From Social Commerce to Preschools, Lessons Behind Wondershool’s Pivot to Raise a $20M Series A
On Friday, our portfolio company Wonderschool announced its Series A fundraise… a $20M Series A led by Jeff Jordan at A16Z. It’s big news for a company tackling a huge problem for both families and teachers in an enormous space. But this post isn’t about why early childcare is broken in the US (it is) and how Wonderschool is looking to fix it by enabling educators to run in-home preschools and daycares. The media will cover that. I want to share some details the media won’t tell.
We’ve all heard the tale of the mystical pivot that saves a company. What we don’t hear enough is the pure willpower and series of tough choices founders make to survive through a tremendous pivot in order to thrive. You see, Wonderschool actually started out as Soldsie, a social commerce platform that allows customers to purchase via commenting. What enables a pivot from a social seller tools to marketplace for preschools to happen? Here’s a quick look at five things that (combined with Chris Bennett and Arrel Gray’s grit and vision as founders) led to this new, exciting chapter:
Facing reality. After scaling Soldsie’s revenue and team, Chris and Arrel found their growth curtailed by changes to Facebook’s algorithm. They had the courage to face head on that their venture-backed business no longer had venture-scale. They were intellectually honest about Soldsie’s prospects and evaluated where their time and capital were best spent.
Shifting to breakeven. Chris and Arrel scaled back Soldsie, taking the team of 45 down to seven, focusing on unit economics instead of growth. Getting the business to a sustainable state (i.e. profitable!) enabled them to not burn the remaining cash from their seed round while they explored long term options for Soldsie.
Getting buy-in to shift focus. Chris and Arrel were transparent with their investors about their desire to find a new business to focus their time and attention. Having Soldsie running concurrently and generating cash was a big part of the investor sell as it extended the team’s runway. They got buy-in from their early investors to spend time ideating and testing new ideas. They came up with dozens of ideas, dedicated time to testing several, and kept moving on until they found an idea that had both enormous potential and was something they were passionate about building for the long term.
Funding the new idea. Chris and Arrel waited until they had results to seek funding for the new idea, “One Preschool”. First, they recruited a teacher, launched, and ran an in-home school in Los Angeles. Only then did they go back to investors, working to get their insiders’ financial support for an entirely new business with a cap table that made sense for the new business going forward. Finally, they attracted new investors, a strong signal in outside interest for the new business.
Executing. Oh yeah. After all that, Chris and Arrel began growing the Wonderschool team and executing a brand new business for two years to the tune of 140 schools live today. And only then did they raise $20M.
Social media thrives on stories of startups “crushing it”, but startups are $@#!ing hard. It’s important to acknowledge that while grueling times and arduous decisions are not the stuff of headlines and tweets, they are the reality for most early stage founders (even ones making headlines). For those going through this part of the journey, whether it works out or not, you are by far not alone.
Finally, Wonderschool’s existence is testament to Chris and Arrel’s grit and vision as founders, as well as their ability to make really tough choices. I’m thrilled to support them in what lies ahead with Wondershool. And I’m extremely appreciative and thankful to both of them for letting me share just a little of their story.