In a new Education Next article excerpted from his latest book, education scholar Rick Hess recounts the skepticism that the entrepreneurs behind KIPP (Knowledge is Power Program) and Teach for America (TFA) encountered when they set out to drum up financial support for their then-nascent ventures. The KIPP founders fired off more than a hundred letters to local corporations, while TFA’s Wendy Kopp wore a former presidential candidate down with some youthful persistence.
Little did they know that more than a decade later (two, in Kopp’s case) that they’d still be climbing the mountain to funding – or that they’d be the exception rather than the rule.
That’s in large part because the capital markets for education entrepreneurs – and indeed, for all social entrepreneurs – are still quite early in their evolution. NewSchools was founded more than a dozen years ago to fill the early-stage capital gap for entrepreneurs seeking to make a difference in public education, by providing them with funding and guidance as they created new nonprofit and for-profit organizations. We were inspired by technology entrepreneurs who marched down Sand Hill Road in Silicon Valley, armed with little more than a business idea sketched onto a cocktail napkin, and managed to turn their visions into monopoly-toppling corporations that changed. It’s not that these entrepreneurs are necessarily smarter or more committed (even one of the most selective VCs in the business, John Doerr, thinks education entrepreneurs have it harder), but rather that a sophisticated capital market had been proactively built over the course of decades to nurture risk-taking entrepreneurs. As Hess notes, investors in places like Silicon Valley “impose a certain flexible but hardnosed quality control even while creating an entire ecosystem and equipping promising new ventures to take root.”
While the entrepreneurial education movement has come a long way in the last decade, the social capital markets haven’t yet caught up. The Obama administration’s move to shift millions in federal dollars toward social innovation is a positive development, but it’s far from enough. As NewSchools co-founder Kim Smith and I implored several years ago in a chapter for one of Hess’ earlier books, other investors must step up to the plate, particularly with seed capital for promising for-profit ventures and growth capital for nonprofits that have demonstrated success.
Together with other measures like common metrics for success and more transparent and accessible performance data, beefing up the number and diversity of capital providers will go a long way toward ensuring we don’t miss out on the next TFA or KIPP.