who are just getting their companies off the ground, there’s HighGrade Ventures, based out of London and Tel Aviv. It’s a small, $4 million fund that will support 4-6 investments, in the $250,000 range, in early-stage edtech companies each year. The two funders behind HighGrade are MindCET, an Israeli edtech incubator, and Arie Capital, a venture firm backed by British, Chinese and Israeli investors that funds Israel technology companies.

Among the networks that HighGrade will use to scout for deals is the Global Edtech Startup Awards, an annual competition that MindCET has organized since 2014. The process starts off with a series of regional semi-final pitch competitions, and concludes with winners from each region squaring off in a final round. The final winner takes home a $50,000 prize.

So far HighGrade has made one investment: Storyball, a London-based developer of a “smart ball” that kids can play and interact with.

HighGrade and Exceed are just the latest among a flurry of edtech investors that have cropped up over the past year. Earlier this month, EdSurge broke the news that Japan-based EduLab is starting a Boston-based edtech investment group. Last year, Educapital, based in France, launched a €45 million fund for K-12 and corporate education companies. Brighteye Ventures, based in Luxembourg, also closed a €50 million fund to invest in seed, Series A and B rounds for tools serving K-12 and postsecondary learners.

According to Metaari, a Seattle-based market research firm, global edtech investments across all education segments reached $9.5 billion in 2017.

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