First Investment for Tuck Social Venture Fund

Guest Student Contributor, April 28, 2017 | 0 comments
Tags: Finance, Private Equity, Venture Capital, Social Impact, tuck experience, experiential learning

By Jeff Lazarus T’17

Jeff Lazarus T'17Last month, the Tuck Social Venture Fund (TSVF) made its first investment since its inception more than a year ago: a $25,000 convertible note in Education Modified (“EdMod”), a Boston-based start-up in the education technology space. The company, which helps teachers improve learning outcomes for students with special needs in their classrooms, addresses an underserved community with a differentiated product based on strong research.

While signing on the dotted line certainly felt good, getting there wasn’t easy. As a student-led impact fund, we invest in for-profit enterprises that that have both a social and financial return. One of the hardest aspects of this is trying to systematically measure social impact, an undertaking that has challenged the nascent impact investing space as a whole. EdMod was no different. Below is a brief overview of what that process looks like from our perspective as student fund directors. We hope it adds some color to what we do on TSVF, provides a better understanding of what an experiential learning activity looks like at Tuck, and inspires prospective students to consider getting involved in impact investing.

Let’s start at the beginning. We initially learned of EdMod through our relationship with Village Capital, a venture fund and accelerator. EdMod had recently graduated from Village Capital’s accelerator program and had also graduated from Learn Launch, a Boston-based ed tech-focused accelerator with longstanding Tuck ties.

After the warm introduction from Village Capital, our initial phone screens with Melissa Corto (the CEO and co-founder of EdMod) got us excited about the opportunity, and so began the due diligence sprint. Erin Dunn-Franklin T’17, one of our managing directors, led the three-person deal team. Erin’s background in education—she spent time in the classroom teaching in the Bronx as part of Teach For America—helped us get a better sense of the potential use cases and impact EdMod’s technology could have. We began placing calls with individuals in the education space, including former TSVF director Avi Sethi T’16 (now at Boston Public Schools) and others to get a better sense of the scope of the problem EdMod is trying to solve.

EdMod addresses one of the most pressing issues in K-12 education: how to help special needs students improve their learning performance. Research has revealed that teachers have trouble identifying how to best teach their special needs students, as many teachers face the challenge of instructing students with a wide array of disabilities, from dyslexia to Asperberger’s. This makes it especially difficult for a time-constrained and resource-stretched teacher to determine which strategy and set of tools might work best for each student.  What we loved abut EdMod from a social impact perspective was how the company’s success hinged directly on the efficacy of its technology: if it didn’t help teachers help students, schools wouldn’t buy the product.

Initial data among teachers who have used EdMod’s product are promising.Teachers feel more prepared and are more confident they can effectively implement need-specific strategies for their special education students. EdMod is now in over 70 schools and is used by over 1,300 teachers.

Beyond looking at the product’s social impact, we conducted a market analysis, competitive landscape analysis, and valuation exercise—many of the same types of analysis any venture fund would conduct. Our research into the learning management system space revealed that EdMod’s technology fills a unique niche and seamlessly integrates with other software already used by teachers, enabling instructors to quickly and easily use EdMod without going through the hassle of learning a wholly new platform.

EdMod came out of our diligence deep-dive looking even better than we initially thought. Of course, any seed stage deal is fraught with risks, and EdMod is no exception. The efficacy of the technology remains largely unproven (although initial indicators look good), and school budgets to buy EdMod’s product are already tight and susceptible to cuts.

While it’s still early days—both for the EdMod investment and TSVF as a whole—we’ve come out of this experience with a stronger sense of how to value and critically assess an investment opportunity and how to ask the right questions. As the next class of fund directors takes the reins this summer, they’ll be tasked with the new challenge of monitoring our investment going forward, trying to determine when and how to add value to EdMod’s management team. And, of course, we’ll be looking to build on this investment as we explore other deals next year.





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