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The Role of Capital in Education Innovation

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Michael Staton
Michael Staton

Despite education being the third largest sector of the US economy, it receives very little venture capital investment compared to other sectors like healthcare and technology. Venture capital helps create new industries but education receives less than 0.0001% of total capital. The document argues that there are larger pools of capital like sovereign wealth funds, university endowments, and teacher retirement assets that could potentially be oriented towards long-term, visionary investments in education if mechanisms like crowdfunding were used to connect them with entrepreneurs pursuing new ideas for the future of education.

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Despite increasing interest from capital, education is comparatively starved. @mpstaton
Percentage of Sector GDP vs VC Investment Education is the third largest segment of the economy, yet has been signi?cantly under-represented in venture Source: World Economic Outlook database, Centers for Medicare & Medicaid Services, US Department of Energy, UN Human Development report, PWC / NVCA “Money Tree Report”, BMO Capital Markets “Education & Training”, World Bank Study 60% ICT 31% Health10% Alt Energy ~0% Education % of total VC investment 0% 15% 30% 45% 60% IT Energy Education % GDP %VC % of US economy 58% other 17% Health 9% Energy 8% ICT 8% Education
$53 Trillion in Managed Assets $200 Billion in Venture Capital $3 Trillion in Private Equity > $2 Billion in Education Ventures $212 Trillion in Global Assets .0001% of Capital goes to Innovation in Education
Venture Capital helps create industries.
Where do we put our money?
We act like money grows on trees....
$141 Billion in High- Frequency Trading 73% of trading volume $2.2 Trillion in Hedge Funds “A new breed of trader had emerged who focused on gaming the plumbing itself, exploiting complex loopholes and quirks inside the blueprints like card counters ferreting out weaknesses in a blackjack dealer’s hand.” “Because hedge fund managers make speculative investments, these funds can carry more risk than the overall market” ?Global Macro ?Directional ?Market Neutral ?Event Driven Some capital pools seem far away from value creation
Private Equity is lost “More Money Than They Know What to Do With” - The New York Times $500 Billion in Private Equity has nowhere to go.
Extractive Actively seeks to extract value out of calculable assets Migratory Searches for unfair returns by gaming the system Productive Invests in long-term strategies proposed by entrepreneurs and management Visionary Seeks to invest in entrepreneurs and management pursuing a vision for the future Let’s simplify Clayton Christensen’s de?nitions according to the “doctrine of new ?nance.”
Let’s simplify Migratory Productive
Extractive Actively seeks to extract value out of assets Migratory Searches for unfair returns by gaming the system Productive Invests in long-term strategies proposed by entrepreneurs and management Visionary Seeks to invest in entrepreneurs and management pursuing a vision for the future We need to think of capital as having intentions.
Migratory Productive VisionaryExtractive We need to think of capital as having intentions
What if we could reorient capital? Migratory Productive VisionaryExtractive
What if we could reorient capital? Migratory Productive VisionaryExtractive
What if we could reorient capital? Migratory Productive VisionaryExtractive
What if we could reorient capital? Migratory Productive VisionaryExtractive
Inspiring work Make a profit An inappropriate dividing line.
Blur the line let’s refuse “OR” Inspiring work Make a profit “AND”
$4.6 Trillion in Sovereign Wealth $583 Billion in Philanthropic Assets $411 Billion in University Endowments $1.14 Trillion in (Funded) Teacher Retirement Assets (US) There are capital sources that have an interest...
Emergence of Crowdfunding.
Crowdfunding models can unlock larger pools $217B in Individual Giving $42B in Foundation Giving 35% in Top 1% Assets 53% in Next 19% Assets Grow the pie.
What if we could open up investment into visions for the future? inspire.vc What if we could.... ?
Thank you. @mpstaton

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The Role of Capital in Education Innovation

  • 1. Despite increasing interest from capital, education is comparatively starved. @mpstaton
  • 2. Percentage of Sector GDP vs VC Investment Education is the third largest segment of the economy, yet has been signi?cantly under-represented in venture Source: World Economic Outlook database, Centers for Medicare & Medicaid Services, US Department of Energy, UN Human Development report, PWC / NVCA “Money Tree Report”, BMO Capital Markets “Education & Training”, World Bank Study 60% ICT 31% Health10% Alt Energy ~0% Education % of total VC investment 0% 15% 30% 45% 60% IT Energy Education % GDP %VC % of US economy 58% other 17% Health 9% Energy 8% ICT 8% Education
  • 3. $53 Trillion in Managed Assets $200 Billion in Venture Capital $3 Trillion in Private Equity > $2 Billion in Education Ventures $212 Trillion in Global Assets .0001% of Capital goes to Innovation in Education
  • 4. Venture Capital helps create industries.
  • 5. Where do we put our money?
  • 6. We act like money grows on trees....
  • 7. $141 Billion in High- Frequency Trading 73% of trading volume $2.2 Trillion in Hedge Funds “A new breed of trader had emerged who focused on gaming the plumbing itself, exploiting complex loopholes and quirks inside the blueprints like card counters ferreting out weaknesses in a blackjack dealer’s hand.” “Because hedge fund managers make speculative investments, these funds can carry more risk than the overall market” ?Global Macro ?Directional ?Market Neutral ?Event Driven Some capital pools seem far away from value creation
  • 8. Private Equity is lost “More Money Than They Know What to Do With” - The New York Times $500 Billion in Private Equity has nowhere to go.
  • 9. Extractive Actively seeks to extract value out of calculable assets Migratory Searches for unfair returns by gaming the system Productive Invests in long-term strategies proposed by entrepreneurs and management Visionary Seeks to invest in entrepreneurs and management pursuing a vision for the future Let’s simplify Clayton Christensen’s de?nitions according to the “doctrine of new ?nance.”
  • 11. Extractive Actively seeks to extract value out of assets Migratory Searches for unfair returns by gaming the system Productive Invests in long-term strategies proposed by entrepreneurs and management Visionary Seeks to invest in entrepreneurs and management pursuing a vision for the future We need to think of capital as having intentions.
  • 12. Migratory Productive VisionaryExtractive We need to think of capital as having intentions
  • 13. What if we could reorient capital? Migratory Productive VisionaryExtractive
  • 14. What if we could reorient capital? Migratory Productive VisionaryExtractive
  • 15. What if we could reorient capital? Migratory Productive VisionaryExtractive
  • 16. What if we could reorient capital? Migratory Productive VisionaryExtractive
  • 17. Inspiring work Make a profit An inappropriate dividing line.
  • 18. Blur the line let’s refuse “OR” Inspiring work Make a profit “AND”
  • 19. $4.6 Trillion in Sovereign Wealth $583 Billion in Philanthropic Assets $411 Billion in University Endowments $1.14 Trillion in (Funded) Teacher Retirement Assets (US) There are capital sources that have an interest...
  • 21. Crowdfunding models can unlock larger pools $217B in Individual Giving $42B in Foundation Giving 35% in Top 1% Assets 53% in Next 19% Assets Grow the pie.
  • 22. What if we could open up investment into visions for the future? inspire.vc What if we could.... ?