This blog was originally published by EdWeek MarketBrief on May 28, 2021 and can be found on their website here.
Investors Often Ignore Entrepreneurs of Color. NewSchools Venture Fund Wants to Change That
By Sean Cavanagh | May 28, 2021
Frances Messano wants her organization to nurture promising, diverse talent within school districts — and within the education companies that serve them.
Messano is in her first year as president of NewSchools Venture Fund, a nonprofit venture philanthropy that accepts charitable donations and invests the money into schools, organizations, and private education companies.
NewSchools focuses its investments on early-stage companies, and provides them with guidance and support. Helping underserved communities is a core tenet of its work.
Earlier this year, the organization announced plans to invest $100 million in four investment areas that promote diversity, equity, and inclusion in schools and among entrepreneurs.
Those four areas are nurturing diverse leaders, which includes supporting Black and Latino educators in school districts; promoting innovative school designs and learning environments; backing learning solutions, or efforts to support early-stage entrepreneurs; and supporting racial equity through investments that fall outside the other three priorities.
NewSchools unveiled those four focus areas in January, at the same time the organization announced the appointment of Messano as president. It was a newly created position in which she works with CEO Stacey Childress and guides all the organization’s investment areas.
Even before she took on her new role, Messano has taken a strong interest in the struggles of minority entrepreneurs to secure venture capital. She authored a report for NewSchools on the topic two years ago, and says it will be a priority for the organization.
EdWeek Market Brief Managing Editor Sean Cavanagh spoke recently with Messano about how her organization is trying to foster diversity within the industry through its investments, and what it will take to make progress across the broader K-12 market.
What was the overall thinking behind NewSchools Venture Fund’s plan to invest $100 million in these four investment areas?
Our new approach allows us to go deep on on work supporting diverse innovators with vision and skills, with new momentum, while erasing boundaries and focusing throughout our investments on the vital question of who leads the work. Some of the investment areas of focus you’ll recognize—innovative public schools and diverse leaders will continue to be central to our work.
We’re funding early-stage education innovators. What that means is we’re funding people who are creating new schools, in both charter and district contexts. We are funding organizations that are creating new learning solutions. That’s where our ed-tech work has sat–more for-profit companies. We are funding the creation of diverse leadership pipelines, so we can make sure there are Black and Latino leaders at all levels of education. And then also funding the creation of diversity, equity, and inclusion capacity-builders–such as service providers–people who are working directly with schools and systems and other education organizations to become more diverse, equitable, and inclusive.
How will the investment in racial equity play out?
In our racial equity work, what we learned from our diverse leaders portfolio over time is it’s important to have a cross-cutting priority on diversity, equity, and inclusion, but it’s also helpful for us as funders to have a direct focus on an issue where there’s a need, where we need to shine a brighter light. To be able to focus on diversity in a cross-cutting way, but then fund against it, we’re actually able to influence the field more, through other education partners, other foundations.
How will you make investment decisions with the new racial equity fund?
We are intentionally going to have a broad-based fund. And we’re going to use participatory grant-making, meaning we’ll have a steering committee of 15 individuals, innovators outside of our portfolio, including parents and students, to decide how that money gets allocated. Because our belief is, if racial equity is seeding power and making sure it meets the needs of students and families, we need to have a representative committee making those decisions.
We don’t know what ideas will come to us–because we’re going to have an open funding opportunity. [But] when we were doing the planning work, the kinds of ideas coming up seemed to be anti-racist curriculum, culturally responsive curriculum, youth leadership, more of a focus on social-emotional supports for students, as well as efforts to rethink school discipline.
What are some of the most essential kinds of support this funding will provide to founders of early-stage companies?
There were a number of trends and themes that kept coming up from innovators of color. One is that we have all these ideas of how work should be done differently to create a more diverse and equitable system, but we can’t find the funders. Basically, the parameters of a funder strategy don’t allow for that innovation to take root. They felt they had to sit in particular molds and ways of doing that work.
Are there areas where the K-12 market continually falls short, in supporting minority entrepreneurs?
We’re incredibly fragmented and segmented in terms of the work that’s done. You think about different companies–everyone has their own area of expertise and focus. But we’re not seeing a range of integrated solutions that are going to meet the needs of school systems so they can be on a journey to create more racially equitable experiences for students.
When I think of the work of curriculum providers, some might say, “I’m going to give you great, strong math curriculum.” But they’re not necessarily thinking about how to make sure that curriculum is culturally responsive–bringing the experiences of a diverse range of students and communities.
As you’re thinking about teacher professional development and support, you can focus on content. But it’s also about engaging students who might have a different race or ethnicity than you–how are you making sure you’re spending enough time on the engagement strategies to make sure it’s going to meet the needs of all students?
Does this lack of cohesion hamper diversity in the market in other ways?
I find [this fragmentation] even with diversity, equity, and inclusion service providers. You might have someone who could say, “I’m really great about doing an audit of your system to help you understand the approaches that will work today, and where you can grow your support.” But the people who are great on implementation might be a different group of folks.
We need to make greater levels of progress in thinking about wholesale solutions that school system leaders can engage in, and can address some of that silo-ing that exists. Because I find that system leaders are often having to bring together a patchwork of solutions.
What kinds of education companies do you envision NewSchools supporting through its racial-equity work?
There are early-stage innovators of color who are saying, “I have this area of what can work differently in school systems around the country, but I haven’t really found the opportunity to get funding for it.”
We typically fund people who are in year zero through year three of developing new ideas, who might not have been able to get ideas off the ground. Because we’re using participatory grantmaking, that decision’s not up to us. It’s up the individuals on the decision-making committee.
But based on our learning solutions work, we’re going to fund people who are going to create new tools, new subject-area approaches, new ways of doing school entirely. I imagine we’ll have new curriculum companies or schools that feel they’ve figured things out and want to scale. We’re actually launching a funding opportunity focused on literacy solutions, specifically, where we’re hoping to have those sorts of players share their ideas for us for supporting literacy in a more equitable way.
You’ve done research on why entrepreneurs of color don’t get backing from investors. What do you see as the best ways to tackle that problem?
This is an issue that’s been getting a lot of focus recently, which I’m excited about. Number one, there’s a lack of understanding of both philanthropic and investment capital. When we asked entrepreneurs, “Are you familiar with the top 10 education funders,” less than 50 percent of them knew who the funders were. Just a third had reached out to get any capital at all. Part of it is a lack of understanding of who’s funding and how do you get access to the funding.
A lot of the questions we’ve seen coming up [from these company founders] were along the lines of, “Is that funder looking for someone like me? Do I fit the mold?” When you think of entrepreneurs, innovators, there’s typically an image that comes to mind. It might be someone who identifies as white, someone who’s male, who’s gone to a particular school. There’s some belief that, “You’re not looking for me in the first place.” There’s some opting-out.
How do you conquer those barriers?
What we’re hoping to do–and see others do–is figure out how we let people know we’re looking for diverse innovators. We’re looking for people who have fundamentally new approaches and new ideas. We’re not just trying to replicate what others would see as tried-and-true best practice. What we really believe now, as everyone is navigating the pandemic, and thinking about systemic racism in our system, is that we need new combinations of best practice or fundamentally different solutions.
It’s on us as funders to build pipelines of leaders in communities we might not be in touch with already. It requires capital providers to think differently about how they’re choosing who to fund. We believe diverse innovators are going to help us figure out what the work is that needs to be done, and how.
And I’m assuming you see broader benefits in entrepreneurs of color bringing new solutions into schools.
You have to look at our main customers in the education system–those who are the least well-served.
There is a distrust, a mistrust of education systems right now. We’re seeing this during the pandemic, [with parents asking], “Are leaders going to do what’s right for my kids?” There’s a lot of research that’s shown that if a student being taught by a teacher who shares his or her racial or ethnic background, academic results go up, suspensions or referrals go down, students are developing greater aspirations for themselves. There are all these benefits that accrue when we have diverse leaders in place.