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Reach Capital Raises $215M for Edtech Startups Amid Changing Landscape
Reach Capital, a venture firm that exclusively focuses on edtech startups, recently closed a $215 million investment vehicle to back early-stage startups in the United States, with a specific eye on Latin America. Although edtech startups raised $10.6 billion last year, which was down 49% from the year before, Reach Capital believes that less capital means less competition, and consequently, more opportunities to succeed. Co-founder of Reach Capital, Wayee Chu, said that the new capital was raised against a very different backdrop from the prior, but history makes a difference.
Focus on AI in Edtech
Reach Capital is optimistic about artificial intelligence and is eager to invest in net new startups in this field. The firm has made around five investments in AI companies since its inception and is currently in the process of diligencing four AI startups. Reach Capital has emphasized the importance of founders collaborating with researchers, establishing unique data moats, and introducing measurable impact in their AI-powered edtech tools.
Reminding Founders That AI Isn’t New
Esteban Sosnik, partner at Reach Capital, reminds founders that AI has been around for a while. He believes that founders should start by identifying the pain points and solutions and deciding which technological solutions will address them. AI-powered edtech solutions must be able to deliver better experiences and outcomes to be adopted widely.
Conclusion
Reach Capital’s strategy has not changed much between funds. The focus is still on edtech startups; however, the firm is now paying more attention to artificial intelligence due to recent technological advancements. Despite the decrease in venture capital in the edtech industry, Reach Capital remains confident that it can help early-stage edtech startups succeed.
