Investing for Impact: Increasing equity for learners
Stanford GSB Impact Fund: Our 2022 Education Thesis
At our first meeting, the GSB Impact Fund Education Team members reflected on a teacher or mentor who had shaped our career paths. From elementary school teachers who encouraged us to think about science in a different way to college professors who inspired us to pursue a job in a new city, each of us could trace some element of our success back to someone who had gone above and beyond.
But what if success didn’t depend on the luck of encountering that special mentor or the resources to pay for the best opportunities? What if the entire educational system was designed to ensure that each student received the training, support and skills they needed to explore their dreams?
Across the world, there are far too many gaps and inconsistencies in the school to employment journey, leaving many people in low wage jobs. In the developing world, education and training can be prohibitively expensive, perpetuating a cycle of poverty. In the US, economic mobility is at an all time low. At the same time, high growth sectors like healthcare struggle to fill roles, and employers and policymakers consider how automation and machine learning will bring opportunities to revolutionize the workforce.
Our thesis
When considering this vast landscape of structural challenges, our team decided to focus on three areas that are most crucial for increasing equity for learners: workforce development, K-12 education, and next-gen technology. These sectors represent opportunities to leverage exciting business models as well as provide impact additionality based on our team’s previous work experience in developing job training programs, K-12 school administration, and VR product development. We believe that workforce development solutions are needed to help address income inequality, K-12 improvements are needed to prepare young people for tomorrow’s economy, and next-gen tech innovations are crucial to enable scalable and accessible learning.
Within the themes identified, we will also focus explicitly on underserved learning populations, either directly or by investing in business models with a clearly articulated path to scaling to serve underrepresented groups through market expansion. Given the explosion of investing in the edtech landscape — $20.8B in 2021, 3x pre-pandemic levels — our goal is to leverage our resources to catalyze impact-first strategies.
Theme 1: Holistic and future-proof workforce development
Investing in workforce development is crucial to addressing the income inequality crisis. Around the globe, the gap between knowledge workers and the rest of the economy is widening, compounding structural inequalities. Over the last decade, corporate interest in hiring from a broader pool has increased (one survey shows that 94% of employers are committed to improving DEI in the workplace). Employers are also recognizing that skills-based hiring is crucial — an overreliance on bachelors degrees in hiring exacerbates structural inequality. In addition, COVID-19 has supercharged transformations driven by automation and digitization, resulting in a corresponding skills shift. An estimated 107 million workers may need to switch occupations by 2030, about 12 million more than our pre-pandemic estimate.
In response to these trends, the team’s workforce strategy features subsectors that address barriers to accessing and retaining quality employment, regardless of background. First, we look for upskilling and reskilling models that help adult learners (affordably) gain the tools they need to switch career paths, especially into automation-resistant careers. These skills-based models have proliferated in recent years, especially when coupled with innovative financing, so we are seeking models with robust outcomes of completion rates and wage improvements. Alternative pathway models, such as apprenticeship or job-sharing, represent another way to make finding a new job more accessible for the hire and less risky for the employer.
Creating a more diverse workforce requires meeting people where they are, rather than expecting them to adapt to existing practices that have excluded many. Matching services and platforms are another way to help employers move beyond traditional hiring practices, which often promote bias and maintain the status quo. Credentialing and assessment tools are useful to facilitate matches based on factors such as lived experience or skills beyond a degree or network. Finally, supportive wraparound services such as childcare, social work, emergency aid and transit are essential to help people of all backgrounds succeed in training or at work. Platforms and tools that enable the delivery of wraparound services at scale and with employer buy-in are particularly important.
Theme 2: Longer-term investments in K-12 for students and educators
There is a widespread misconception that more funding will solve all problems in basic education. While new investments are certainly welcomed, positive educational outcomes are much more strongly correlated with how school districts spend money than with check sizes. With that in mind, our team has mapped the sub-sectors with the highest potential of producing positive change and improving learning outcomes.
We started with the foundational skills of reading and literacy. Early grade literacy performance is correlated with future academic performance: children that learn to read earlier usually attain better grades and have improved attention spans. Many researchers point out that reading disabilities are the most common learning difficulty, amplifying the importance of early identification and support. During the pandemic, reading fluency decreased by 30% for second and third graders, making the work to simplify and gamify children’s literacy learning journeys to increase fluency all the more important.
Social and emotional learning (SEL) tools and curriculum enablers are also on our radar, as they are catalysts for students becoming more socially-aware citizens. They also improve students’ learning outcomes in the classroom: research has shown that students that participate in SEL programs increase their grades by 11% and have higher attendance rates.
COVID-19 has exacerbated many problems in K-12, slowing down student learning and costing the current generation close to $17T in lifetime earnings. This being said, the pandemic also presents an opportunity, as teachers and school managers have become more welcoming of technological solutions in the classroom. In this context, classroom management platforms and other educator-focused tools help improve curriculum delivery and overall student experience, allowing teachers to better track student performance and focus their energy on what matters most: teaching and interacting with students. We are also optimistic about community-building platforms that can have a direct impact over students’ engagement and graduation rates.
Theme 3: NextGen Technology as an accelerator for improving learning outcomes
For both K-12 and workforce development, many Augmented Reality (AR) and Virtual Reality (VR) solutions have been recently launched in the market, under the promise to improve student engagement through more immersive experiences. In workforce development, for example, AR/VR solutions can be extremely helpful by allowing employees to practice and learn from situations that would be dangerous or difficult to replicate in real life (firefighting training, for example). These training programs are also much easier to scale: imagine a public speaking course that each adult can take at their own pace and practice as much as they want.
In K-12, another NextGen technology that has been largely deployed is AI for assessments and adaptive learning. Assessments enable teachers to understand student mastery of previous lessons and decide on the next content to deliver. AI models allow pattern recognition and provide real-time feedback to educators, who can then help students reach their goals. From the perspective of a student, AI assessments allow for individualized diagnosis and customized learning paths, so they can learn faster and better. Our team has also investigated novel online learning solutions that make either K-12 supplemental learning or workforce training more affordable and accessible.
Call to Action
Across all these sectors and models, our team is seeking strategies that disrupt the status quo of education and training to create access, improve quality, and adapt to individual needs. We are passionate about supporting education and workforce companies and would love to connect with founders and investors in the space. If you know of any early-stage businesses that could be a fit for our fund, please reach out to gsb_impact_fund-leadership@stanford.edu and ask for the Education team. Learn more about the GSB Impact Fund here.
Education Team: Ozlem Akkurt, Jamie Billings, Claire Chen, Sarah Freeman, Mohammad Jama, Monique Malcolm-Hay, Paula Nicioli, Hannah O’Neel, Eliane Porturas
