Elizabeth Chou: Partner, Leeds Illuminate – Investing in Adult Learning

“The number of people that need to be upskilled and retrained by 2030 is estimated to be a billion or more globally.”

– Elizabeth Chou

On this episode of On Work and Revolution podcast, Elizabeth Chou, co-founding partner at Leeds Illuminate joins me to unravel some complex themes. We dive into the quickly evolving investment landscape and all the new workforce trends shaping the market today. And of course, no conversation in 2024 is complete without touching on AI & Elizabeth shares the transformative potential of AI in personalized learning and workforce upskilling, pointing towards a future where technology revolutionizes access to education and career advancement opportunities. 

Debbie & Elizabeth dig into:

nuanced differences between venture capital and private equity and what it means for founders

✓ the impact of market forces such as interest rates, valuation pressures, and liquidity issues on fundraising, deal-making, and exit opportunities

evolving trends in the workforce, including the rise of fractional leaders in EdTech

About our guest, Elizabeth Chou

Elizabeth is a co-founding partner at Leeds Illuminate and has been an investor for over 20 years. She has deep experience investing across the capital structure from early-stage equity through later stage equity and debt. For the last decade plus, Elizabeth has focused on investing in impact education and workforce development companies. Prior to Leeds Illuminate, Elizabeth was a General Partner at New Markets Venture Partners where she invested in early and growth stage companies in K12, higher education and workforce development. Prior to joining New Markets, Elizabeth was a Senior Associate at The Gladstone Companies where she focused on control equity and mezzanine debt investments.  Elizabeth began her career as an Account Executive with M&T Bank’s Commercial & Industrial Middle Market Lending Group. 

Helpful Links:

Follow Elizabeth on LinkedIn
Learn more about The Mom Project

Open for Full Episode Transcript

Open for Full Episode Transcript

Debbie Goodman:

Hello everyone. I want to chat a bit about creating career mom friendly workplaces. And this may seem a bit exclusionary to career dads, sorry dads, kudos to you for those of you who are involved dads and who take on your 50 percent or more of the parenting and domestic load. I know you guys are out there, but really what all the global data shows is that women, career women with jobs outside of the home.


Even if you’re working from home, still carry most of the load. Right. So creating career mom friendly workplaces, it’s actually not that hard, but honestly, until I had kids of my own, I didn’t fully appreciate the full extent of the mom guilt that many women have, because from the moment that the baby pops out.

Pop being the figurative. Okay. No, that’s not actually how it goes down from the time that you have the baby. If you’re also ambitious, driven, want to have a career that is going to continue to advance by virtue of ongoing achievements and accomplishments. It’s, it’s a tightrope that we walk. I had always been super focused on my career.


I could devote as much time to work as I wanted. And then boom. Babies and I couldn’t and I didn’t want to do that any longer but then it was figuring out the compromises that I was willing to make. I kind of had to accept and reconcile the fact that neither my family nor my work would kind of ever get my undivided attention ever again, but with me I was my own boss and I could make my own choices and decisions. And so I realized pretty soon what an absolute privilege this was and also that I really owed it to all of my staff members with kids to give them the same privilege of choice. My overriding principle around this was that I never wanted anyone to feel that they needed to apologize for having children, that they needed to hide or make excuses or feel guilty for taking important time for their families, and I also didn’t want moms to feel that the only time they could ask for flexibility was like for an emergency or for sick kids. I wanted them to take time for whatever they considered to be important. Soccer games and school concerts and afternoon pickups and just to take the time for the good stuff, too. Okay, so now some of you may be wondering how this actually works in practice. Don’t people let work slide? Don’t they take advantage of the flexibility?


Here’s the thing. Absolutely not. Nope. Never. I have never needed to worry that my team would not deliver on their accountabilities. Balls seldom, never drop. Career moms are the most resourceful, organized, and diligent people I know. So, I mean, why would I ever even need to doubt. So if you’re thinking that perhaps I was going to trot out a manual of 10 steps on how to create a career mom friendly work culture, here’s the thing.

It’s actually just not needed. It is really super simple. Okay. Here’s number one, hire the right people. Number two, make sure that accountabilities and deliverables are clear. And then just number three, give people the flexibility and trust that they deserve. That is it. Okay. You may be wondering why I’m sharing this and how this relates to my upcoming podcast guest, Elizabeth Chou.

Well, she’s an investor whose private equity firm invests in companies that improve workplace access. One of the portfolio companies is this absolutely awesome organization called The Mom Project. Anyway, more of this coming up in the formal informal part of On Work and Revolution. Roll music.


Welcome to On Work and Revolution, where we talk about what’s shaking up in the world of work and Edtech. I’m your host, Debbie Goodman. I’m CEO of Jack Hammer Global, a global group of executive search and leadership coaching companies. I’m also an advisor to venture backed Edtech founders and for those of you in Edtech who are hiring, we have launched a fractional leaders offering. That’s the little punt for the day. I’ll put the link in the show notes. My main mission with all of my work is to help companies and leaders to create amazing workplaces where people and ideas flourish. And today I’m really thrilled to be joined by my guest, Elizabeth Chou, who I heard speak on a panel at a conference last year, and I decided I really needed to invite her to be a guest on the pod. 


So a quick intro, Elizabeth has spent the last 15 years or so as an investment professional investing in early stage venture capital, later stage private equity, mezzanine and senior debt, which to the uneducated ear may sound like it’s all just one thing, but it really is not and it’s pretty unusual to have a career that spans such a vast range of investment stages and debt categories. Elizabeth is currently a partner with Leeds Illuminate, a leading company focusing on the knowledge industries.


We’ll find out more about this in a bit. Prior to joining Leed, she was with New Markets Venture Partners, which focuses on early stage venture investments in Edtech companies and she’s covered all the other categories with Gladstone Companies and M&T Bank. All right and today we’re going to be chatting to Elizabeth about her take on the opportunities that are presenting themselves for private equity investors, as well as her investment view on companies that are promoting adult learning and workforce access. So welcome Elizabeth. 


Elizabeth Chou: 

Thank you so much, so nice to be here with you.


Debbie Goodman: 

All right, so on this podcast, I’ve had several guests who are either venture or angel investors in Edtech and workforce. But you, I think maybe my very first guest, who’s actually a private equity investor. I’d love to learn more about Leeds Illuminate. What’s the investment thesis or focus? What types of companies are in the respective portfolios?


Elizabeth Chou:

Terrific. And thank you again. Uh, so Leeds Illuminate, we are, we consider ourselves a growth equity investor and so for us, the way we define growth are companies that are doing at least 10 million in revenue and up, up through companies that are several hundred million in revenue and looking for strategic minority partnership.

So we are investing really, as you noted in the education and workforce categories. We’re looking at companies and helping to support them that are supporting learners and workers from their first day of school to their last day of work so we span companies that might have taken venture investment from the angels that you’ve spoken to or other VCs, up through companies that, you know, perhaps have never taken institutional capital and are looking for their first institutional capital and so we really span quite a large spectrum, which is fun for us, fun for the team and so invigorating to work with great founders, in many different stages of growth. 


Debbie Goodman: 

Okay. So let’s talk about those stages of growth because, once again, we have listeners who are not pros in the space and venture capital and private equity can sometimes sound like the same thing. So what, how would you define that? How do, how would you distinguish the two?


Elizabeth Chou: 

Yep. So it’s confusing. I understand the potential confusion and conflation. So technically in private equity, we should really think about private equity is investing in the private markets, investing in companies that are not public and so by that definition, venture capital is actually a subset of private equity. But when we talk about private equity, most of the time we’re referring to strategies and fund managers that are investing in control buyouts. So, companies that are a little bit more mature, um, that have the capacity to service debt fund managers on the private equity control buyout side are often using debt as part of their acquisition strategy, where they are writing and investing an equity check from the fund in addition to having debt on the company’s balance sheet versus venture investors, which are typically minority investors, they’re investing in companies that are earlier in their stage in development. So less mature, they’re typically not using debt as part of their investment strategy as these companies are typically high growth, usually not cash flow positive, and venture capitalists are looking at, you know, sort of more potential rather than private equity buyout.

Investors are looking at also potential, but is there a company here that has, you know, sort of sustainable and steady cash flows that they can underwrite to? 


Debbie Goodman: 

And so the question I have for you is, do you have a preference? I mean, you’ve done both. It sounds like there’s a different style, a different pace, a different type of founder, maybe the founders even already exited by the time you get to the private equity investment. Is there a preference that you have now that you’ve been on both sides?


Elizabeth Chou:

It’s fun having been on both sides, and I would say that my experience on both sides informs my view of investing now and what’s really nice about where we’re investing at the Leeds Illuminate side strategy, is that it’s really bringing two halves of myself back together. So I had been on the later stage buyout side. I had been an earlier stage VC growth is, you know, kind of sits in the middle of that and so there are aspects of my world from private equity that, you know, are very relevant to what I do today and there are aspects to what I was doing as an earlier stage VC that are very relevant. So I’d say that, you know, from enjoyment perspective, I enjoy the most where I am today. You know, part of what is so wonderful about being an investor is getting the opportunity to work with incredible management teams and help them grow and really realize their vision for their business and the mission that they’re serving.


Debbie Goodman: 

Let’s take a look at where the markets are now. I’ve spoken to so many venture capital investors as well as founders who are kind of stuck with a situation where it’s really, really tough to raise capital right now. Is the private equity markets being faced with the same challenges or different ones?


Elizabeth Chou: Yeah. So, I think certainly, founders who are raising capital have seen the impact of a couple of forces that are also at work from the fund manager perspective as well as the private equity markets. And so, you know, founders having and trying to raise capital in an environment with much higher interest rates than we’ve had recently, not the highest certainly that we’ve seen historically, but higher than we’ve seen in over a decade and so that has really changed the cost of capital and the returns expectations. And so I think that is having a negative downward pressure on valuation, which some founders I think are having a harder time accepting in addition to, you know, sort of risk profiles and just overall strength of the economy has changed.

I think a lot of the conversations around fundraising and particularly structure that we’re seeing come back into many deals on the fund manager side and private equity and venture, you know, that sort of slower deal environment has created less exit opportunities for fund managers. And so what you are seeing is a little bit of a slowdown in the fundraising markets then so, you know, funders and entrepreneurs may have a hard time raising capital. Fund managers are then having a hard time raising capital from their limited partners, their investor basis and so all of this has a little bit of a compounding effect of slowing markets down, because of sort of general liquidity issues from exit markets, the IPO markets, which then are impacting allocators, who are allocating to funds and then fund managers who are deploying into companies.


Debbie Goodman: 

You know, the trickle down effect really impacted the hiring market as well. So with the very quick flow of money and then type of dealmaking and the speed at which deals needed to be concluded, let’s say a couple of years ago, there was not a lot of pause. There were, I know the kinds of deals that were taking place where the level of rigor that one might want to do in terms of due diligence, particularly on the VC side, I’m not sure if this impacted the private equity side as well, just didn’t have the time to go through the rigor because there were competing offers on the table before you could even turn around. Same thing in the hiring market. We had this absolute hiring frenzy. We had candidates who would come for an interview knowing that they already had two other offers. And before they could even finish an interview process, they would be snapped up by someone else. The package offers that were being offered were just increasing, increasing and increasing in order to like fight for talent. And as a result, we ended up with people making poor career moves or companies hiring without doing the level of rigor that I would have liked. And so I’m wondering if in the deal making space, the slight slowness, if one can put a positive spin on it, perhaps has the positive impact of adding rigor to the process and making sure that the deals that are getting done are getting done well.


Elizabeth Chou: 

I think it certainly has enabled longer diligence cycles from the fund manager’s perspective. You know, this is where being a sector specialist [00:14:00] has a lot of value, uh, in those very competitive times, because certainly we saw deal processes that were, you know, um, uh, companies expecting term sheets within seven days, not even seven business days, but seven days.

Um, I, and it, it’s really difficult. And so, you know, what we tell our investors is that, um, Um, you know, having been in the space for, uh, well over a decade and, you know, our team has multiples of that of experience in this sector. Um, this is where being able to navigate through some of those challenges, um, has really helped us, uh, as investors.

Um, because of those compressed diligence cycles, um, you know, knowing folks to call on the front end. Uh, and, and really understand, um, the, what, what you would be investing in prior to, uh, even a shortened diligence cycle, uh, is helpful. So, you know, as those diligence cycles elongate, certainly, um, it gives every investor an opportunity, uh, to do [00:15:00] the work that is necessary, um, and hopefully get to the same answer.

Debbie Goodman: Okay. So now let’s talk about the approach, the post deal, um, engagement with, uh, with the company that you’ve invested in because, um, venture investors, they have a minority investment. They’ll sit on the board. They might be an advisor or they call a board observer, but not necessarily have too much opportunity to influence depending on the size of their stake.

With a private equity investor, the intention is that you take a majority, um, or it’s a buyout or anyway, there’s more influence. Thanks. And so how do you drive the growth that you’re looking to achieve as the, as the new investor? Um, when you’re dealing with, you know, people who have not been used to having influential investors on their board, perhaps they’ve transitioned from the venture style now into private equity and now it feels like they’ve got a boss.

There’s a new boss in town. 

Elizabeth Chou: You know, that that’s always a tricky dynamic, at least eliminate as a growth investor. We are [00:16:00] a minority investor. And so, um, of we have invested in eight terrific companies, uh, with an average check size of about 30 million in our companies. We are very active investors. So of our eight companies, we are on the board and have at least one board seat on seven of our companies.

So we are, um, we are very active and collaborative. Um, you know, we are looking to really Uh, enter into board discussions as a partner, uh, and be able to work well with management and work well with our co investors. And so it’s very important. You know, as you’re doing diligence on a deal, that you’re diligencing board dynamics and really understanding what the fluency and comfortable, uh, levels, uh, of, uh, of interaction management has, uh, and so, you know, we, we, like I said, we have companies in our portfolio that have taken venture capital before and certainly have understood that construct and other companies that, you know, have been bootstrapped and this is their first institutional investor.[00:17:00] 

And so it is, um, We approach it very similarly, though, which is just always starts with how do we become a good partner and what’s the best way for us to all work together to move forward? Um, and really, just by offering, you know, a very earnest Um, helping hand, uh, when needed. And, uh, you know, that comes in many forms, whether that’s, you know, sort of more operational.

And our team has an amazing operational background. My partner, Susan Cates, um, has been an operator in her past lives. Um, and So, you know, we bring that acumen to our work and our work alongside, uh, our, our companies and really being able to tap into networks and connections and potential customers. Um, and so we really do try to be, um, as much, uh, a value add partner as we possibly can.

Debbie Goodman: Yeah. I think that having former operators as part of the investment team definitely seems to make a big impact. I’ve seen that with, you know, almost all the, the bigger funds these days, they do have, they’re [00:18:00] not just purely investment professionals. Um, so that’s definitely an added value there. Okay. So on our earlier call, you spoke about a focus on workforce access, adult learning.

You’re very bullish about the sector. Um, share more about this. 

Elizabeth Chou: Absolutely. So we are really investing in education and workforce development. Uh, and that is from early childhood all the way up through, uh, workforce learning and access. And the way we had, you know, sort of looked at the world, uh, pre COVID and what has come about, you know, sort of post COVID is an acceleration and, uh, and certainly, um, You know, sort of deeper stickiness coming out of COVID from some of the things that were experimented during COVID in terms of online learning, uh, on the adult learning side of the spectrum.

And so, you know, we have found that, uh, a lot of what, what was discovered is possible in terms of access to learning for workers, um, [00:19:00] you know, ability to, uh, you know, sort of engage in alter, alternative credentials. Um, you know, those job skills that are part of the growing economy that, um, higher education is not serving well.

Uh, so, you know, there are certain job categories that just are not covered by higher education. And so companies that are offering those training opportunities to help workers level up faster and within industry norms without having to go back, uh, to a credentialing body. I think gives workers an opportunity for that income advancement, uh, in a much more fluid, accessible way.

Uh, and it’s something that, you know, as we look at, you know, the changing economy and the number of people that need to be upskilled and retrained, uh, uh, by 2030, it’s, you know, estimated to be a billion people globally or more. Uh, and so it’s just a tremendous opportunity. And so that’s definitely one part of our thesis.

The other part of our thesis is looking at, uh, we’ve invested in a number of companies that have [00:20:00] workforce access opportunities. So these are companies that are really enabling more choice. More flexibility, um, and connecting workers who are seeking those two things with companies that are open to engaging with that kind of work.

And, you know, as a team, we’ve been tracking, you know, sort of contingent labor and the rise of contingent labor, uh, and what that has meant for the overall, uh, U. S. in particular labor force and how much of a percentage that contingent labor as an overall percentage has grown quite dramatically, um, over the last couple of years.


Debbie Goodman: We need to say contingent labor Clarifying.


Elizabeth Chou:

So, contingent labor is labor that is not full time employees. So, it could be W 2, it could be 1099, really project based work and I’m happy to talk about a couple of our companies that do that. Um, and, uh, you know, we just think it’s a great opportunity for So, income augmentation, uh, you know, more flexible work for folks who need that, uh, option, uh, and there’s just a myriad of reasons why, [00:21:00] you know, more choice, more, more flexibility and, um, the ability, uh, for workers to have choice, uh, is just so critical.


Debbie Goodman: 

Yeah, well I completely, just in terms of what I see in the markets both here in the US as well as in Africa, because Jack Hammer Global has got our main executive search company that focuses on the continent there and the shifts and changes in workplace, as well as, we’re all bombarded by information on AI and how that is changing already the workplace and the workforce and the nature of white collar workers, management level people who are our bread and butter in terms of leadership hiring for big corporations, who are for the very first time facing the kind of threats really that blue collar industrial revolution style impact has, we’re on the cusp of something really, really big.


I was chatting to the founder of a company called Beamery. They do full talent lifecycle management. And he was saying that in terms of the workforce plans for upskilling in most big corporations, very few of them already have a plan. It’s not necessarily coming from sort of internally within the companies to be able to skill up their people for the future. And so having these external third party education and workforce upskilling organizations that can help is going to be critical. And then definitely the gig economy, we’ve been learning, we’ve been hearing about this for, I don’t know, a decade, but it really feels like it’s upon us. And I think the confluence of AI together with hybrid and remote work has just enabled an environment where we can really rethink the way in which people work.


I think this is the segue. I’d love to hear about some of the companies that you, in your portfolio that are doing this great work. I would be happy to talk about them. 


Elizabeth Chou:

So on that last point, you know, we’ve invested in a company called the Mom Project, which we think is just so incredibly special. And, you know, it is a company that to your point on the white collar professional workers, it is working with women, with moms who have at least, you know, eight to 10 years of professional experience who are at that time in their lives when a little bit more flexibility, really can make or break your ability to engage and continue to be in the workforce. And so the mom project helps connect moms with that professional experience, with companies that are open to project based work, more temporary type work, with more flexibility and so, as we’ve talked with the Mom Project clients, the Mom Project has really been able to surface a level of talent for them and a more diverse pool of talent than they were typically seeing.

And so, you know, I think It benefits both groups, the moms and companies to be able to connect them. And so, we’re terribly excited about, you know, just the capability and the impact that the Mom Project can have in terms of serving up additional economic opportunities for women, as they’re going through those childbearing years that as we know are just an incredible juggle.


Debbie Goodman: 

Yes, indeed. I keep wanting to sort of like tip my hat to the Mom Project and the founders, Alison, because there really is, you know, that’s just one great example of opening up a market for people who can add just such incredible value. So, Jack Hammer, we really pride ourselves in being like the place to work for career moms. I prefer not to call it working moms because every mom works regardless of where you’re doing that work. So, for career moms, who want to have a great career and don’t want to have to apologize or make excuses for the fact that they have a family, I’ve always wanted Jack Hammer to be that place. And I’m always excited to find other founders and entrepreneurs and companies that are truly family friendly. A lot of people say that they are, but, when it comes into the nuts and bolts, it really is about the ideology of having moms feel like they are not needing to pretend that they don’t have kids. So yes, that’s a great company.

Thanks for bringing that to the light. Okay, so what are you excited about, about Leeds Illuminate? For your portfolio companies for the Edtech space for 2024?


Elizabeth Chou:

Yeah. I mean, I think AI, I think I’d be remiss if I didn’t talk about AI. Everyone is, but you know, I think that there is just a lot of opportunity and promise that AI can bring to the learning and workforce development space. You know, we’ve been investing in the space for a long time and, you know, conversations for those of us who have been in the space for a long time have been around I really could get us closer to personalized learning, and, you know, serving up content, serving up didactic questions and in an automatic way, really just giving more leverage to great pedagogy, which is really for those who have invested in the space for a long time, know that Edtech is not just tech that’s applied to education, it is best when it is really incredible learning science and pedagogy that is partnered with technology. And so I think having AI as a tool in and amongst all of that, gives me great hope for just continued development and getting closer to closing the learning gaps that we know exist post COVID, and getting closer to really being able to provide learning in the moment when you need it and at a faster uptick, so that we can get workers the training that they need, to level up and make advancements in their career in a cost efficient manner. So all of that is just so exciting to me. I feel like we are on the cusp of another great breakout moment for the sector and certainly we see the need and the opportunity, which is just great fun.


Debbie Goodman: 

Yeah. I think it’s not a far-off dream. So, it’s almost here. So as much as AI is giving a lot of people, a lot of headaches, it also has just such promise in terms of what it can deliver. So, let’s keep that hope alive for 2024. Elizabeth, this has been a fantastic conversation. Thank you so much for your time and all the best. I hope all those dreams come true in the year ahead.


Elizabeth Chou: 

Thank you so much, Debbie. I really appreciate being on.


Debbie Goodman: 

Thanks for hanging around all the way to the end. It would mean the world if you would rate and review On Work and Revolution on your favorite listening app. It helps people know that the show is worth listening to, and so I’ll really appreciate that. Thank you so much!


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