00:00:01 moving the Neto unfound your failure one conversation at a time I'm your host Justin Gordon and welcome to startup 2.0 by spark XYZ during each week as we give you access to some of the top investors and entrepreneurs in the country to help you think through and overcome the top challenges that startups face I think there's no better place in the country to be investing than Los Angeles what is the problem that you're solving and for who like what is that specific pain point sometimes when a company is not

00:00:29 listening to his customers and just thinks it knows better than it customers has a really really hard time finding product market fit I want to see somebody that that isn't you know this person you just feel like they're gonna they're gonna they're gonna make it work today's guest is Dean Kline who is the managing director of USC's Rossier adventures incubator Dean was also formerly the founder and managing director of Penn Venture Partners Dean welcome to the show hello welcome there's a lot lots of

00:01:03 obviously chat about with two different types of funds but let me want to start with first is just looking at adventures right what's involved with that what do you focus on with that right now yeah so we we started that about a year and a half ago so there are three basically managing directors and I'm the senior managing director okay and but we've known each other for some time and the one partner I've known him for about 15 years apart from USC yeah and where are you exactly are you focus on investing

00:01:34 with adventures and what's your involvement in terms of where you're kind of looking at with that yeah so and anything that involves the intersection of Education and technology whether it's early childhood through through workforce and in our case to what we try to do is look for companies that have kind of a positive impact on access to quality education yeah and that's also a a goal for the grad school of education at USC Rossier we follow that awesome and with that CI a-- how much are you investing in companies

00:02:11 or as it house whole thing work with it yeah so that yeah now we we decided not to do that early on so we we've had some experience doing education accelerators and we thought okay this time around no fees no equity make it very simple and see how that changes a dynamic between us and the entrepreneur which I think it does yeah and then further then how is your program Roenick how does that work with bring these companies in there yeah so we a few things we decided early on which is you know education is being

00:02:53 more personalized and it's also hybrid for the most part we know that that works yeah but yet accelerators even if their education accelerators you have a residency requirement fine but and then the curriculums are almost identical at you know whether you're doing hospitality or you know some deep tech or whatever but the core curriculum is to say yeah so we wanted to personalize the curriculum and that means that we try to avoid telling them what they need we do sort of deep interviews with them

00:03:32 figure out - three ways in which we think we can really be helpful and then among all the companies there will be some things that are that are common so we'll do workshops on those but those workshops are entirely virtual ok we'll do them once a month and then that also allowed us to take companies from outside the US yeah and outside this this time so yeah and with that you know how are you sourcing deal how you starting companies for the program yeah it's it's still this sector still fairly tight and we also decided we were going

00:04:12 to run this lean so I kind of practice what we preach yeah and so we you know if you're going to put out widespread call for applications over time you're going to get hundreds and as a VC I know what it's like going through that and it's that you know it just takes too much administrative time so we just decided basically we're going to scout the companies ahead of time okay and so that takes you know six months to a year before we started the first cohorts or a year ago we had known some of these companies for some time

00:04:51 yeah and I should say the other thing that was important to us that struck us about education accelerators is although the practitioners are mainly women you know even up through workforce and HR departments and if you're in an urban area where equitable access is you know really important people of color but you if you do an ed tech accelerator most of them are going to be white guys like me Yeah right and they're the ones who typically get funded and but this was a especially mismatch as far as we were

00:05:32 concerned so we wanted to focus on founders who are women and people of color not very specifically but really just say hey you're wanted and and please please apply it so we did look particularly for companies like that yeah and can you tell them a deeper into that kind of that diligence process then you evaluate these companies with yeah you know we have a list of sort of ten things that are that are important to us and it's kind of the basic stuff you know commitment you know whether you've already raised some money although we

00:06:13 try and and not we try and also have a diversified cohort with respect to that some companies already raised two million dollars some of raised some was raised none yeah and but it's it's we believe in synergy and diversity and so we also want founders who we think can communicate well with one another and help out we don't particularly want folks who are very individual individualistic I mean we want some some synergy among that yeah yeah and with that too I mean how many different companies are you taking in each cohort

00:06:53 yeah so we always we've we've done this twice now and each time we've taken fourth we said you would and at 16 16 yeah okay 16 and how long is the program itself about seven about seven months so beginning really in kind of October November and then we do have a certain end time there's so the largest gathering of Education innovators and technologists and investors and so on is in San Diego in April and it's called ASU GSB summit so we do a pitch event at that time and then we also do a pitch event in demo day at USC but I also want

00:07:40 to say that we were a bit troubled by accelerators being very focused on on the money race a common issue for all the companies for sure but to us sort of efficacy impact was at least well I should say it was it's more important for us so that's something very much that we that we look at what kind of impact you have what kind of impact mic you have and who is it impacting yeah and with the 7 months 7 months of the program how hands-on you say there's like every month there's a thing you're doing it virtual but whether what are

00:08:21 things are involved with that yeah so know what we'll do virtual workshops sort of once twice a week ok oh that forum yeah yeah once we get that going and introducing them to folks that typically you know they I our experience is if you're an entrepreneur who's a woman or person of color you probably don't have access to the same folks at the rest of us sure it might and so we try but this is a this is a pretty tight community so once we start introducing them to those folks and they follow up you know I think they things can even

00:09:00 out a bit for them but that that's 7 months we also try and respect the fact that they're entrepreneurs they're busy you know Cheech your choice whether you want to participate and you know workshop or not and you know some of the other things that we have but we try not to make it heavy in terms of requirements for them and allow them to sort of pick and choose yeah and that you don't have to necessarily choose one or two but I'm curious are there any ones that particularly stand out of your companies that have gone through this

00:09:34 and I'm asking is to see what was it about them that actually made them stand out yeah in the in the first cohort so I was at an event from the East Coast and I was at an event in New York for entrepreneurs three years ago and there was a woman who was talking about doing women's colleges in East Africa and but with a particular focus on job skills okay and I used to work at the World Bank and it worked in East Africa for a while and also did other projects they are helped to start a a nonprofit

00:10:18 hospital company so we did did some things in East Africa and so that really fascinated me because I know how difficult it is for women to get educated in Rwanda and here was a American woman who at that point had been there eight years raised her family there you know got married and all so like totally in and then she was thinking about okay do I expand this for other women's colleges in Africa which means each time I do this I have to I have to raise money yeah because they're not really sustainable for the most part

00:10:57 or do I start doing co-ed and then do I stay in Africa go outside of Africa so she was sort of struggling with that but she's just a terrific entrepreneur and her name's Elizabeth Dearborn Hughes and the company was Aquila and then she did end up opening a co-ed college in Hong Kong which if you I lived there at one point and you think of it as being this very vibrant place which which it is yeah but there are so many people just stuck in very small apartments with not again not much access to kind of formal

00:11:43 education so that's what she ended up doing is she's very successful in raising the money now we still all had this heart sort of desire for her to continue with the with the women's colleges yeah but that is difficult so she still do I think she's expanding into Uganda and what-have-you but mm-hm she was just an inspiration to everyone - I think hard hard work and very committed yeah what else I'm just curious on characteristics of her that made her stand out just just perseverance yeah and and again total

00:12:20 total commitment and and also desire to kind of get the pedagogy right brought in a few folks who as it happened we knew so she did her research will not - and she was trying to figure out some personalized learning and then this question was well if you can create some sort of technology to do that and we could sell it can we can we subsidize what we're doing here and and so on so she ya just incredibly thoughtful about about how to do it and now we'll take a quick break and hear from our sponsor

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00:13:27 using receipt capture Breck's is the credit card of the start ecosystem and we highly encourage you to check them out and back to the show so dean Rossier adventure is obviously not the only thing you're involving right now you're involved with Penn Venture Partners and how did that how do you go about raising the funds for that because it is a different type of model yeah so I had done a couple funds before that were very tech oriented and I've always had an interest in economic development particularly overseas and so

00:13:59 you know again work for World Bank and then did a kind of Children's Hospital startup in developing countries so I wanted sort of a different challenge yeah in the industry so we wanted to do something that was economic development oriented and focused on areas and Pennsylvania kind of East Coast that were underserved so the SBA had an SBIC type of program just focused on that but you know very difficult to raise money for that situation so the SBA will give you so you a match let's call it but the

00:14:45 nice thing is to there are all sorts of benefits that come with that match to some of the investors who otherwise would not have invest so yeah so one hand very difficult situation on the other hand we had help so if you were a regional bank and you wanted to improve your CRA score maybe you wanted to buy another Bank or whatever if you just invested in an SBIC you got CRA credits so several regional banks like large regional banks invested and then there were a couple of foundations so purely institutional

00:15:25 whereas the ones I did before were more high net-worth people yeah our investors and you know mainly raise the money and you know the Mid Atlantic and then also raised money from the from the state of Pennsylvania and then that determines some of our geography but we could we I had portfolio companies that were very active out here yeah in Southern California is here you know with some of them you know had operations and in Europe whatever but kind of the core was was there so I should say that that's

00:16:03 that's sort of at the end of its life yeah and and should be so then the question was what do I do next and I did not want to do another venture fund it's wonderful but I wanted to do something different and wanted this to come to Southern California and stay out here I'd been here often yeah and so yeah it's that takes you know it wasn't awful but probably took about a year to raise okay and that was not at the best time is where I'm 2002-2003 so after the bust what we were coming out of that so but though the

00:16:46 downside though are those those sort of investors those sort of institutional investors do demand more reporting so yeah that's that's a bit costly yeah costly and with that - I mean how'd you decide actually to go that route with raising you've done different raises before how did you sound like okay wait this is actually thing I want to do for this next one yeah it was it went from here's the type of fund we want to do we want to do something that that has an economic development purpose to it okay

00:17:19 so how do we make that happen there's really only one way to do this the only route now there you know you see some funds that are far more impact oriented where I think investors you know family offices foundations that are more willing to do that back then it wasn't the case there were very few like it and we were we were still a venture fund and in all other purposes yeah to all of their effect yeah and with the two obviously I mean ran venture funds I mean what we talked about due diligence a little bit with

00:17:58 the with the adventurous thing as well but through that as well I mean how do you have look at and evaluate companies for that yeah that that was a standard VC thing you know you'd see you try and get in as many companies as possible so you see a hundred and then you'd follow up on you know ten or whatever and then you know maybe you invested in one it was just that kind of funnel which is is wonderful to get a lay of the land and frankly at the time we did the fund we we weren't sure of the deal flow so we

00:18:33 were pleasantly surprised but yeah then diligence was was pretty much like diligence she'd do for any fun you know we had a very large checklist you go down that you collect all the documents you lawyers have to look at a few things and and you go through it the same as as I want to say a regular phone but that's not that's not correct but you know same as most folks do it yeah thanks a lot yeah and having gone through that too for a number of years then I mean what are some of the reasons you've seen why

00:19:04 startups fail in the first place yeah Wow so there are you know kind of well recognized reasons why they fail so try and think of some that aren't so well recognized I I think the the relationship between the the founder or founders and one another and the senior management team or whoever are incredibly important but they don't spend enough time on it and I think it's because you know you're trying to survive yeah but it's it's very important in my view for them to keep community kayson's open if there's a problem

00:19:47 identify it solve it really quickly because otherwise people being people then you know you start to get out one another and before you know it you know you're like a rock band okay arguing over everything and that's just not going to work and people are going to leave and there will be you know sort of groups that odds with other groups I I think that's that's highly important and also to and something still relevant for you know the education companies we look at not enough focus on getting revenue

00:20:19 in and product market fit you know you can you can you know as you develop difficulties along the way there are certain things that you'd rather do yeah and entrepreneurs sometimes tend to do those but you you cannot you have to be sort of razor focused on on those sorts of things and even to the detriment of raising money I I think which is just incredibly difficult to do yeah so decide early on that you may not get funding in the formal set so you know go out there and make sure that you can you

00:21:01 have a product that can sell and in our case to not only a product that can sell but a product that can have an impact if we're talking about adventures yeah for sure and then looking at the obviously the team is everything and that's why a lot of stores fail and people have echoed that too but even with your experience so far in the last number of years and what have you either mentioned to this the startup founders and about the team mission how they can set themselves up or what would you suggest

00:21:25 they do to set themselves up for success within those relationships while they're actually trying to build a company yeah I think you I think you have to be just very intentional about it I don't I'm not very prescriptive on stuff they just keep reminding them hey you know you have these relationships are important in some cases they've been they've had them for a long time and it's a shame so you want to you know even if stuff goes wrong at the end of the day it's important and you want to make sure that

00:21:55 you're communicating with with the folks because yes entrepreneurs - I think they're very they are very laser focused right so they forget about relationships with with people and they are the ones as they would tell you who care the most about the success of the company so that kind of blinds you to a few other things so yeah I think I I'm not gonna say it's that easy but it's kind of you know that's that's the advice and there's certain ways you can do that it just depends on what they're like yeah you

00:22:25 know how they communicate yeah and and now looking at the kind of the EdTech space I mean what are some things you're excited about our themes are seeing that you just really want people to work on in that space I'm just curious I need perspective what you have on the space as a whole yeah I mean it's something and this kind of goes to the investment thesis too so it's something we we all know because we've been in the we've been in the system yeah is that that system has hardly changed and I mean

00:22:50 pick it 100 years 200 years 300 years whatever and so it's it's right for disruption yeah now can it be if you're talking about you know kindergarten through twelfth grade which is largely a public good how do you you know how can that be changed because at least it's I think historically in the u.s. kind of achieved the goal of making sure that everyone is access to education so now what's what's the quality like yeah and what's equitable access like and that doesn't mean in my view reducing access

00:23:29 by those who who who can get quality education means sort of evening things out a bit and I think that technology's probably maybe the only way we can do that and certainly can make some things scale but there there are many many interesting I'll call them interventions out there going through early childhood again through through workforce so that's it that's exciting and you have folks Eva you know in the USC campus - undergrads again they've all been through the system and so they I'm mentoring a company there now to

00:24:09 where it's I just found a very practical gap in the experience of post-secondary students I'm like wow you know and probably encourage them to you know keep at it yeah so there are there are sort of very discreet interventions there then the question is kind of how do you put them together what do you focus on can can the system even reliably include folks like that and entrepreneurs like that and so for the answer to that snow so then you know are we looking at more of a private sector focus kind of supplemental

00:24:54 education and you know do the school districts have certain schools that they that or may be more oriented toward innovation or not yeah and then you know how do you help the teachers with the work below low that's already significant and you know they're took a look at k12 you're just controlling a classroom it's tough I don't care where that classroom is it's just a matter of how difficult it is that age I mean where I'm to that point I'm with in EdTech at South I mean what are their specific challenges that these startups

00:25:38 founders are facing in EdTech that you know that this is gonna be a challenging anything want to mention on that yeah I kind of alluded to this before it's okay you have a product yeah and maybe your tech focused or maybe your pedagogically focused something right but you still have this issue of how do I know it works because again you're probably going into a market that's very it's controlled by the public sector right for for better or for worse but that's a different kind of sale and it's a

00:26:19 different kind of even ability it could just do a pilot right so it's being able to afford them the the opportunity to just check it out is it I mean is it efficacious you know are we meeting the needs of students or is this just a cool piece of technology you know so that's that's difficult and that that goes for I think along that continuum of learning mm-hmm the whole the whole way it's just probably in a sense gets easier as you get to adults because then it's it's mainly a private-sector thing

00:27:00 and then it almost is a you know what you know b2c or something like that yeah and with the companies you working with all right do you see most of them going in private sector because it's just too difficult to change anything in the or what have you seen so far well it's it's not clear to me not clear yeah but I would probably encourage most of them to the extent it unless we can get them pilots you have to think of a way to get it into the hands of the learner or into the hands of the parent or

00:27:36 custodian or whatever yeah because otherwise I think most investors in education would tell you this you know sale cycle cycle at least in K through 12 is too long too complicated yeah maybe too political you know so yeah it does it does complicate things when you think about your whole the whole market you're aiming at has a lot of barriers more so that more so than most but it's a humongous market right which is obviously a need to improve always and everything you know that's actually that ya know I I agree so they I mean the

00:28:17 challenge is is certainly there but it's it's fun and everyone has experience you know with the call system yeah and they have opinions on it whether they're practitioners or users with whatever yeah and with that Sue's to everyone having their opinions and how is your how's your team my team even play for for adventures and I'm how do you work together to help these companies or find companies like as a team yourself I'm curious of how you guys kind of yeah it's it's it's neat because again is I

00:28:47 don't think we're that smart to hit each other together but you know the one is you know dual faculty that at at Viterbi the School of Engineering yeah and at Rossi or the school of Ed which is himself itself really rare and you know grew up in in probably difficult school environment and then the other has experience so almost like a thought leader he was the first person I knew to kind of put together a group folks interested in innovative approaches to education particularly involving technology and this is like 15 years ago

00:29:32 at Penn and then I'm I'm an investor yeah and then there are other folks too that that help us out you know one way or another yeah but that's that's sort of the core and and with yeah absolutely coming from that and investing background I mean have you seen already or do you think there's gonna be more accelerators incubators venture firms focus on EdTech there so there's a fair amount now but ya know I guess I guess that will be the case and maybe it will even reflect what I see in venture as a

00:30:03 whole which is you know the earlier part of the early stage investing is is now you know diligence a lot of its being done by accelerators and you know it's organized I say it's sort of organized angel investors and it's very fragmented I think particularly in a place like Los Angeles yeah very difficult to to figure out who's investing in what and where and yeah makes no sense and then with you mentioning you you switch back in 2018 when you started this and then even you want to change directions why did

00:30:45 you decide to actually change directions in terms your your focus on your career from not doing the venture fund to more so the EdTech and different space I've always approached my work life in kind of an opportunistic way so if there's something I was interested in I tried to do it and then you know it's a matter of as you'll find later on you get to a certain point in your life it's like yeah I want to do something a little bit different but take advantage of things that I've learned and work with people I

00:31:16 enjoy and not with people I don't and for cause that I think is worthwhile and not just you know kind of a you know almost purely commercial purpose behind it not that that was necessarily the case before but you know it can be yeah so you have to be careful and then you know doing it out here it's better weather [Laughter] and so yeah I you know just the kind of phase of life we just wanted new challenge yeah all the way around so maybe I bit off more than I can chew but you know it's wonderful and I can also

00:31:59 say to like you know the the sort of the university system out here but I don't mean that you CSIS I mean all the schools yeah I think are generally more open-minded innovative and encouraging of students who want to do that and it's you know and I also think that Southern California particularly LA is has a lot going for it and I would think with respect to education or technology in general is is a great place to be at this time yeah and obviously being in Los Angeles now for a bit and having

00:32:41 connected more people and everything to what if someone's interested in ad tech and they're looking at what options they have for support I mean there's actually Rossi air adventures but what else is there for them that you know of in Los Angeles even well so the yeah this is something we're trying to sort of buildup okay and to that end we just had a a group where we took a bunch of stakeholders from all over Southern California to kind of talk about this how do you okay so technology absolutely

00:33:14 doesn't doesn't solve everything but you know particularly in education but it's a it's an enabler and it's important and so like I said for scale and to you know get get some interventions out to folks who who need it without going through normal channels so how do we know who's doing some of these things and how do we encourage folks to do more of it I think it's very nascent here again very very fragmented so there are there are certainly venture funds who will invest it invest in it but like me before is

00:33:50 part of a portfolio yeah and it's an important part of a portfolio but if you're a general kind of multi sector fact you know venture fund you wouldn't want to put a whole lot of emphasis on it and in the case of education for pure venture you know it's not had the kind of exits that a lot of other sectors have had so you have to go into it with that in mind but anyway so that's something we're working on and I don't take a decade yeah but it's interesting it's fun you meet some great folks yeah and with adventure student

00:34:30 I'm here I'm looking forward kind for for adventures for us your adventures are you going to be taking on more companies and in terms of like you try us wrap up to do more companies I'm just curious what the plans are kind of further yeah so we we want to have sort of a regional focus as in you know can we help matters in Southern California and so how do we do that but we also have a global focus so that will lead to some changes in the portfolio so right now we're putting together what we understand to be the first global

00:35:02 collaboration of vet tech incubators so it's it's it's Finland it's Singapore it's us and it's sort of important to have a strong core group when we know these folks and and of course those are you know two countries very small but Excel and you know Visa scores and things like that so I think you could say they're small and so that's you know that's not always applicable to us but I'm not so sure about that yeah I think it is and so what we want to do then to is reach out to some other at tech incubators you

00:35:39 know in Latin America and Asia and Africa and start to and in Europe and start to kind of build that ecosystem but not anything that's administratively heavy just you know a collaboration kind of figure it out as we go along but we've sort of taken it upon ourselves to to start that yeah and for us we've all of us have sort of a global perspective anyway and I think there's you know we need that sharing in education and we certainly don't don't have all the answers to that yeah and but what we do know and we should share

00:36:16 and be willing to take the examples of others yeah and and Dean where can people go to actually apply to programs yeah so we right now we only do it once a year okay so the second cohort were about we we've had the evaluation process and we're about to to to go on but probably you know about next summer be the same thing but you know if we have a website and in USC and so you know do that and if in the meantime they have an interest my partners and I are always always available and love to chat

00:36:55 with folks which is not to say we can be helpful you know but we we want to be so it's meant to be sort of a public good so yeah reach out to us what's the best way for them to get in touch with you well should I give my email address [Laughter] they can see sigh potentially whatever it whatever is yeah you know come to come to think of that I don't know that we're very good at well there we go I think on our website I you know we probably don't have that link to us so yeah they're welcome to connect with me

00:37:39 Dean KL i n at USC dot edu awesome yeah Dean thank you so much my time today oh you're welcome thank you it's enjoyable thanks for checking out star up 2.0 from spark XYZ if you want to learn more about startups and investing and check us out join the ecosystem at spark XYZ dot IO