Investing in Relationships: Rita Ferrandino, Founding Partner of Arc Capital Development, Shares Advice for Successful EdTech Investment
According to Rita Ferrandino, Founding Partner of Arc Capital Development, edtech investments should be more than just a monetary exchange. Investors should work alongside their portfolio companies to mentor them, and help them learn and grow.
Rita spoke on the subject at last October’s LearnLaunch Investor Summit, along with fellow edtech investors George Kane of Emerson Collective and Amit Patel of Owl Ventures. She emphasized that in order to ensure a startup is successful, investors need to provide long-term support beyond financial investment.
So how can edtech investors foster growth and innovation? Listen in to our interview with Rita to find out what she has to say about the subject.
Play the podcast episode above, read the transcript below, or download it on iTunes to learn more.
Hannah Nyren: [00:00:00] Hi. This is Hannah Nyren. And today I’m speaking with Rita Ferrandino from Arc Capitol.
Rita Ferrandino: [00:00:04] Hi there. I’m the founder of Arc Capital Development. We’re a private investment and advisory firm that works exclusively in the education and special needs industry to help companies grow their ideas into thriving businesses.
Hannah Nyren: [00:00:19] So, we are here today at the EdTech Investor Summit. So tell me, Rita, what are you doing here today?
Rita Ferrandino: [00:00:24] Well, I was delighted and pleased to host a panel with my investor colleagues, where the topic was, “How can investors better work with education companies to help them thrive and grow?”
Hannah Nyren: [00:00:38] And how can investors better work with education companies?
Rita Ferrandino: [00:00:41] I think that it was the consensus of the panel that we should really be building relationships with our investment portfolio companies. That the best way we as investors can support our companies is by working together with them to help supplement and accelerate what they’re doing. And how have you experienced this or seen this in practice? Well, I jokingly said that one of the CEOs that we work with always makes sure when we’re in town to have a family dinner with all of us. That this is really, when you’re investing at a seed level, an earlier stage, it really is about investing in the people and to be able to really support them through this process which is often grueling and difficult. And we really are a family.
Hannah Nyren: [00:01:37] And so, as your role is to help support these seed-stage companies very often, what advice do you have for them? What advice would you give one of the companies you invested in for their product development, or for their growth?
Rita Ferrandino: [00:01:51] What I think is really important is to have a strategic distribution sales plan, that’s accompanied by a very disciplined tactical plan. Often companies are able to build an MVP or build their product and take it to market. But they often struggle with getting, not just the first five companies, but scaling from five customers to 25 customers and then making that big strategic leap from 25 early customers to a scalable process to obtain the next hundred. And so, we really think that it’s important for them to stick to a very disciplined, mile-stoned plan, where they’re tracking their sales month-to-month to ensure that they’re going to meet the milestones that they’ve set.
Hannah Nyren: [00:02:43] And so, what are you looking for in an edtech investment? What kind of products are you looking for? And if you could get in on the ground floor of any new idea, or of any new edtech area, what would it be?
Rita Ferrandino: So we really believe that we are looking for founders and founding teams…that will be coached and will be able to put in the kind of effort that it takes to get a company scaled. So, we want to see a company with a defined target market, with a defined product, and product offering that they’re looking to deliver. And then we’re looking for the team that’s going to be able to achieve the goals.
Hannah Nyren: [00:03:30] And based on what I know of the companies you work with — what experience have you had working with edtech companies? Would you call out any particular companies that you think are doing a great job?
Rita Ferrandino: [00:03:40] So Arc Capital development was founded over 15 years ago. So we have now got over 100 companies domestically and internationally that we’ve worked with, and we’ve put over 8 million dollars of capital into those companies. So we really are proud of our track record of success. Of course, I would tell you that all of our portfolio companies are fabulous. You may know that I have been the president of EDSi, which is the education accelerator associated with the University of Pennsylvania. And so, I was responsible for cohort 5. And so, I’m very supportive of those companies as well. And I was one of the founding and first mentors to come to LearnLaunch. So I have been working with LearnLaunch for the last six years. And I make at least four trips to LearnLaunch a year. Because I’m very committed to this early stage marketplace and supporting all the companies and all the accelerators.
Hannah Nyren: [00:04:40] So, it’s great to see you here today then, since this is a LearnLaunch-run event. So how do you think LearnLaunch has grown over the past few years, and where would you like to see it go?
Rita Ferrandino: [00:04:51] Well, first of all, I’d like to see LearnLaunch continue to be able to fund early stage companies, and to be able to fund the gap funding that these companies need after their first tranche. So what I would really like to see is more support for the investment community, at not just the angel level. But as the companies grow they will continue to need support. Due to the long selling cycles in education, we need to provide more investment funding to be able to have them be able to weather the storms and weather the gaps.
Hannah Nyren: [00:05:25] So where do you see the future of tech investment going?
Rita Ferrandino: [00:05:28] Well, clearly I think investing in edtech is exhilarating, because there’s so much opportunity. And I really believe that we’re at the very beginning of our next revolution. And I think that edtech is going to be able to play a really large role in the re-training and the redefining of how we teach students of all ages in this new economy. And so change is not always quick, and it’s not always painless. But I’m very optimistic.
Hannah Nyren: [00:06:00] Well, thanks for speaking with me, Rita.
Rita Ferrandino: [00:06:02] You’re welcome, Hannah.
Hannah Nyren is the General Manager of EdTech Times. A Texan by birth but a Bostonian at heart, Hannah is an educational writer, AmeriCorps alum, and one-time StartupWeekend EDU (SWEDU) winning team member. She started her career at a Pearson-incubated edtech startup, but has since covered travel, food & culture, and even stonemasonry in addition to education.