When starting a new venture, one of the first questions that education entrepreneurs wrestle with is the legal structure. There are no hard fast rules to determine legal structure – it depends on your goals, as Jim Fruchterman so nicely lays out in the Stanford Social Review article “For Love or Lucre.” Once upon a time, starting a for-profit education company might raise suspicions about your motives for doing good—now, that’s less and less true. A new crop of for-profit education companies – Revolution Foods, BetterLesson, Edmodo, and Acelero among others – are proving that a for-profit structure can be the right vehicle to accomplish your social mission. On the flip side, education technology companies don’t need to be for-profit in order to scale or attract talent– Reasoning Mind and GreatSchools.org are top notch nonprofit edtech companies with huge reach and social impact.
For a good piece on the capital side of this question see Acumen’s Sasha Dichter’s blog on the “third pocket.”