Deal to Watch: Global Learning for the Curious Student

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Summary

PenPal Schools has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our deal diligence funnel.

Problem

When it comes to student motivation for today’s generation, it is becoming very clear that children from K-12 are increasingly losing interest in their work, hurting overall performance in schools.

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Quartz, 2018

Looking at the graphic, it becomes apparent that from elementary to high school, there is a significant drop in engagement, fun, excitement, and simply overall value of learning. More concerning, however, is the fact that these factors are low to average to begin with. In a Gallup Student Poll in 2017, 29% of students K-12 claimed feeling disengaged in school while 24% were actively disengaged. On top of these disturbing statistics, 34% of students are stuck and 20% downright discouraged when it comes to schoolwork.

It is clear that students are not receiving the attention they need and not leaving school feeling invigorated and excited, something that can be incredibly detrimental to overall learning and future growth. Globally, it becomes quite clear how the lack of motivation in U.S. schools is impacting student performance when compared to peers worldwide.

Solution

PenPal Schools has decided to tackle this issue by creating an online, global connection of over 320,000 students from over 7,000 schools in 150 countries. By offering students the opportunity to communicate with others miles away while collaborating on projects, PenPal Schools hopes to spark more interest in learning.

Not only do students have access to a wide variety of subjects and topics through which they can work globally to design robots, create films, explore careers, and so much more – working to learn from different perspectives and find solutions to problems, but teachers are able to create their customized online classrooms with constant access to all of the students’ messages and work. In addition, teachers are able to provide feedback and grades to help encourage students to learn more and develop in the areas needed.

By interacting with peers that would normally be out of reach and delve into more hands on projects, students are able to create authentic connections that help with readings, writing, digital citizenship, and emotional intelligence.

While there are currently many options in the market for schools and individuals to sign up for pen pal programs, there is nothing quite like PenPal Schools – offering education and worldwide connections at the same time. This offering is a market breakthrough and truly a one of a kind product.

Even though unprecedented in its own sense, the idea of project based learning (PBL) that PenPal Schools adapts in its program is not. While there are no official PBL statistics to track as of yet, much research goes to prove that students who learn through PBL retain content longer and have a deeper understanding of content, perform better on high-stakes tests, demonstrate better problem solving skills, and demonstrate improved attitudes towards learning. In addition to this, PBL shows incredible promise for working in different types of schools, serving diverse learners and helping support the global program that PenPal Schools offers.

Not only is PBL a growing category in education, but statistics show that the biggest individual spending category by far is “instruction” in schools, with at least $6,821 being spent per student annually. This is 61% of all current spending that goes towards course material and books, making PenPal Schools – with their online platform and lower costs – a much more appealing substitution when it comes to certain courses or classes.

Why We Like it

  1. Promising for students and teachers alike: Not only is the project based learning approach that PenPal Schools is attempting to adapt to incredibly beneficial for students, but for teacher alike. While some teachers may be reluctant to commit to PBL because they fear it means scrapping a style they are more comfortable with for another and starting over, it has been proven that despite this additional time and professional development needed to become familiar with PBL, teachers who make an effort report increased job satisfaction.
  2. Facilitating teacher involvement: PenPal Schools recognizes the importance of teacher involvement and satisfaction, and implements a free trial of two topics for teachers willing to test out their platform. After the trial period, teachers are then able to encourage principals to purchase a license for their respective school, with the average license with unlimited access at about $1,900 annually, not accounting for discounts for small schools and schools serving low income communities. According to PenPal School’s statistics, 78% of teachers who complete their free trial encourage the purchase of a license, denoting support and success for their method of teaching. Not only does this model encourage teachers to test PenPal Schools, but also helps schools ensure that limited funds are used on a resource that is actually beneficial to teachers and students.
  3. Upcoming mobile app: PenPal Schools is not simply going to stop at their facilitation of global connections and learning through their online platform, but is also working on engineering an app that makes it easier for people with unreliable connections to get course work offline so they can continue to work and communicate with fellow students. This app would also enable parents to have access to their children’s work and content online, keeping track of progress and motivating interest outside of school and creating additional revenue opportunities for enrollment in extra topics for a monthly fee.
  4. Strong partnerships and success to date: In 2015, PenPal Schools partnered with Dell in “Big Small World Contest”, focused on providing technology to non-governmental organizations working the global education space. Not only did they host a competition to give to a cause promoting their own mission, but also partnered with a large corporation, increasing their own influence and enthusiasm for their program. Since then, PenPal Schools has been names Best Education Technology of 2017 by Common Sense Education and was recognized by Obama as a leading social enterprise. Their name and mission has spread, granting them licenses in schools across the world with 790% YOY revenue growth.

Founders

PenPal Schools has three experienced, passionate founders who all work together to ensure that the company stays on track to fulfill its mission to educate and connect students all over the world in a hands-on way.

Joe Troyen, Founder and CEO, is a proven entrepreneur whose prior venture, Healthtech, now generate $5M in annual revenue. In his 10 years as a product manager, he has led design and development of software used by investment bankers, hospital administrators, and educators among others.

Miguel Vasquez, Co-Founder and CTO, is an incredibly skilled developer and previous owner of his own development agency where he le a team of four software engineers. In addition to this experience, he helped a startup develop a video streaming system which currently holds a patent, ensuring that he is just the man for all of PenPal School’s online and programming needs.

The third and final founder, Mark Danforth, Chief Learning Officer, spent six years in California as a teacher and school leader. His Master’s in Education and specialization in curriculum design is testament to his ability to help design the perfect PBL program fit for students worldwide – engaging and inspiring K-12 students to want to learn more.

Rating

With an unprecedented offering, an adaptation to a growing method of learning, a market in need of solutions like this, an experienced founding team with a range of skills, and students with a desperate need for heightened engagement and interest – there is no doubt that PenPal Schools will have a significant impact on our education system.

This platform offers a modern way of learning that not only heightens student and teacher involvement, but also forces thinking from different perspectives, bringing people from all around the world closer together in a way that is bound to benefit future global solutions.

The unfortunate challenge for the business in its current state is generating significant revenues. Despite over $450K in operating expenses last year the team was only able to generate around $7K in revenue. While the team is absolutely still in its early days and focused on growth over profitability, it appears as though the education sector, which unfortunately always seems to be cash constrained could create near-term challenges for revenue growth.

While we believe in the long term viability of the business once the teams establishes enough proof points to win over more paid contracts, at this time we do think the team will be hampered on driving actual revenue dollars into this business. At the current $12M valuation cap, we think this is a Deal To Watch and will be one to watch for the long term with no clear near term suitors for acquisition.

Regardless, it is an intriguing business.

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About: Chris Lustrino

A Boston College Eagle for life, on a mission to democratize startup investing for all people at KingsCrowd, with a passion for Fintech, investing, social impact, doing well and doing good, and an avid runner, cyclist and writer.

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