How to Get Investors for Your Microschool
As a part of our Money & Microschools series, I will discuss all things funding! In this article, we will go over what getting investments for your microschools looks like, how to get them, who has gotten investments, and where to find potential investors.
Microschools are revolutionizing education with personalized, student-focused learning experiences. For for-profit entities, securing investments is essential for growth and sustainability. Launching a microschool is no small feat, and terms like seed funding, Series B, and equity can feel overwhelming; I know they were for me, at least! This guide simplifies these concepts while focusing on for-profit microschools and how they secure funding. For those exploring nonprofit options, check out our nonprofit funding guide here.
Nonprofit vs. For-Profit Microschools: The Key Differences
When starting a microschool, you have to decide whether to operate as a nonprofit or a for-profit entity. Each model comes with unique opportunities and challenges:
Nonprofit Microschools: These schools reinvest all profits into their mission and rely heavily on grants, donations, and fundraising. They do not have traditional investors owning parts of the school. If you’re considering this route, read our nonprofit guide here.
For-Profit Microschools: As a for-profit entity—often an LLC (Limited Liability Company) or a corporation—your microschool can attract investors. These investors provide funding in exchange for equity (ownership stakes). While this route gives access to venture capital and private investments, it also comes with expectations for financial returns and sometimes input from investors on how the school operates.
Choosing the for-profit route means operating your school as a business, focusing on scalability and profitability while balancing your educational mission.
Why Microschools Need Investments
Running a microschool requires financial resources for renting space, hiring staff, curriculum development, and providing student resources. Investments help cover these costs, allowing your school to scale and serve more students. Before I started Kind Academy, I had no clue how much money it took to have a successful school.
How Investments Work for For-Profit Microschools
When someone invests in your microschool, they provide financial resources to help your school grow. In return, they may expect equity (ownership) or a share of profits. This partnership works similarly to planting a seed: investors nurture your school financially, hoping to see it grow and succeed.
Types of Investment Rounds
Understanding the different stages of funding is key for for-profit microschools:
Seed Funding: This is the first round of investment, used to develop your idea, build infrastructure, and test your model. It’s the initial push to get started.
Series A, B, C, etc.: These rounds come later to help scale the school, expand into new markets, or improve services. Each round brings in more funding and often larger investors.
Examples of Microschools That Secured Investments
Here are three microschools that successfully attracted significant investments:
Prenda An Arizona-based network of microschools, Prenda raised $6.15 million in equity funding in 2020 and $20 million in Series B funding in 2022, led by Seven Seven Six (Alexis Ohanian’s firm). Other investors included Learn Capital and Peak State Ventures.
SchoolHouse A New York-based edtech startup, SchoolHouse raised $8.1 million in 2021 to expand its microschool model nationwide. Investors included Pace Capital, Trust Capital, and Metrodora Ventures.
Sora Schools This online high school offering personalized learning experiences raised $23.5 million in venture capital, demonstrating strong investor confidence in their innovative approach to education.
Potential Investors for Microschools
Here are organizations known for investing in innovative education models:
Key Terms to Know
Here are some essential terms to understand as you seek investments:
Capital: The money used to start and grow your school.
Equity: Ownership stakes in your school. Investors who own equity have a share of the profits and decision-making power.
Valuation: The estimated worth of your microschool.
Dilution: When you bring on more investors, your ownership percentage decreases.
How to Calculate Your School’s Worth
To determine your school’s valuation, consider the following:
Revenue: Your current income from tuition and other services.
Growth Potential: How much can your school expand in the future?
Market Comparables: The valuation of similar microschools or education startups.
I learned recently that you can get your company's ballpark valuation (or potential worth) by multiplying your annual revenue by 3 to 5 times. For example, if your microschool generates $200,000 in annual revenue, its valuation might range from $600,000 to $1,000,000. This simple formula provides a helpful starting point for discussions with investors. Definitely something to think about as you grow your school!
Balancing Investments with Your Mission
Securing investments can fuel your school’s growth, but staying aligned with your mission is essential. Choose investors who share your educational values and long-term vision. Governance agreements and Founder's Clauses can help protect your mission while allowing for financial growth.
Why Pitching Matters
Pitching is your opportunity to tell your school’s story and explain why investors should believe in it.
Tips for Pitching Investors for Your Microschool
Pitching investors is all about confidently sharing your vision, showing the value of your microschool, and explaining how their support can help you scale. Here are some tips to nail your pitch:
1. Start with a Compelling Story
Investors want to connect with your “why.” Share the story behind your microschool.
Why did you start it?
What problem are you solving?
How are students' lives changing because of your work?
Example: “I created this microschool because I saw kids being left behind in traditional schools. We’re creating a space where every child can thrive, and here’s how it’s working…”
2. Clearly Explain Your Value Proposition
What makes your microschool unique? Investors need to know why your school stands out. Focus on:
Personalization: How your school caters to individual student needs.
Innovation: Any new methods, technologies, or approaches you’re using.
Impact: The outcomes you’ve achieved so far (testimonials, graduation rates, etc.).
3. Know Your Numbers
Investors want to see that you understand the financial side of your business. Be prepared to answer:
What’s your current revenue?
How many students are enrolled, and what’s your growth potential?
What are your operating costs, and how will you scale efficiently?
Pro Tip: Include your valuation and explain how you calculated it. (E.g., “Our school generates $200,000 annually, so with a 4x revenue multiple, our valuation is $800,000.”)
4. Showcase Your Market Potential
Investors want to know there’s a demand for your school. Include:
The market size (e.g., parents seeking alternative education options).
Trends supporting microschools (e.g., growth in homeschooling, dissatisfaction with traditional schools).
Your target audience and how you’re reaching them.
5. Have a Scalable Plan
Investors need to see how their money will help you grow. Highlight:
Plans to expand your student base or open new locations.
Hiring more staff or developing new programs.
How will their investment be used (e.g., technology upgrades, marketing, etc.).
6. Be Confident but Authentic
Confidence is key, but don’t feel like you need to be perfect. Investors appreciate honesty and passion. If you don’t know an answer, admit it and explain how you’ll find out.
7. Focus on the Return on Investment (ROI)
Investors will want to know what’s in it for them.
Will they get equity (ownership) in your school?
How soon can they expect to see a return?
What’s your projected growth in 1, 3, or 5 years?
8. Practice, Practice, Practice
The more you rehearse your pitch, the more confident you’ll feel—practice in front of friends, family, or mentors who can give constructive feedback.
9. Have a Strong Visual Presentation
Create a clean, professional slide deck that includes:
Your mission and vision.
Key statistics and market trends.
Financial highlights and projections.
Testimonials or case studies.
10. End with a Clear Ask
Be direct about what you need from investors. For example:
“We’re seeking $200,000 in exchange for 20% equity to expand our program to 50 more students.”
Final Thoughts
Pitching is your chance to share your passion, build excitement, and connect with investors who believe in your mission. Be prepared, be clear, and remember—no one knows your microschool better than you!
Conclusion
Securing investments as a for-profit microschool can be a rewarding path to growth and sustainability. By understanding the basics, aligning with the right partners, and staying true to your mission, you can build a thriving educational model that makes a lasting impact.
For more insights or guidance, feel free to connect with us at Kind Academy. If you’re exploring nonprofit options, check out our nonprofit funding guide here.
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