Jessica Millstone: Copper Wire Ventures – How Edtech Founders Must Adapt (or Die)

“Women have better exits. They build more sustainable companies that have a higher value and valuations and exit quicker than men do for the most part.”

– Jessica Millstone

This conversation with Jessica Millstone, who is the Co-founder and Managing Director of Copper Wire Ventures, is important for two main reasons: The first, as someone who has over 25 years of experience in the space, and has worked as an advisor, operator, and evangelist for the top EdTech brands, her views on the market and the changing funding landscape is critical for all founders to hear. The second, and this is something we at Jack Hammer stand behind full stop, is Jessica’s commitment to portfolio support and advocacy for women investors. With a mere 2.7% of all venture funding going to women founders in 2019 (and that number decreasing in 2020), yet research showing  the positive outcomes associated with female-led ventures, Jessica makes it a point drive more investment into women-led businesses.

Debbie & Jessica dig into:

✓ the differences between angel investing and venture capital and implications for founders

✓ the underrepresentation of women in venture capital funding and the importance of supporting and investing in women-led startups

✓ Jessica’s unique approach to portfolio management and support for startups that you will not want to miss

About our guest, Jessica Millstone:

Co-founder and Managing Director of Copper Wire Ventures, Jessica Millstone has over 25 years of experience in the technology sector. She spent her early days at NYU’s Interactive Telecommunications Program and as a professor at Bank Street College. More recently, she has worked as an advisor, operator, and evangelist for top EdTech brands like Sesame Workshop, Common Sense Media, the NYEdTech Meetup, and BrainPOP. 

In her current role as an early-stage investor, Jessica leverages years of mentoring entrepreneurs and the support of a mission-driven family office to help dynamic female founders — particularly those creating products and services that accelerate the future of learning and work —to build and grow their ideas into great businesses.

New Yorkers may also know Jessica as the creator of a series of popular parenting workshops exploring the ways video games and social media can support children’s learning and healthy social development, and as the co-organizer of the NYEdTech Meetup, a professional networking organization over 9,000 members with monthly events for educators, entrepreneurs and investors in the edtech space. She continues to wear these crazy hats along with her new ones.

Helpful Links:

Follow Jessica on LinkedIn
Check out Copper Wire Ventures & their mission here
To become a part of the thriving NYEdTech Meetup – click here.

Open for Full Episode Transcript

Open for Full Episode Transcript

Debbie Goodman: Hello everyone. Some of you may not be aware of how I entered the world of entrepreneurship. Well, frankly, it was a bit of a surprise to me too, that I was geared for this life as an entrepreneur ’cause actually more of an accident. So here’s the story. My first career could not have been further away from the world of business.

I was, as some of you may know, a professional contemporary dancer and choreographer. Which actually meant that I earned very, very little money. I was also a part-time waitress, and I still lived at home with my mom because I could not afford rent. I happened to also be studying for my law degree part-time.

So I was dancing full-time, waitressing, part-time, studying part-time, and then all of a sudden I completed my law degree. It was a bit of a shock because now I could no longer justify living with my mom. I was like 28 years old. And then I realized, shit, I really did not want to be a lawyer. I mean, I was glad to have completed the degree.

I mean, a completed degree is better than an incomplete one, but man, I just could not face the idea of becoming a lawyer as my profession. But I was also at a bit of a crossroads with my dance career. I was broke, I was constantly injured. I was, it was really, really hard to make a living as a dancer, and I was not getting any younger.

So sadly, the professional lifespan in dance is pretty limited. So I decided to try something radical. I decided to get an office job. I managed to do quickly. I got a job as a database manager in a recruitment company, which meant that I had this pile of CVs on my desk when I arrived at work every morning.

And it was my job to phone people and update their details. Hmm. So very soon I rose in the ranks. I became a fully-fledged consultant, and within a couple of years I was doing really well in the company, but internally, I was really struggling. I was reporting to someone else with having to do things according to the rules set by others, particularly when I thought my ideas were so much better.

God, I was an arrogant little shit. Anyway, one thing led to another and I decided I was going to set up my own firm. Wow, just what guts and gumption I had. I really knew nothing about running a business, being an entrepreneur, but I had a lot of self-belief, and I loved the idea of using my creativity to build something, and I guess creativity and tenacity and determination and discipline, and waking up every day with loving your heart for the thing that you’re showing up for.

Those rarely are the common denominators with being an artist and an entrepreneur. Anyway, it has been 23 years. I’ve never looked back. Not once have I ever been tempted to throw in the towel, despite the many, many challenges and curve balls and detours and low moments over the past two decades. Because here’s the thing, being an entrepreneur is tough, particularly right now in the current markets, and particularly if you’re looking for investment capital at any stage of the game, whether it’s your first.

Bit of angel money or pre-seed money, or if you’re raising your A, B, C round, whatever, money is not flowing the way that it was a couple of years ago. And then I always wonder what’s going on in the mind of investors when they decide to invest cash in startup founders who, like probably many of them entrepreneurs, that is if this is their first rodeo, I’m kind of clueless about things just as I was when I decided to go out on my own way back.

So. I’m super curious to know what is the X factor that makes them confident enough to invest? What are the deciding factors? So that’s why I’m really excited about my guest today. We’ll get into that in a bit in the formal, informal part of today’s episode of On Work and Revolution.

Debbie Goodman: 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, and 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 the Edtech sector who are hiring, we have launched a fractional leader offering. I’ll put the link in the show notes. My main mission with all my work is to help companies and leaders to create amazing workplaces where people and ideas flourish, which is why I’m so excited today to be joined by my guest, Jessica Millstone who I feel I’ve been stalking at the various Edtech conferences for the past year or so.

Finally we realized that there’d been some kind of weird email glitch and so our emails weren’t getting to each other. And then finally we’re here. So quick intro, Jessica is a venture and angel investor in women led pre-seed tech companies in the future of learning and workspace. She’s been working in the Edtech sector in one form or another for more than 25 years as a teacher, a professor and an operator having helped grow companies like BrainPOP before deciding to enter the world of investing.

And today we’re going to be talking about the opportunities that are arising for founders and investors, if they’re willing to adapt at what seems like an incredibly challenging time in the venture world. So welcome Jessica. 

Jessica Millstone: Thank you. Thank you so much for stalking me down because I have truly enjoyed now that we are connected to each other to have many conversations about this space.

Debbie Goodman: Great. Okay. So, I have so many questions before we even get into the current state of the investing landscape. Firstly, what prompted you to leave the operator world and cross over to the dark side, the other side and become an investor? 

Jessica Millstone: Well, I will say just as a baseline, like personality trait, I do like to reinvent myself every once in a while. So, you know, I have now in retrospect to look through my career in Edtech and seeing these very clear delineations between me and the instructional side of my career, the product development and sort of operational side of my career. And now I’m in the investing side, but probably in the moments, they were a little bit more based on circumstance and just like ready to do something new in this, in this world and in this space and I’ve had the great privilege to have both a deep and wide career in education, where I’ve been able to go very deep into some areas specifically around technology integration and the development of technologies for teaching and learning, but then also be able to apply those across so many different aspects and I, as part of my work in Edtech, I’m a big believer in community building and gathering and bringing the people together as much as possible, like, like you said in your introduction of yourself, like, to have these great workplaces and you know areas where people can, like, really collaborate and grow together. That’s always been one of my missions and here in New York, I run the New York Edtech Meetup, which is now almost a 9 500 membership community of Edtech educators and operators and investors. And that’s where I really got to meet the investor side of the Edtech space. We had a number of great sponsors and contributors to our meetup, including GSB ventures Cooley Goodwin Proctor, legal firms, people who really worked on the investment side of building those businesses.

And I got a little taste of it from working with them. One of my co organizers is a woman named Michelle Durbin, who was a venture partner of a partner at Rethink Education and is now a venture partner there and has her own startup as well in the Edtech space so I’ve gotten to see it from, I have a number of mentors that really sort of guided me towards investing and, and helped illuminate like what is the level of influence that you can have on the trajectory of these companies from that side of the table. So that was really appealing as well. 

Debbie Goodman: Wow. Okay. So now it makes sense as to why you seem to be the most well networked person in the entire Edtech community. 

Jessica Millstone: Because I create the network. That’s how I do it. Yeah, exactly. Exactly. Yeah. 

Debbie Goodman: Right okay. So, now just for listener purposes, can you just clarify the difference between angel investing and venture capital, because it seems like it’s all, you know, morphs into the same thing, but they are quite distinct. 

Jessica Millstone: They are, and it’s something that I really try to illuminate for the founders that I work with. I think that venture capital whether it’s angel investing and venture capital are equally kind of a black box for founders.

They’re like, no, they’re supposed to raise VC, but they’re not really sure what that means or what are the implications of it and really the difference is an angel investor is investing out of their own pocket. So, they are perhaps an exited in the Edtech space, maybe they exited their Edtech company and they have some discretionary income that they would like to use to help other founders, other entrepreneurs like themselves start up and, you know, contribute both some startup funding, but then also expertise and support operational support in some way a venture capital event, a VC, a venture capitalist or venture capital fund is a fund that actually has its own investors that have come in. So, it’s not really the discretion of the general partner or managing director of that fund, as much as it is them having to go back to their own investors and decide collaboratively what investments to make.

And usually, you go in with an understanding from your investors, which are called LPs that there’s either some or no contribution they might make. Maybe there’s an investment committee. Maybe there’s some more casual communications but essentially you are managing the money of others and, you know, there’s a fiduciary responsibility involved with that.

That is not true of an angel investor. So generally when I talk to founders, I try to help. I try to be able to really like feed them with some questions that they can ask a potential investor. That can get to, like, who, who is making this investment? Is it you personally? Are you doing it on behalf of somebody? What are the expectations that you have for the return on this investment? Is it that you really love to invest, you know, investing your time and energy into the ecosystem and if there’s a little capital that goes along with it, all the better or are you managing funds for a very serious LP and you need to return those funds to a multiple of five, ten, you know, at what’s been put in so it’s a very different investment decision that happens whether you’re VC or angel. 

Debbie Goodman: Okay. So, then I just want to continue with that line of thought, because when we spoke a little while ago, you were chatting about the misalignments that can sometimes arise between investors and founders and in fact, how sometimes the venture model can actually be quite destructive or completely not aligned with the trajectory growth plans, et cetera, of the founder. In the meantime, you’ve got this founder who is just desperate for any cash and will take it wherever it comes. It may sound like an angel investor is an easier target because it’s more discretionary, but venture is usually bigger amounts of money. Anyway, there’s a lot at stake here, but let’s dig misalignments that founders should be aware of before they accept any cash. 

Jessica Millstone: Yeah. Well, this is really a learning process of my own. I mean, I consider the investing space to be like an experiential learning platform in many ways. Like it’s really necessary to be doing it to understand how it works and one of the things I learned along the way is sort of like what, so let’s just start with the benefits of venture capital. Like the idea of venture capital is that you have a front loaded amount of money that you can use to furiously scale the size of your business and when I think about what the misalignments might be to that, is that the expectation of the return on that investment being historically the ideal return is a 10 X return, right, you know, that. That amount of money that is being put in the not only just the size of the expectation of the size of the return investment, but actually the time frame that that needs to happen within, is predetermined by the venture capital model of the fund structure with the outside investors who are being guaranteed a return on their investment. And within 10 years, so once a founder takes venture capital, they’re on a clock, a very fast ticking clock of how are they going to scale to become that billion dollar company that the investor has promised back to their own backers. And so that’s sort of like, when you couch all this within the education space, and you think about those timelines, a 10 year timeline of the creation of the technology, the adoption by the stakeholders, including teachers, students, parents, administrators that have to understand the value of it actually paying for it, getting it, getting the contracts done and getting within a school, having some usage, being able to see, and then like ultimately being able to see learning outcomes, that’s a much longer timeline, right? Even with a very fast moving technology, like AI in education, or even some of the technologies we’ve seen in the past you know, they have had fast adoption, but fast is not the same fast as the venture capital model. So, when you take this money, this front loaded and typically venture capital, like you were saying, it’s a much larger check size that can also be quite detrimental to an early stage startup that doesn’t have the high growth model sort of built into it. Education in its slow implementation and in its adherence to efficacy and learning outcomes doesn’t have the same kind of you know, very fast trajectory, massive trajectory, high trajectory, it can’t absorb that much money. It actually can’t absorb the kind of growth that would be necessary to scale the same way an enterprise app.

Debbie Goodman: So, I have a question around that because, you know, venture money typically has got this expectation regarding the multiple X’s. That’s the point of it. And unless an investment has the possibility of that, why invest at all, and they’ve got accountability to their LPs and that’s the mandate. But in the Edtech space right now, what we’re seeing is that the likelihood of that type of growth is actually a little more muted, a little more realistic, a little more, okay, we’ve adjusted to the post COVID realities and is the venture model still aligned with the likely, with the, the way in which Edtech companies for the most part are likely to grow.

Jessica Millstone: Well, I will say that even in my short time, my four years of venture investing being in this space, there has been a real evolution of like, what is the venture model? So, we’re actually seeing a lot more diversity of fund structures and ways in which the actually the investors are imagining the trajectory of their funds and the, and the expectations and the promises they’re you know, building into raising their funds there are absolutely in the education space. Those unicorns, like there’s actually been a sort of like pulling back of that word unicorn, of course, just on his 10-year anniversary, now, Amy Lee has written a new report and talked a little bit about how a lot of those are paper corners or I think she had another, she had another word for it too that was not as complimentary but it’s, it’s, you know, there are those, there are really those companies that break out of the pack and have that kind of both conser and enterprise level success and eventually IPO and go public you know, the long term viability of those on the market is, is still TBD.

We’ve seen a real pullback of some of those publicly traded Edtech companies, but for the most part, there are some that, that will happen to, and they are, they’re the kind of rare, like, star that like bursts onto the scene at the same time, as you said, like there are these more slow growing companies that have real sustainability, real profitability. I mean, the education space is truly a multitrillion dollar market. And there’s a lot, I mean, there’s just a constant you know, refreshing of audience, you know, within the market, there’s always new students. There are always new families. There are always new people to be using and, you know, teaching and learning is obviously not going to work. So there’s a lot of stability and profitability in this space. And so, I think the venture investors have been very smart in the ways that they have, we, I should say, have adapted to the realities of the education market and trying to curate models that work for both the venture side of it and the education side of it.

Debbie Goodman: Yeah. I heard you speak about this, at the Transcend Network webinar a few weeks ago, just around the, the alternative models. And we don’t need to repeat that here. Anybody who’s listening and who’s interested, go find that, a recording of that. It’s super, super interesting regarding the alternatives, but we know that raising capital right now is really hard and so what does it, what does this mean for a founder who’s still of the mindset that either they raise angel or venture capital or they’re out? Die. 

Jessica Millstone: I mean, the bootstrap model has always worked for our companies since the beginning of time. I was actually just in London and I did a quick fireside chat with another angel investor turned VC who really had a, I think a really good idea of a model that many, I think startup founders should look at, which is that you are, you are going to raise capital, like you’re not going to be able to fully bootstrap. You are going to have to be out there raising, but think of it as one round. Maybe that round is over many years of time, but you can tranche it. You can create incentives to come in earlier at lower valuations. And as you become revenue positive, you become profitable, you have the traction that you need to really prove out the value, the product market fit of what you’re building then you can raise your valuation along the way, but not think of it as like, I’m going to go out and like front load, you know, 2.5million and then spend it all. And then I’m going to raise more money and then I’m going to spend it all. But rather, think about it as a continuous growth period of your company and how you finance it along the way through a combination of angels and venture investors. And as you move up that tranche, as your valuation increases, then you can start to look for more and more professional institutional investors who can see the value in what you’re building and be able to be immediately responsive to it with capital. 

Debbie Goodman: Do you have sort of a window of insight into what’s happening into some of the sort of the accelerator venture studio, like really early stage, because I think in the past few years there was a just such a view that the obvious thing was, you’re going to have an idea and then you’re going to raise some money and that’s just the way it works. And so, for many founders or people who thought, Oh, this is a problem to solve. This is how it’s going to work for me to, to adjust the mindset and to go, actually, that was one way. And it’s largely not going to miss, it’s largely not going to be my future destiny based on where the markets are now. Is that sort of like learning or rethinking starting to emerge, starting to sort of arise in the very, very early stages when it comes to founders with the idea who they need to get it to market?

Jessica Millstone: Absolutely. I mean, I think there’s two things happening kind of simultaneously. One is that it has never been easier to start a company and run it on a very small sort of lean startup than ever before. I mean, certainly if you’re leveraging AI, you’re leveraging all kinds of tools and platforms and technologies to build the product that you make, but also build out the business model and be able to find your customers and have that be a viable entity in the market, viable product in the market. It’s never been easier to do that on a shoestring. So that’s happening. And then there’s also a model around collaboration. And, you know, as you mentioned at the beginning of your introduction, like you’re working on a fractional. Helping people like sort of build out their teams fractionally, and that’s just that model, that trend, I see happening in the education space. Specifically, I’ve actually just in the last couple of weeks met so many people who are trying to help these lean startups, these like as one investor called it a micro companies in a tech space, be able to like build out their teams in a balloon and deflate capacity and then also band together into these venture studios. And, you know, the accelerator programs have been ongoing for a while I think, you know, the big brand ones, YC and Edtech stars have always had great education at tech you know, sort of companies come through them, but there’s also all kinds of really specialized ones that are more geared towards social impact companies, people working within a particular space, like education, where it’s harder to get in, but it, you know, has more impact societally in the long term. And there’s value around that, that can be established and communicated and so there’s this combination of like, really small companies sort of banding together into these venture studio or under the heading or under the auspice of a fractional leadership kind of model and really collaborating, working together. And, in a way it’s like, what is more like a school than that? Like all these people sort of disparately coming together and like having a shared purpose. Yeah. I mean, I think there’s a very particular audience.

Debbie Goodman: Right. I think there has been sort of a status attached to, Oh, well, I’ve just raised and now I’m going to market. And there was, I think just the change landscape, if people are willing to adapt and actually reconsider the way in which you grow a company, which actually it’s kind of new.

That’s as somebody with just an idea would be able to raise money and then hire a bunch of people full time and not necessarily even have revenue or any site of profitability and then be able to raise more money. I mean, that’s kind of insane, if you think about it.

Jessica Millstone: It really is. And I come from a family business that my grandfather started in the forties and I can assure you that that was never the model that anybody worked on, you know, prior to, you know, the last 10 years or so. You know, of course, venture has been around for a long time and it had a very specific purpose. I mean, the history of venture capital is quite fascinating in the sense that, you know, really was established to create these hardware companies and we’re kind of in a back in a, in a phase of this too, where like, there’s a lot being invested into deep tech and chips and semiconductors and hardware. And that’s really driving a lot of the innovation in our space. And that’s the way it was 50 years ago in Silicon Valley, you know, the actual, you know, creation of the Silicon chips and you need, you needed that money to front load. Like you absolutely needed that money in order to get it off the ground and have very favourable terms to the investors to get paid back for it and now that’s been applied so widely. I mean, I’ve seen fitness instructors who have a VC model where they, you know, get investors for their influencers. It’s very similar in the creator economy, like these are, it’s been applied so widely now and I think we are in a moment of sort of picking and choosing, like, what are the actual benefits or, or detractions like to using this type of capital to your point about raising all this money and scaling so quickly. I mean, I have a number of founders in my portfolio who have had extremely bad experiences of doing exactly that and really wish they didn’t have that much money going into it. Sometimes when you can, if you have the opportunity to build slowly and more focused on product market fit from the very beginning, it’s a more rewarding experience. I think then the stress and I think ultimately, sometimes mostly failure that comes along with, you know, a rapid scaling of a hybrid business. 

Debbie Goodman: Well, I’m case in point. I have started and grown and closed many businesses and I never really had to do the capital raise and always bootstrapped and when things fail, they’re my failures and I don’t have to answer to anybody when they grow. It’s slow growth, but 

Jessica Millstone: yeah, you have the ownership. You keep the ownership piece of it as well. 

Debbie Goodman: That too and so sometimes I wonder if I had, if I had raised capital, if it would have been faster growth, but there is that stress factor that I really can make decisions together with my colleagues and partners within the company and really turn that around very, very quickly in response to change, you know, changing external factors, which I really do prize highly together with my independence. Anyway, that’s not for everybody and some companies really do need the injection of capital in order to, in order to grow. I wanted to just pick up on the women led bit, because I heard you say you’re doubling down on that in the previous webinar I’d alluded to, and so tell me what, I mean, of course I think that’s a brilliant strategy, but why?

Jessica Millstone: Well, I mean, first of all, I don’t, I started this fund four years ago based on a statistic that had been published about how women Edtech companies only get 2 percent of all the venture capital that’s available out there and in the intervening four years, that number has gone down. That has actually decreased over the time that we have seen the bit some of the biggest boom and bust in venture capital investments across all sectors, and I don’t think that women are participating equally in any of that. And that’s a huge motivator for me to, you know, based on my own personal history and also you know, the work that I’ve done over many years in education, you know, I really see this happen over and over again, like in education specifically, it’s mostly women who do the work in educational environments, but it’s still mostly men that start the companies and have the big exits and so, and actually to the exit point, we know from research from the data, actually, that women have better exits. They build more sustainable companies that have a higher value and valuations and exit quicker than men do for the most part you know, I think that there’s actually quite a bit in the leadership, women’s leadership model that we could use as a culture and a society to improve the tech world overall and I just want to be more a part of that than ever. 

Debbie Goodman: Well, thank you for that. We could have a whole other discussion all on that alone, but that will be part two.

Jessica Millstone: Because it is actually a big part of this year for me is to actually not only invest in more women through my angel investing practice, but also to help women angel investors go level up into becoming LPs and funds and, you know, extending the influence and the leadership qualities their values and leadership qualities into those environments. 

Debbie Goodman: Well, that is a perfect segue into my last question around what are you most excited about for CopperWire Ventures, your company, for your portfolio companies for the Edtech space in 2024, what’s up? 

Jessica Millstone: That’s so great. So CopperWire Ventures specifically, you know, I’m in a moment of real portfolio support for those companies. I’m not actively making new investments out of the fund you know, we’ve really locked it actually towards the end of 2022, locked the fund as a way to either do some bridge capital, some follow on investments within the portfolio, but really focus time and energy on helping those companies achieve their next big milestone. So, for like the very first check that I wrote out of CopperWire Ventures, for example, they’re going out on their seed round this year. It’s a company, adolescent mental health company that won the GSB cup at ASU GSB last year. And on the strength of that raised a very healthy pre seed round now going out for their seed rounds Q one or two this year. So there’s those kinds of milestones and then I have some companies who are either hitting their series A or really thinking about their exit, like what is going to be the next phase of their company and maybe that’s as part of the product roadmap of a big Edtech at K12 Edtech company or a media acquisition media company acquisition for what they’re building. So there’s like a number of companies at that stage as well. And so to support those portfolio companies, I’m doing a little bit of work in the M&A cultivation space, like helping make some network, some of those companies to the potential acquirers, but also help the acquirers understand who’s out there in the early stage space that they might be using to buy, not build innovation within their, their company.

So that’s always, that’s been really fascinating to me. I do a lot of this work with the Transcend Network with Alberto and Michael from Transcend Network. We’re really like I consider them real thought partners on building out that phase of CopperWire Ventures specifically and then, as I mentioned, I’m doing much more work advocating in the women investor space. So I already do a lot of networking and community building within the family office and social impact fund space helping people who are really interested in directing allocations that they may have towards philanthropic contributions and thinking about how they could do that very same work, but investing in for profit companies, so I’ve done that all along, but I really and working very specifically now around that sort of level up between angel investor and LP.

Debbie Goodman: Well, that sounds like a lot, and all very exciting. I am sure we will I definitely want to do part two.

Jessica Millstone: You’ll be my accountability partner, that I actually achieve any of these things, because as I said, I always, I’ve always got to be reinventing myself. So, a little bit of it is build it and they will come, but I love checking back in and hearing about what you’re up to as well. 

Debbie Goodman: We will do that, or I will see you at another Edtech conference, I’m sure. So, thank you so much, Jessica.

This has been fabulous, as always speak to you soon. Bye bye.


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