Emerge Career’s pre-release job training lands $3.2M seed and new state contracts

Education options during and after incarceration have never been particularly extensive, despite the best intentions of educators. Emerge Career is working on changing that, and its early success in putting formerly incarcerated folks to work is attracting investment from both VCs and government programs.

It was only August when Emerge first appeared as it came out of Y Combinator’s latest batch, and I covered its initial ambitions and approach then. The team previously worked on Ameelio, which upended years of bad and exploitative video calling services in prisons, but also made the problem of education clear to them.

Security and limited budgets at vocational and community colleges limit the amount of help they can actually offer people in the system, and courses from GEDs to trades often take a very “study by mail” approach during incarceration, or traditional brick and mortar one on release. Emerge changes that with modern video lectures and regular video call office hours with educators who specialize in the subject matter.

At first the subject was strictly getting a commercial driver’s license, and that has helped numerous former inmates find jobs soon after release in a sector hurting for labor. Now Emerge is also planning to offer nursing assistant and welding courses — two other areas where a shortage of workers means employers may not think twice about hiring someone recently out of prison.

“Besides the clear labor shortage and high compensations, these are two professions that the justice-involved people we met in prisons and reentry centers across the country showed a lot of interest in,” said Emerge’s Gabe Saruhashi. “Trucking has been an exciting starting point, but we know many people cannot be away from home for prolonged periods of time, be it for personal reasons or reentry obligations. Ultimately, we want to offer training programs for individuals from all walks of life.”

Co-founder Uzoma Orchingwa said the feedback from their first students has been very positive, highlighting the self-paced training (since it can be accessed piece by piece whenever is convenient), its speed (the aim is to go from zero to job in about two months) and the hands-on support they get from Emerge’s career coaches.

Emerge reports that graduates from its program, who once averaged $13 an hour if they had a stable job, are pulling in an average of $78,000 now. It’s hoped the new programs will broaden the appeal and let the company support more students and locations.

The company’s pitch pulled in local officials, a good step if you’re hoping to get into state-funded institutions, and now Emerge has landed a two-year, $845,000 contract (using American Rescue Plan funds) with the Connecticut Department of Labor. They also have several letters of intent, perhaps waiting on outcomes from the other programs.

This early success has also brought in investment: a $3.2 million seed round led by Alexis Ohanian’s 776, with participation from the SoftBank Opportunity Fund, Y Combinator, Lenny Rachitsky and Michael Seibel.

The money will be used to hire engineers and start up the new welding and nursing programs, as well as expand to three more states. Saruhashi said their ambition is to make Emerge Career the first choice for anyone in the country who has a disadvantaged background to get a second chance in the modern workforce.

Emerge Career’s pre-release job training lands $3.2M seed and new state contracts by Devin Coldewey originally published on TechCrunch

Prenda raises $20M led by 776 to build tech to run K-8 microschools

Education took some significant twists and turns when the Covid-19 pandemic descended on the world. We saw a surge of new users, and new tools, around online learning; but we also saw a number of people and organizations more basically start to rethink how to get the best out of learning environments overall. (In fact, education went through many of the same changes as many enterprise verticals facing digital transformation around newly distributed teams, in that regard.)

Today, a startup called Prenda, which has built a platform to enable one permutation of delivering education — by way of tuition-free microschools of ten students or less — is announcing $20 million in funding to expand its business and its vision.

The Series B is being led by Seven Seven Six (776), Alexis Ohanian’s firm. Previously, Mesa, Arizon-based Prenda had raised just over $26 million from investors that included Y Combinator (where it was part of a 2019 cohort), AngelList, edtech-focused VC Learn Capital, Eric Ries (the “Lean Startup” author), Mango.vc and others.

Prenda is not disclosing valuation with this latest round, but the funding comes on the back of some significant traction for the startup.

Prenda says that to date, 3,000 students in the kindergarten through eighth grade range in six states in the U.S. have already been learning by way enrolling in one of 300 microschools powered by its platform and run by hundreds of its so-called guides.

Founder and CEO Kelly Smith came to the idea of Prenda not as someone with years in education behind him, but as someone working in another field who took some time out to consider his next steps after selling a small software business in 2013. During this time, Smith told me he volunteered as a computing tutor at a local library, where he saw kids working on a variety of different skills and projects, each to their own motivation and interest. He was inspired by what he saw, and thought there could be an opportunity to create something deeper around the concept. 

“We arranged groups and provided learning guides to the kids. We then supported the process and helped them become empowered learners by setting their own goals,” he said. “By 2018 I was excited enough about this core learning hypothesis that I wanted to see if you could design a whole school around that.”

The first microschool was in Smith’s own home.

This wasn’t so outlandish at the time. Before the pandemic, the idea of alternative education beyond the structure of public schools provisioned by departments of education was already a concept getting some attention in the U.S., where you not only have private schools, but a number of charter school programs contracting out from departments of education, as well as home schooling and other small learning environments.

So tapping into that, Smith could see the potential of building another option around the idea of learning pods like the one he was running, single classrooms run out of a house or another location run by others interested in education.

Prenda’s operational and business approach leverages parents, schools, school districts, and most often a combination of all of these. Typically, Smith told me that the no-fee schools are financed by more traditional schools or school districts, but they are often organized parents looking for an alternative to the public school system but not prepared to run their own one-on-one full-time home learning. (Microschools have at least 5 learners, and no more than 10.) The fees that Prenda gets — typically financed by the schools, school districts, or other organizations that contribute to schools — are then shared between Prenda and its guides.

School districts where Prenda is active are the actual schools of record for the children, and they provide accredited teachers to oversee the progress of the students and the school, but the guides that run the classes do not need to have teaching accreditation: they can be parents, or former teachers, or people in the community who want to get involved as a new direction for their own careers.

Prenda itself provides operational support — administration tools and learning materials, including computers, to students and guides. Its curriculum both uses third-party online tools like Khan Academy for math, Lexia for reading, and a number of other platforms; along with learning tools developed by Prenda itself (such as several writing platforms).

VCs have a lot of time for startups that are building technology that both fills a need and in doing so is also playing into a well-established market and audience, and those backing Prenda believe it’s checking both of those boxes.

“As a mom and a former teacher, I have spent a lot of time thinking about the power of a great education,” noted Katelin Holloway, Seven Seven Six founding partner. “Since the pandemic, every parent is asking the same questions. We see a future for education that empowers kids, rallies communities, and includes everyone, and Prenda’s microschool model will be a big part of that.”

And yet, it should be pointed out that Prenda — and others like it that promoting small-group schooling like Acton Learning and CoPod — are not without their controversies and detractors.

Although Prenda existed before Covid-19, programs like it, as Holloway pointed out, saw a new focus with the rise of the so-called pandemic pod — where parents, concerned about their children being too isolated and not learning during lock-downs and school closures, were setting up loose schools to enable at least partial teaching environments. Smith tells me that Prenda’s numbers ballooned to 3,000 from 1,000. (Another article in 2021 quoted a company spokesperson saying it had 80 students in 2019, and as many as 4,000 at the height of the pandemic.)

But that doesn’t sit well with everyone. Speaking for one kind of incumbent in the game, the National Education Association appears to have published an opposition report in the wake of Covid-19 highlighting Prenda and describing it, others like it, and the pandemic pod model as a whole, as “flawed” and “exploiting”. Prenda also was investigated last year in its home state by the attorney general’s office for some of its business relationships and how it gets funding.

Even before the pandemic, some efforts like the Andreessen Horowitz-backed AltSchool backed away from running schools in the wake of persistent challenges in building and running alternative schools. (AltSchool eventually rebranded to Altitude Learning and pivoted only into learning management systems; in 2021 it sold up to Higher Ground, the same company that had taken over its schools in 2019.) Another pandemic pod school organizer, Bubbles, is no longer taking students.

All that said, though, education is a tricky one to get right. Every individual learns differently, and one size does not fit all, so having more choices and more flexibility in how learning is provisioned, including options like Prenda’s, is a route to trying to address that. If some startup efforts don’t succeed perfectly, public schools unfortunately fail in that sometimes, too.

Interestingly, Smith told me that funding will be used both to expand to more states and to cover more students and bring on more “guides” (Prenda’s term) to run schools (these do not have to be accredited teachers, more on this below), as well as to start to think about how to enhance the programs that are available today with extra curricular activities, and if there is an opportunity to grow with its students as they get older.

“Starting in high school, you have regulatory and transcript requirements, and there is pressure for college-ready courses, as well a bigger appetite for sports, music and other extra-curricular activities,” he said. “Part of what Prenda is doing is thinking differently about education up to 14 years and we have chosen not to compete beyond that. But we get asked a lot [about programs for older students] from our community so it’s becoming a consideration for us, too.”

Everyone is going to launch a fund that backs other funds

Investors have long invested in other investors as a way to get exposure to ambitious, speedy smaller funds (and access to hot deals before their neighbors notice). Andreessen Horowitz has been doing it for years, most recently putting money into a fund for NFT art, and same with Lightspeed and Sequoia, now have well-known scout programs that give starter capital to ambitious emerging investors.

While fund of funds isn’t a new strategy, it’s one that is gaining significant steam in a softening late-stage market and a rush to back the best pre-seed companies out there. Recent efforts from Tiger Global Management and Seven Seven Six – Alexis Ohanian and Katelin Holloway’s venture capital firm – show just how much attention is going toward emerging fund managers.

To start, The Information reported this week that hedge fund Tiger Global Management is allocating $1 billion for early-stage tech funds. The fund, the story reports, has already backed firms including Better Tomorrow Ventures, which raised a $225 million fund, Moxie Ventures, which landed $85 million for Fund II, and Chapter One Ventures, which recently launched an accelerator program off of a $40 million fund raise.

Days later, 776 announced the Titans Fund, an investment vehicle and accelerator that hopes to help emerging fund managers start their own, independent investment firms. The fund, besides providing activational capital, wants to help aspiring investors with advice on how to actually execute on their theses. The investors will also get access to Cerebro, 776’s software tool that connects portfolio companies to a searchable database of over 40,000 contacts.

The throughline between Tiger Global and 776 is that both investment firms want exposure into the early-stage, and instead of doing that themselves, they can lean on experimental investors to de-risk and even lead those first checks. Sure enough, just months ago Bain Capital announced a $1.3 billion fund to back younger firms and startups, which helps the firm support diverse founders, and gives its existing limited partners newer opportunities to seed.

The growth of fund of funds taps into another growing trend: a blooming interest in codifying the investment world. In the past, there was an informal handshake-type vibe to co-investing and passing on deal flow. Now, in a world where scouts can just start a rolling fund and emerging managers are able to lean on the community to win deals, firms need to put money where their collaboration is.

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Reddit co-founder Alexis Ohanian’s 776 closes new $500M venture fund

Seven Seven Six, better known as 776, announced today that it has closed on $500 million across two vehicles for its second fund.

The raise was “oversubscribed,” with $300 million going toward funding startups at their “earliest possible” stage and $200 million allocated for backing companies at their growth stages — or once they start to break out, according to 776 founder Alexis Ohanian.

Notably, 776 only closed on its first $150 million — also oversubscribed — fund just a year ago. It now has $750 million worth of assets under management.

We saw significant markups from our early investments in Fund I and ended up needing to raise this second fund sooner than expected,” Ohanian told TechCrunch in an email interview. “Good problems to have!”

Today, the 776 portfolio includes over 38 companies that have cumulatively raised more than $800 million in follow-on capital. Interestingly, the firm “almost always” leads the rounds it participates in, according to Ohanian. 

Companies within the 776 portfolio include Alt, an alternative asset trading platform; Pipe, a global trading platform that makes recurring revenue streams tradable for their annual value; Axie Infinity, a web3 play-to-earn online gaming universe that witnessed over 200x growth in the last year; and Metafy, a video game education platform providing one-on-one access to champion-level gaming coaches. Pipe was valued at $2 billion at the time of its last raise and Axie Infinity at $3 billion last October.

Ohanian, who also co-founded Reddit and Initialized Capital, told The Wall Street Journal that 776 plans to invest “primarily in crypto startups” out of its new fund and that 40% of its current portfolio is made up of crypto-related companies. Crypto investments are already seeing a good start to 2022 building off record hype in 2021.

When asked to confirm the crypto focus, Ohanian told TechCrunch that 776 follows “the lead of the smartest founders we meet.”

So if they keep building in Web3, we’ll keep funding them,” Ohanian said. “We’re also seeing a strong push into climate tech, space tech, food tech and still good old-fashioned SaaS businesses.”

As for how 776 sources its deals, the investor said that for now, it’s a “really old-fashioned” process in which leads mostly come via email or text and then end up in Cerebro, the operating system his firm developed.

That will improve this year with some more product to widen our top-of-funnel,” Ohanian said.

Cerebro is its first product and is designed to give founders a way to search 776’s network of 44,000 contracts and request an introduction “with one click.”

The thinking behind the technology was simple. 

“We have a great network that returns our emails and it’s not a good task for a human brain to be asked ‘hey do you know someone at twitter? Do you know a machine learning engineer?’” said Ohanian. “It’s much better to query a database anytime you want to.”

All of 776’s work lives there and that too is by design, he said. 

“This creates transparency and accountability – not only within our team, but also with our founders and investors,” Ohanian told TechCrunch. “The goal is to scale the most valuable and most productizable parts of our work first, so that when we spend time with our founders it’s the kind of work only humans can do well (empathy, strategy, creativity).”

When launching 776’s first fund, the firm said explicitly that it sought a diverse investor base, of which 50% identified as female and 15% as Black or Indigenous people. 

So how’s it doing?

The firm invites all its LPs to participate in a biannual, in-depth demographic survey. The most recent survey revealed that 51% of 776’s LPs identify as female, 13% as Black or Indigenous people and 10% as Latino/a/e. 

It does not have explicit founder diversity goals.

To up its game in being a resource for founders, Ohanian said 776 has started providing “actual receipts,” or monthly accountability reviews, for the work it does for its founders.

“It’s the exhaust from our engine,” he said. 

Nuggs creator Simulate raises $50M

New York-based Simulate today announced a $50 million fundraise. Led by Alexis Ohanian’s 776, the Series B brings the meat alternative’s total funding to north of $60 million and values it at $260 million.

Simulate’s first product, Nuggs (formerly also the startup’s name), has already caused a splash, thanks in no small part to aggressive online advertising. The company notes a massive push in retail availability in the last six months. The chicken nugget alternative was available direct to consumers through online ordering when it launched in Summer 2019 — availability that moved the needle during U.S. shutdowns over the past year.

“During the height of the pandemic, people really wanted frozen food shipped directly to their door,” founder and CEO Ben Pasternak tells TechCrunch. “At the time, we were DTC only, so we saw a lot of growth there prior to our pivot to retail.”

He adds that the majority of the company’s sales now currently come from retail, due to accessibility and more restrictive DTC pricing. Currently, the product is available in 5,000 retail locations, a list that includes pretty massive retail names like Walmart/ Sam’s Club, Target and Whole Foods.

“We are getting ready to launch in restaurants and in fast food,” says Pasternak. “Internationally, we recently launched across Canada, and have plans to expand to other countries too.”

Funding will also go toward expanding the company’s headcount. Currently at 20, Simulate expects to expand employment to 50 people by 2022. “Over half of that expansion will be focused on growing our engineering team,” Pasternak says.


Alexis Ohanian files for a new $150M fund, with a nod to his Olympian family

According to an SEC filing, Alexis Ohanian, the co-founder of Reddit and early-stage VC firm Initialized Capital, is raising a new fund, named 776, with a target of $150 million. The filing comes three months after the entrepreneur left Initialized Capital and a month after The Information first reported on his plans. Ohanian declined to comment on details regarding the fund due to general solicitation restraints.

Along the filing, the fund launched an intentionally cryptic new website: sevensevensix.com. It appears that the name of the fund is a reference to when the first Olympics were held, in 776 B.C.E.

The website reads: “The first Olympics brought the best athletes from all over the known world to determine who was the greatest. The first competition was a 192m footrace; it was won by a cook from a nearby village. We’re going back to that very first starting line.”

If I had to guess, I’d say Ohanian’s investing in pre-seed and seed startups. And he’s likely not investing in startups solely run by cooks in villages all over Olympia, Greece.

His tie to the Olympics is personal. Ohanian is husband to tennis superstar and champion Serena Williams, who has four Olympic gold medals to her name. (Williams invests too, and joined Bumble’s investment fund a few years ago). In fact, the couple has a daughter, Alexis Olympia Williams. 776 is a likely nod to his gold medalist family, not just the games. 

Further details on Ohanian’s new fund, and what it plans to focus on, remain opaque.

In a statement to TechCrunch, Initialized Capital said that Ohanian left the firm, which raised a $230 million fund in August, to work on a “a new project that will support a generation of founders in tech and beyond.”

Earlier this year, Ohanian left his board seat at Reddit following protests of police brutality. The co-founder urged Reddit to fill the seat with a Black board member. Reddit ultimately selected Y Combinator CEO Michael Seibel to fill the position.