The EdTech market, valued at $76.4 billion in 2019, is growing rapidly, with projected growth of 18.1 percent from 2020 to 2027 — but many small firms have been unable or unwilling to utilize the traditional venture capital market. Fortunately, EdTech companies can harness Novel Growth Partners’ unique revenue-based financing model to spur their long-term growth.
Six EdTech companies — Branching Minds, ClassWallet, Elevate K-12, MyMajors, Ultimate Drill Book, and Thrively — have found Novel Growth Partners superior to the traditional venture capital approach.
An alternative to traditional venture capital financing, revenue-based financing (RBF) provides a non-dilutive option that empowers smaller companies to grow while preserving equity. RBF provides growth capital with companies paying the investments back as a small percentage of monthly revenue up to a predetermined return.
Why EdTech Firms Are Choosing Novel Growth Partners:
- EdTech’s cycles and the frequent need for pilot implementations or initial partial deployments requires patient capital.
- EdTech companies may be unable to grow robustly year over year, especially as they build their reputation within cautious school districts or universities.
- Given school calendar years and budgets, EdTech companies often lack consistent MRR, since revenue is rarely steady across months. This revenue variability can make education companies less appealing to traditional venture capital.
- Because Novel’s investment returns are tied to cash that companies receive, its revenue-based financing is optimal for companies in industries with strong seasonality like education.
- Novel’s cofounder, Carlos Antequera, was the cofounder/CEO of Netchemia for 14 years, a K-12 EdTech company that grew to have their products in 2500 school districts.
- Novel’s Operating Partner, Nick De Buyl, has built teams that have sold to thousands of customers at EdTech startups.
“Novel Growth Partners delivers an abundance of K12 education intellectual capital that made the decision to select them all the more logical,” said ClassWallet CEO Jamie Rosenburg.
“We chose Novel due to their authenticity and respect for my time; they do what they say. And that wasn’t the case with other investors,” noted Elevate K-12 CEO Shaily Baranwal.
“Revenue-based financing has supported our seasonal ed-tech company in a way that traditional VC cannot,” said UDB CEO Luke Gall.
Novel Growth Partners, founded in 2018, has invested in 25 companies across North America. Visit Novel Growth Partners at novelgp.com.