What was the biggest challenge in building Raise Me's marketplace?

The primary challenge was the 'chicken and egg' problem inherent in marketplaces: securing funds before having enough students, or vice versa. Raise Me prioritized getting funding partners first, then focusing on building network density in specific regions.

How long did it take Raise Me to fundraise its first round?

Raise Me's first funding round took over a year to secure after the company's inception. They bootstrapped initially and later leveraged grant funding from sources like the Gates Foundation before gaining traction with investors.

What are the key differences between being a pre-seed/seed CEO and a later-stage CEO?

In the early days, a CEO is very tactical, focused on customer interviews, prototyping, and hands-on selling. Later, the role shifts to setting vision, recruiting the right team, and ensuring financial stability through continued fundraising.

What advice does Preston Silverman have for aspiring entrepreneurs?

He emphasizes the importance of patience and resilience, stating that survival is key in the early stages. While identifying what doesn't work quickly is important ('fail fast'), it shouldn't lead to abandoning the entire company.

Besides financial aid, what other barriers do students face in completing college?

Students often lack adequate guidance and mentorship due to high student-to-counselor ratios. There's also a need to better link education with career opportunities and focus on skill development, as content knowledge rapidly evolves.

What is the long-term vision for Raise Me?

The goal is for Raise Me to be a platform used by every student in the US, extending to international students. It aims to support students not only with financial aid but also with other pivotal decisions throughout their college and career journeys.

Key Moments

Preston Silverman on Building out a Marketplace in Education - at YC Edtech Night

Q: How did Preston Silverman get the idea for Raise Me?

The idea came to Preston Silverman while teaching high school students in India and reflecting on their challenges in navigating college applications and payment. Witnessing the gap in financial aid timing, he conceived Raise Me to award aid earlier.

Y Combinator

Science & Technology6 min read18 min video

Dec 4, 2017|4,834 views|70|2

YC Y Combinator Preston Silverman RaiseMe EdTech Tim Brady Startup Tech Interview Education Technology

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Key Moments

TL;DR

RaiseMe offers micro-scholarships throughout high school, but new college entrants are not the only ones losing out on financial aid, as it can take over a year to secure initial funding.

Key Insights

RaiseMe awarded nearly $1.5 billion in scholarships and grants in its third year of operation.

The rising cost of higher education impacts over 80% of US jobs, which now require a college degree.

Historically, over $100 billion in annual scholarships and grants are awarded too late in the college decision process to influence students.

RaiseMe's initial fundraising process took over a year, emphasizing bootstrapping with personal savings and grant funding before securing institutional investment.

Edtech faced significant pushback in Silicon Valley during RaiseMe's early funding rounds due to the dominance of MOOCs in popular discourse.

Guidance and mentorship are identified as critical barriers to college completion for students, especially those from low-income or first-generation backgrounds, with counselor-to-student ratios as high as 1:600.

Addressing the college affordability crisis with micro-scholarships

Preston Silverman, founder and CEO of RaiseMe, discusses the critical issue of higher education accessibility and affordability. He highlights that over 80% of jobs created in the US since the recession require a college degree, yet the escalating cost of education is making it an unviable path for many students and families. A significant problem identified is that the over $100 billion awarded annually in scholarships and grants in the US typically comes too late in the decision-making process for students to be influenced. This delay causes many students to disengage from pursuing higher education, even if they are eligible for substantial aid. RaiseMe's core premise is to shift this paradigm by enabling students to accrue scholarships and grants throughout high school, based on their progress, skills, and talents. This approach aims to create a more transparent and empowering system, allowing students to make confident decisions about their college and career aspirations.

The evolution of RaiseMe's model

RaiseMe has completed its third year of operation and is entering its fourth, having awarded nearly $1.5 billion in scholarships and grants in the previous year. Silverman, who has been with the company for five years, transitioned to founding RaiseMe after recognizing a desire for more direct impact than his previous role in strategy consulting and research offered. His time teaching high school juniors and seniors in India exposed him to their challenges in navigating college applications and costs, sparking the idea for RaiseMe. He applied to Y Combinator (then Imagine K12) to help launch the platform. Initially, Silverman considered various funding sources like crowdsourcing or foundations, but after six months of research and selling, he landed on partnering directly with higher education institutions as the primary source of funds.

Navigating the marketplace's chicken-and-egg challenge

Building a platform like RaiseMe, which operates as a marketplace, presents a inherent 'chicken-and-egg' problem: attracting students without funds and attracting funds without students. Silverman's approach was to prioritize securing the funds first, believing that if the financial resources were available, students could be found. While this proved broadly correct for RaiseMe, he acknowledges that marketplace dynamics can differ. A key learning over time has been the importance of building network density, particularly concentration in specific geographies and regions, to effectively balance the number of students with available funds. Product-market fit was not an immediate 'aha!' moment but a gradual awakening, solidified when thousands of students began signing up. Silverman also notes that product-market fit is an ongoing process of iteration rather than a binary achievement.

Early-stage fundraising and overcoming obstacles

The initial fundraising journey for RaiseMe was long, taking over a year after the company's inception. Silverman bootstrapped using his savings from a previous job, supplementing this with grant funding. Notably, they won a $100,000 grant sponsored by the Gates Foundation, which was instrumental in hiring their first employee. The company paused active fundraising to focus on building traction with the platform, securing more partners, and gathering proof points. When they re-engaged investors, having a live and working platform with students signing up significantly boosted confidence. During this period, RaiseMe faced skepticism in Silicon Valley; the edtech landscape was dominated by discussions around MOOCs, leading to pushback and concerns about the longevity of traditional colleges. The company found investors who were both mission-driven and saw the business opportunity.

The operational realities of early versus late-stage CEO

Silverman contrasts the CEO role in the pre-seed/seed stage with current responsibilities. In the early days, the focus was highly tactical, involving extensive customer interviews, user research, prototyping, and hands-on selling to colleges and universities—consuming about 80% of his time outside of fundraising. Now, as CEO of a larger company (with 50 employees and two and a half rounds of funding), his primary roles involve setting the vision, strategy, and goals, ensuring alignment across the organization, and recruiting top talent. He emphasizes that a strong team is crucial for overcoming challenges and building resilience. Fundraising remains a significant responsibility to ensure the company has the necessary capital to operate and grow.

Key learnings and advice for aspiring founders

A major surprise for Silverman looking back is how much time could have been saved, suggesting they could have reached their current position in half the time by avoiding numerous mistakes. He stresses the importance of patience and resilience, framing early-stage entrepreneurship as a survival game. He cautions against the misconception that a lack of immediate rocket-ship growth signifies being on the wrong track. While failing fast is important for identifying what doesn't work, it shouldn't lead to abandoning the entire venture. Instead, adapting tactics and iterating is key. This patient, resilient approach allows founders to navigate the inevitable setbacks and learn from them.

Beyond financial aid: current barriers to college completion

The biggest barrier facing students today, aside from financial aid, is the lack of guidance and mentorship for navigating their next steps after high school. High school counselors are often overwhelmed, with ratios as high as 1:600, leaving students with limited time for critical life decisions. This is particularly challenging for first-generation or low-income students. Silverman advocates for better support systems for mentorship and guidance. He also believes education needs to better link with career opportunities, focusing on developing fundamental skills rather than just content knowledge. As content rapidly evolves, these fundamental skills are crucial for long-term success in the evolving job market.

The future vision for RaiseMe

In five years, RaiseMe aims to be a platform utilized by every student in the US, and potentially internationally, throughout their college and career journeys. The vision extends beyond just financial aid, intending to support students through many pivotal decisions they face from early high school through college. This comprehensive support system is designed to empower students to navigate this critical phase of their lives with greater confidence and clarity.

Mentioned in This Episode

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Common Questions

Raise Me is a platform that allows students to accrue scholarships and grant funding throughout high school based on their progress and development. This makes financial aid more accessible and transparent before students have to make crucial college decisions.