An Update on Collab+Sesame

Necessity is the mother of invention, so some of the most powerful innovations come from entrepreneurs solving their own problems, rather than someone else’s. Uber was envisioned after two founders couldn’t get a cab. Mark Zuckerberg created Facebook to learn more about his classmates.

This might explain why kids, as a group, have largely been left out of the technology revolution of the last 15 years. Many of the most innovative founders – those who truly understand how to harness technology – built their companies in their 20s, when kids weren’t on their mind.

But that’s changing. The generation of entrepreneurs who truly know how to harness technology is just now having children. It’s only a matter of time before some of these entrepreneurs use their talent and resources to build a new set of companies to compete with child-development incumbents.

That’s one of the reasons we partnered with Sesame Workshop last year, creating a new fund to invest in the next generation of kid-focused products.

It’s been a year since Collab+Sesame launched – a good time to share what we’ve learned and where we’re heading next.

What have we learned so far?

Two big things:

We grapple with a question: Will the next great business to transform children’s lives be a company focused on changing children’s lives? Case in point: For anyone who has kids, it’s hard to argue the impact YouTube has had on their lives. But YouTube wasn’t founded as a kid’s company. And it certainly isn’t limited to that today. What does this mean? Should Collab+Sesame focus our investments on businesses solely focused on kid products? Or should we cast a wider net to include businesses with the potential to improve kids’ lives — even if that isn’t their sole intent? The next great kid’s company might not look like the next great kid’s company, which is quirk we keep in mind.

What was once a sector outside the mainstream for tech entrepreneurs and VCs is increasingly catching people’s attention. Y Combinator’s tie-up with Imagine K12 is a good example. We’ve also seen established firms such as Upfront, Accel, ICONIQ, and others showing up in cap tables of kid-focused ventures. This corresponds to the proliferation of next-gen toys such as LittleBits, Kano, Sphero, among others. Overwhelmed with the volume of innovative kid products, we built a website called KidTech to highlight some of the ideas that have caught our attention. There’s a lot of momentum in this space.

Where are we today?

We’ve met with dozens of entrepreneurs, and have invested in three companies: Yup, Osmo, and a third that’s yet to be announced. Along the way we’ve worked closely with the Sesame Workshop team to provide strategic support for those portfolio companies — including research, marketing, and due diligence. We also hosted a Founders Summit at Sesame Workshop’s HQ in New York City

Where are we headed next?

Collab+Sesame is aiming to make 4-7 new investments in 2017, with an emphasis on the intersection of analog and technology. We’re also excited about non-education related ventures such as food, transportation, childcare, and family development. We think we’ll continue to see a sharp increase in innovation in the kid’s space as the “software generation” comes of age, realizing how little software has eaten this world and how useful their skills can be at solving problems they now experience firsthand.

Kids are one of the most fascinating groups of consumers. They are learning machines. They are some of the most creative people on Earth. They give you instant, honest feedback. And they are growing up in a world where technology dominates nearly everything they touch. There’s so much potential in this space and we’re excited to be driving ahead.

If you’re interested in kid-focused products or want to keep tabs on Collab+Sesame’s progress, email me at magic@collaborativefund.com. And if you have ideas or suggestions for how we can improve, we would love to hear from you.


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