Securing Investors and Structuring the Deal 329Innovation and Learning
L. John Doerr has helped launch dozens of
successful ventures, including Google,
Netscape, and Amazon.com, as a partner in
the venture capital firm of Kleiner Perkins
Caufield and Byers. But six years ago Doerr
became involved in a venture capital fund
that doesn’t expect to earn a penny in profits.
The New Schools Venture Fund is instead
focused on getting a return in innovative solu-
tions to the problems facing public education.
The New Schools Venture Fund’s
(http://www.newschools.org) investments
include a high-tech high school in San Diego
(www.hightechhigh.org); a Web site for par-
ents with advice about helping their children
in school and information for evaluating their
local schools (www.greatschools.net); and a
nonprofit charter school cluster of fifteen
K–12 schools (www.aspirepublicschools.org)
working to raise the academic performance of
California’s diverse student population. More
than half of the 4,000 children enrolled in
Aspire Public Schools are economically dis-
advantaged; 67 percent are Hispanic or
African-American, and 39 percent are English
Language Learners. The projects are all dedi-
cated to helping students:
- develop scientific, technological, and literary
skills - learn to work collaboratively in diverse
teams - learn to communicate via new kinds of
media - prepare to participate in American democra-
cy as informed and involved citizens
The New Schools Venture Fund raised its
first $80 million from contributions from indi-
viduals like Mr. Doerr and from foundations
like the Bill and Melinda Gates Foundation,
which contributed $22 million. The fund is
now trying to raise an additional $125 million
by appealing to donors who want to have an
impact on public education and who value
the fund’s expertise in identifying worthwhile
projects. Several of Doerr’s partners in
Kleiner Perkins Caufield and Byers are
among the major donors to date, and princi-
pals from four VC funds serve on the New
Schools Venture Fund’s Board of Directors.
Investing in education entrepreneurs is a
new frontier for wealthy investors who have
lost interest in traditional start-ups. Doerr
describes the New Schools Venture Fund as
a fresh kind of philanthropy “held accountable
by the rigors of venture capital financing.”
The Fund’s Web site says it is the only ven-
ture philanthropy fund dedicated to K-12 pub-
lic education reform.
Doerr claims investing in education is
more difficult than backing high-tech ven-
tures. “The education entrepreneurs have it
harder. They must overcome massive institu-
tional resistance,” he says. So far the
California Teachers Association has been
skeptical of the charter schools movement,
possibly because the schools are not union
employers. “And if the high-tech entrepre-
neurs succeed, they get rich,” continues
Doerr. “The educators’ rewards will be more
important in life, but they’re not going to get
rich.”
The educational ventures the New
Schools Venture Fund supports are expected
to become self-supporting with tax dollars
from local, state, and federal sources fairly
quickly. “Education is not the filling of a pail
but the lighting of a fire,’” observes Ted
Mitchell, the Fund’s CEO. “We provide the
fuel for that fire.”
SOURCES: J. Flanigan, “Venture Capitalists Are Investing
in Educational Reform,” New York Times Online. Retrieved
from the Web, February 16, 2006. http://www.nytimes.com.DISCUSSION CASE