Reach Capital Edtech Outlook 2017

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Reach K-12 Edtech Outlook
2017

Reach supports the most promising entrepreneurs developing
technology solutions to address challenges in early childhood,
K-12 and higher education.
We invest in early-stage companies that develop tools,
applications, content, and services to improve education
opportunities for all children.
2© 2017 Reach Capital. Confidential. All rights reserved.
About Reach Capital

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At Reach, we believe in...
Learning that...
Technology
that...
● Have a sense of purpose and actively pursue it
● Are empathetic, caring, and connected
● Work together to solve problems and improve the world
● Enables and respects a person’s agency and voice
● Exposes one to broad perspectives, places, and challenges
● Enables meaningful human interaction
● Minimizes boundaries and deepens connections between people
● Enhances and scales effective practices
● Increases access to quality education
Communities
where people...
© 2017 Reach Capital. Confidential. All rights reserved.

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Education is at an inflection point
Tech-enabled learning is
here

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Digital immigrants
learned to use
computers in the
workplace
Digital immigrants
learned to use
computers for school
Digital natives
grew up with computers,
video games, and social
media
Mobile natives
always connected;
integral part of life
BABY BOOMERS
1946 – 1964
MILLENNIALS
1981 – 2000
GEN X
1965 – 1980
GEN Z
2000+
Today's students are mobile and always connected
Photo sources: Express Newspapers 2015, Mr. Martin's Web Site, MacStories 2017,
Independent Digital News & Media 2017

Then Now
67%of millennials agree they can
find a YouTube video on
anything they want to learn
Learning is now bite-sized, on-demand, and
accessible anywhere
Think with Google
Photo sources: Amazon, Buzzfeed

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K-12 schools are making headway

PC Revolution Begins:
first computers in school
1:5 Computer:Student 2:3 Computer/Tablet:Student
1977 2000 2016
NCES
Schools are moving rapidly to one device per child
Photo sources: Computer History Museum, Ben Schumin, Google

of state-mandated tests in 2016
were available in a digital format
Then Now
85% EdTech Strategies
Online test policies drive schools' tech investment
Photo sources: Military OneSource, Education News

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New Devices Shipped to Schools
Low-cost devices meet school demand
• 20M Chromebooks are
used by students and
teachers weekly
• Microsoft offers suite of
low-cost devices
starting at $189
• Apple launches a $299
iPad for education
New York Times

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Classrooms are connected but
need more bandwidth

Cost of K-12 Internet access has dropped significantly
EducationSuperHighway

Virtually all U.S. classrooms are connected ...
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… but more bandwidth is needed
15%but
only
of districts have enough
bandwidth for 1:1 learning
88%of districts have enough
bandwidth for online testing
Photo sources: Education News, Edsurge

ADMIN SOFTWARE
- Internet access
expands
applications
- Focus on backend
systems and
compliance
HARDWARE
- Computer lab era
- 90% of edtech
spend is
hardware
- Apple dominates
in schools
CONNECTED
CLASSROOMS
- Proliferation of
low-cost devices
- Student apps take
off
With connected classrooms, edtech broadens focus
to instructional resources and content
1990s 2000s 2010s

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Content is breaking free of the
big publishers

More than half of all states allow textbook funds to
be used for digital materials
DMAPS

BMO
Texas made a rapid shift to digital content
93%43% 20152014
Percent of new instructional materials that are digital
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SETDA

© 2017 Reach Capital. Confidential. All rights reserved. 19
Digital materials will soon overtake print in U.S.
89%
of school technology leaders expect
instructional materials to be at least
50% digital within three years
BMO

Digital content frees us from static textbooks
thousands of sources4 major publishers
district-prescribed curriculum teacher-curated content
adapted in real-time7-year adoption cycles
Photo source: G.I. Jobs

• Lessons, assessments, and
activities are unbundled
• Anyone can publish
• Purchases made by
subscription or on-demand
Content marketplaces disrupt established
publisher model

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Teachers Pay Teachers marketplace upends
traditional publisher model
teachers in U.S.
downloaded at least one
resource from TPT
total earned by teacher
authors on TPT in 2016
$100M 14
teacher authors have
earned over $1M on TPT
2 3out of
Teachers Pay Teachers

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Over past 3 years
• S&P 500 up 24%
• Pearson down 58%
• Houghton Mifflin
down 32%
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Publishers are on the decline
Jan
2015
Jul 2015 Jan
2016
Jan
2017
Jul 2016 Jul 2017
PercentChange

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Teachers drive rapid adoption and enable
new business models

Teachers drive viral growth of ed tech products
40M
monthly active users
20M
users in 3 years
90%
of schools in 5 years
Edsurge, Edsurge, ClassDojo

Teachers overwhelmingly find resources online
40.4%
Simba Information & MCH Survey, May 2016

Decision-makers rely on teachers and increasingly
students for edtech recommendations
100%of superintendents
95%of principals
Improving Edtech Purchasing
Rely on end-user recommendations for
K12 edtech purchase decisions

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Teacher choice
Abundance of
digital resources
Massive user
adoption
Upsell to
schools / districts
Upsell to
families
Premium featuresFree product
Freemium business models are behind the fastest
growing edtech products

ENTRY POINT
Sell to school- and
district-decision makers, who push
product down to classrooms
Product is free for teachers and students
who drive school- and district-level
purchases
CONTRACT SIZE $10K+ / district $1K - $5K / school
SALES CYCLE 6-9 mo < 3 mo
SALES REPS Field-sales ($$$) Inside-sales
GROWTH Driven by field-sales Driven by teachers
Freemium flips traditional top down sales model
TOP DOWN
Institutional sales
BOTTOMS UP
Freemium institutional

Newsela ramped up to 78% of US English teachers in
less than 4 years

Teacher-love drives growth and school sales for
Newsela
Newsela
Teachers love product
and evangelize
High teacher
engagement enables
sale to schools
Viral growth driven by
social media
Teachers & students
access for free
High quality, leveled news articles
engage students
Schools pay for analytics and
other high-value features

Free access to over 25K high quality e-books
makes Epic an easy choice for teachers
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87% of all K-8 schools
use Epic
87%

Parents and kids first learn about Epic in school and
bring it home to continue reading
Families learn about
Epic from teachers
Families purchase Epic
for home use
Teacher referral builds
parental trust in brand
Students use Epic at
school for free
Students access thousands of
books in digital classroom libraries
Parents support and reinforce
reading behaviors at home

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How has this impacted learning?
We’re getting better and better at doing
what we’ve always done.

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Technology super-charges student writing
Manual typewriters
Student writing looks
professional
Electric typewriters
Publishing is faster and
easier
Chromebooks,
Google Apps, AI
Writing is collaborative and
feedback rich
Desktops, MS Word
The writing process is
digital and iterative
BABY BOOMERS
1946 – 1964
MILLENNIALS
1981 – 2000
GEN X
1965 – 1980
GEN Z
2000+

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Tech-enabled instruction is multimedia, two-way,
and differentiated
Chalkboards
Teachers supplement
lectures with visuals
Whiteboards
Students with allergies
spared from chalk dust
Sync’d student devices
Students receive
differentiated content and
can respond in real time
Interactive whiteboards
Teachers supplement
lectures with multimedia
BABY BOOMERS
1946 – 1964
MILLENNIALS
1981 – 2000
GEN X
1965 – 1980
GEN Z
2000+
Photo sources: Slate, NY Post, IntMath Valley View Elementary

While tools have improved, today’s classroom
experience can still feel surprisingly old-school
BABY BOOMERS
1946 – 1964
Hairspray
set in 1962
GEN X
1965 – 1980
Fast Times at
Ridgemont High
1982
MILLENNIALS
1981 – 2000
High School
Musical
2006
GEN Z
2000+
Photo sources: Hairspray, New Line Cinema; Fast Times at Ridgemont High, Universal
Pictures; 10 Things I Hate About You, Buena Vista Pictures, WYPR
Sparrows Point
High School, MD
2017
TODAY’S CLASSROOMHOLLYWOOD IMITATES LIFE

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Now consider workplaces of the future ...
automated by robotics, artificial intelligence
and machine learning ...

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The nature of work changes as more and more
activities are automated
McKinsey
81%
Predictable physical
activities
69%
Processing data
64%
Collecting data
Work activities with the highest automation potential

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Workers will need to work more
closely with technology … and acquire
new skills that will be in demand in
the new automation age
McKinsey Global Institute

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“Automation
could make us all
more human”
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Automation creates opportunity for workers
to make use of innately human skills
Top skills needed in 2020
Developing others Problem solving
Emotional intelligence Creativity
McKinsey, World Economic Forum
Photo sources: BeanCap, LuxeBeat © 2017 Reach Capital. Confidential. All rights reserved.

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We believe that now is an opportunity to
transform learning

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Reach poses a challenge to the edtech ecosystem:
How might we…
… harness technology to change learning and help people
meet the next generation of opportunity?

How might we...
Increase access to educational opportunity?
Streamlined school choice
and enrollment
Free digital library with over
25K+ titles for schools
Platform that enables
non-literacy specialists to
support struggling readers

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Presents sets of news articles
that examine personal identities
from diverse communities
Students around the world
collaborate on projects about
language, culture, & global
issues
Animates and publishes stories
of students’ personal struggles
in their own words
How might we...
Expose students to new perspectives?

Connects students with industry
professionals
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Connects students with peers
who have faced similar
challenges
Connects students with alumni
mentors
How might we...
Make meaningful connections between people?

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Students produce videos
using Green Screen by Do Ink
Students express
themselves and learn from
others on Flipgrid
Students write for a global
audience on Pobble
How might we...
Give students a voice and a real audience?

problem
solving
learning how
to learn
critical
thinking
creativity
collaboration
How might we...
Teach skills essential for personal success and societal impact?

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Frontier technologies help educators to
do what educators do best

a
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Chatbots scale student support
from enrollment to graduation
AdmitHub
AdmitHub offers 1:1 student support
at scale through AI-powered
mobile messaging
REAL-TIME, PERSONALIZED
SUPPORT
- Sends nudges
- Gathers important data
- Fields FAQs
AVAILABLE 24/7
- Meets students on mobile
- Answers questions instantly
CONNECT
- Students are connected
with empathetic college
counselors for more
meaningful conversations
90%Of students engaged with
the Chatbot in Georgia
State’s first year
Photo Source: AdmitHub © 2017 Reach Capital. Confidential. All rights reserved.

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“I love Pounce, it’s
not pushy.”
“I like how
convenient it was.
I didn’t have to look
through my emails.
I just went to text.”
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Students love AdmitHub, especially
those who are underrepresented
Summer Melt Case Study, AdmitHub
32%
Greater engagement from
traditionally underserved
Pell Grant population
94%
Of students recommended
AdmitHub’s chatbot for
future students

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AdmitHub helps scale 1:1 support and frees
counselors to focus on critical conversations
AdmitHub
Of the 185,211 messages sent,
less than 1% needed university
staff intervention
“We would have had to hire
10 full-time staff members to do
the amount of messaging that
‘Pounce’ did.”
—Scott Burke, AVP for Undergraduate
Admissions at Georgia State University (GSU)
When’s the housing
deadline?
Which parent do
I use on FAFSA?
When will I know
if I got accepted? This is my dream
school, but I don’t
think I can afford it.

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AdmitHub’s real-time, tailored support improved
enrollment outcomes at Georgia State University
How an Artificially Intelligent virtual assistant helps students navigate the road to college
+3.3
percentage points
21.4% Decrease in
Summer Melt
16.9% Increase in
flawless FAFSA
14.9% Increase in loan
counseling

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With AI-assisted grading, educators can give
constructive, timely feedback en masse
Gradescope streamlines the tedious
parts of grading so educators can
focus on what they do best: giving
great feedback
HOW IT WORKS
- Students submit work online,
or educators scan & upload
- Using AI, Gradescope
automatically groups similar
responses
- Educators provide granular,
constructive feedback for the
group of responses all at
once
Handwriting recognition and AI
automatically group similar responses
Constructive feedback
provided by educators at scale

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AI-assisted grading transforms grading -- and learning!
“The course is much better off
because we are able to implement
this type of frequent assessment
and give students better feedback,
all within 24 hours.”
Chris Mayfield
James Madison University
"I feel like my life has changed.
Not only did [Gradescope] cut
down the time drastically, the
quality of the end result was
dramatically better … It resulted in
a grading criteria that was so
clear, structured and consistent
that the students also enjoyed it."
Samuel Dickerson
University of Pittsburgh
“Gradescope has revolutionized
how instructors grade homework
and exams. I don’t use that word
a lot, but once you’ve used this
tool, there’s no going back.”
Armando Fox, UC Berkeley

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TeachFX provides teachers analytics
and insights on classroom dialogue
HOW IT WORKS
- Teachers record their lesson
using a mobile app
- Voice analytics technology
distinguishes voices of
different speakers
- Teachers see a visualization
of speech patterns over the
course of a class
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Voice analytics provide insights that can help
teachers facilitate more student dialogue
I decided to adjust my curriculum to
include more simulations and focused
discussions … The students were more
engaged than I had seen them all year.
Students were speaking over 80% of the
class!
Lucas Richardson
History teacher, Pembroke Hill, MO
I thought student talk was going to be a
lot more. Seeing the quantitative data was
shocking at first. I want to improve, to
raise my student talk percentage. So I'm
working toward that.
Matt Hicks
English teacher, Rockhurst High School

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Together, we can create communities where people
- have a sense of purpose and actively pursue it
- are empathetic, caring, and connected
- work together to solve problems and improve the world
Photo sources: The Teaching Channel, Mystery Science, Tinkergarten, YouCubed

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info@reachcap.com
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Reach Capital Edtech Outlook 2017

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