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Over the past few years, I have had the privilege of observing and participating in education and technology ecosystems all around the world. Whether I am traveling from, to, or currently in any given city, I am frequently asked, “What do you think of the startup scene there? Are there even any edtech entrepreneurs?” This led me to wonder, what exactly makes an edtech ecosystem possible? From Silicon Valley to New York, Hong Kong, Beijing, Manila, Tokyo, Australia, and beyond, where in the world are we most likely to find the next innovative technology solutions for education?

Indeed, just as a painter cannot create a masterpiece with a canvas, paint, and brushes, a technology entrepreneur cannot meaningfully transform education without a few key ingredients. When we’re evaluating opportunities around the world for both ourselves as investors and on behalf of our portfolio companies as businesses, I have noticed there are three key ingredients that, when present, make it truly possible for an edtech ecosystem to thrive.

1) People — with experience in both education and technology.

This means there should be both an existing start up ecosystem, and a mechanism by which digital natives are spending time in traditional education environments. Teach for All programs are a prime example of a community mechanism that takes ambitious individuals who have grown up with technology integrated into their everyday lives (Facebook, mobile, e-mail, etc) and places them inside of underserved, largely analog education environments, where they are in a position to directly witness the ways in which technology can make learning more efficient and effective.

2) Connectivity — to the internet.

Technology cannot impact education if individuals do not have access to the internet. For years, even some of the most technologically advanced economies in the world have not had reliable internet connectivity in schools and homes. This has been even worse in the developing world where a complete lack of infrastructure has prevented individuals from getting online. However, with now more mobile phones than people in the world, individuals even in third world countries have access to the internet. This means people can access unlimited information through their own devices, without relying on government bureaucracy to build the necessary infrastructure. As BYOD becomes more of a reality, it will be interesting to see the ways which innovation from the developing world may potentially leapfrog the US and other more developed ecosystems.

3) Capital — dedicated to the edtech sector.

A healthy ecosystem requires sophisticated capital that understands the risks and challenges of investing in technology for education. Investors must have enough experience in the sector to ask the right questions, but not so much experience that they think they know all the answers. They must be motivated by both returns and scalable impact so that capital will flow to the right teams and opportunities. Without funders and founders that can see beyond the alluring “let’s help children” and “do good” phraseology traditionally used to draw capital into the nonprofit education sector, entrepreneurs will not be forced to develop truly viable and innovative solutions.

Just like artists, education entrepreneurs are everywhere. However, without a few key elements in their surrounding environment, their talent may forever go untapped. Part of our goal as global investors is to not just observe these ingredients at work in ecosystems of varying levels of maturity all around the world, but to also play an active role in connecting the dots across ecosystems so they can benefit from each other’s unique strengths and weaknesses. That way, innovation in education can truly occur anywhere, and everywhere.

If there is one thing that I simultaneously both hate and love about myself, it is that I always ask, “Why?” Though this was initially praised as a sign of intelligence, my parents and teachers soon found themselves frequently frustrated by my inability to follow instructions I didn’t understand or believe in. It’s not that I was disobedient. I was usually more than happy to comply, I just wanted to know, “Why?”

As I grew into adulthood, it was no longer just my parents and teachers who were frustrated by my inconvenient curiosity. It is me who feels consistently betrayed by my own mind. I have repeatedly tried to follow a common path, do what everyone else is doing, take cues from society about what life should look like, but I keep finding myself unable to accept them.

When I was in sales and trading at Goldman Sachs, I was making good money, living a comfortable life, filled with exciting things and interesting people, but yet every morning I would wake up and wonder, “Why am I doing this?” “Why does this matter?” No matter how hard I tried to suppress them, these exasperating questions relentlessly made their way into the top of my mind. And then I started questioning the questions… Why can’t I just accept how lucky I am? If I have found a situation that is both secure and stimulating, isn’t that everything I should want? Why do I have to constantly be questioning myself and my circumstances? And down the rabbit hole I went.

Inevitably, I had no choice but to accept the reality of my state of constant searching, relent to my own incessant nagging, and make some changes. Without a good answer for, “Why?”, I parted with the traditional path at Goldman, joined a start up, launched the business in a new market, hired a team, and ultimately joined another startup that happens to be a venture capital fund.

Now, we’re growing businesses from the ground up, including our own, and I get to meet with hundreds of entrepreneurs every year who are coming up with new ideas that they hope will change the world. I could have never imagined this is what I would be doing, I didn’t even know this type of job or career existed when I was at Goldman. But clearly I never would have ended up here if I hadn’t asked, “Why?”

So, at least in my professional life, I am learning to be grateful for this constant urge to know more, to know why. Besides leading me to places I could have never imagined, it helps find more efficient ways to get things done. It helps me see through overly optimistic entrepreneurial bullshit, to see holes in business models, to understand colleagues and customers more deeply, to focus on what matters when the details could get incredibly overwhelming.

But the power of “Why?” goes much deeper than that. It is so powerful, in fact, it is an integral part of how we evaluate founding teams. If you, as an entrepreneur, have figured out and are connected to your raison d’être, you have a serious competitive advantage. If you believe your product or service is absolutely essential to the world and you are able to effectively articulate why that is, you will find yourself unimaginably empowered to make that happen. We call this “being on a mission”, and here’s why it’s a key element of our investment thesis.

1. Founders driven by a mission don’t give up when things get difficult. Funding falls through, you lose a big customer… you will learn a lot if you ask “Why did these things happen?” but you will persevere even more powerfully if you remember, “Why are we doing this in the first place?” The reality is most startups fail because founders give up and move on. We don’t blame them for that, everyone is on their own journey. But if you know why you’re on yours, you aren’t going to stop until you make it a reality.

2. Founders driven by a mission can attract the best talent. Everyone wants to be connected to something bigger than just themselves. It is part of being human. If you are able to inspire people in this way, provide them with a means of connecting to the larger fabric of existence, there is no doubt this is where you see talent being actualised, efficiency being maximised, and teams collaborating most effectively.

3. Founders driven by a mission build better brands. They have a stronger story to tell, and thus they sell more, they raise more money, and they grow bigger companies. Billions of dollars every year are spent on advertising, because we buy things for more reasons than simply the quality of the product. Just like employees, customers want to be connected to a powerful mission, too. If you can effectively articulate your mission, why you must exist, customer and investors might just believe you too.

I speak from deep, somewhat painful personal experience when I say that refusing to accept the way things are is nothing short of irritating and inconvenient. Digging a little deeper is not the easiest thing to do. However, if you have the courage to constantly question the status quo, and then ask yourself why you’re questioning the status quo, you will find yourself tapping into something more powerful than you could have ever imagined. Knowing your mission can make you unstoppable. And that is the power of “Why?”

What are the key dynamics, trends, and opportunities for education technology in Asia? From consumer, to mobile, to language learning, Asia is one of the most exciting places in the world to be an education investor, entrepreneur, or stakeholder right now. Here are slides from my recent keynote at New Zealand’s Edtech for Export conference in Wellington, New Zealand.

As an ed tech investor, I am often asked if I think technology can ever replace teachers. Indeed, many wonder aloud how technology fits into the classroom while silently fearing that teachers will lose their jobs if computers and online learning platforms get too good at what they do. Now, I could be controversial and tell you that this is one of the most absurd questions I have ever heard. I could be controversial and declare that refusing to use or invest in technology due to a fear of obviation of teachers is not only a gross disservice to students, but also a blatant misunderstanding of what ‘an education’ really is. But, I won’t.

In some parts of the world, it is Teacher Appreciation Week. Now, I could be controversial and state how ridiculous it is to choose one week to acknowledge teachers. I could be controversial and highlight how counterproductive it is to make people believe that it’s ok to say thank you only one time per year to the people that are playing the most active role in shaping our lives, our identities, our futures.

However, that would not be very productive. Nor would it make my teachers proud. So, instead of being controversial, I’d like to share a story about a teacher who changed my life. I’ve acknowledged her in the past, but it isn’t until recently that I’ve come to fully understand just how powerful a force she has been in my life, and now seems as good a time as any to call her out for it. This is the story of a teacher who educated me in a way that no textbook or online module ever could. She did something neither content nor product can do. She believed in me.

Her name was Barb Fritz. Mrs. Fritz was my second grade teacher and calling her a remarkable person is an offensive and drastic understatement.

To provide some context, I grew up attending a public grade school in Illinois, where I was most certainly not part of the “cool crowd”. In fact, I was what some may describe as a big nerd. I loved homework, I cared more about how I organised my pens than how I organised my friends. I wrote and illustrated books about fictional aardvarks named Dixie. I was so scared of getting sick I would wash my hands until my knuckles cracked and bled. Needless to say, socially, this didn’t play out too well for me, and I soon learned to keep my excitement and my ambition to myself. Academically, it meant I was in a position to go far, but given I didn’t fit in with the rest of the students in my classes, even my teachers often found my enthusiasm to be a nuisance. Honestly, who could blame them? They were struggling to get most of the class to even start their homework, what could be more annoying than me asking for more and more and more?

From the first day I sat in Mrs. Fritz’s class, she made it clear that she valued my curiosity and that my hunger for learning was a good thing. She asked me to be respectful of others while she created new opportunities for me to be creative, take initiative, and explore the unknown. She encouraged me to write more books through her “Writing Workshop”, she gave me extra projects to work on outside of class, she encouraged my questions but also delicately let me know when I was crossing a line. She believed in me, she told me I was capable of anything, and when she looked at me with encouragement, I felt like I was okay just the way I was – no more, no less.

Of course, life went on, I went on to Middle School, Mrs. Fritz kept teaching and inspiring. After I had graduated from Harvard, I reconnected with her through the wonders of Facebook. We met up at her home in Evanston and sure enough, she was the same old Mrs. Fritz – so kind and loving, curious, open-minded, and generous in spirit. Back in second grade, I had declared to her my aspirations to be a writer, an astronaut, and a geologist. She told me I could do anything. When I told her that I graduated from college and decided to go work at an investment bank – a decision for which I was more than mildly self conscious – I was scared she’d be disappointed. But she smiled and let me know that that was okay, too.

By the time we reconnected in 2010, however, she was battling cancer. Only one year later, she lost. I distinctly remember where I was when my mom shared the news of her passing. It threw me for a tailspin and once again caused me to question — what am I doing with my life? It wasn’t a question of whether or not I was making her proud, it was a question of if I was doing enough to share her spirit. Mrs. Fritz had given me such a gift, how could I pay that forward? What was it about her that was so special, that I needed to emulate in order to live a fulfilling and worthwhile life?

This was just one of the many factors that led me to jump ship from Wall Street and dive into the entrepreneurial world, which ended up taking me to places I couldn’t have ever known. Even from her grave, Mrs. Fritz empowered me to do whatever I wanted. She was still telling me that I was okay, just the way I was, and that it was good to be curious. Good to question things. Good to always be learning. Who knows where I would be today if it weren’t for her.

So now, instead of being controversial, I’m taking this opportunity to not only say thank you, but also to shine a light on the power of teachers. In so many ways, teachers are our education. Technology can never, and should never, replace them. It can, however, make their lives easier and more efficient so they can spend more time actually teaching. Technology can relieve teachers of unnecessary and tedious work, allow them to streamline their workflow, feed them with valuable data about what students need help, when they need it, and how. Who knows how many more lives Mrs. Fritz could have changed if she didn’t have to waste time grading papers, dealing with administrative work, sitting in unnecessary training sessions. Technology simply empowers teachers to scale their time and their impact.

No matter who you are, where you live, whether or not you had a formal education, surely there is one person who has impacted your life as deeply as Mrs. Fritz has impacted mine. Whether you acknowledge it this week, or every week, there is no question that the power of another human being looking you straight in the eye and telling you that they believe in you is completely irreplaceable. The goal is simply to empower those individuals to look as many people in the eye as possible. Now that’s what I call scalability.

Before looking at the future of the Hong Kong startup ecosystem, it’s important to begin with the past. The Hong Kong startup ecosystem has seen tremendous progress during the past five years.

The most important factor has been the entrepreneurs themselves. Without entrepreneurs, there would be no ecosystem. To build teams, of course additional talent has been needed, and Hong Kong has seen a strong mix of immigration and inspired young people. Next, capital from angel investors and real estate from co-working spaces has provided the the basic resources for starting a company. The first accelerator in Hong Kong, AcceleratorHK, was started by my partner Stephen Forte and Paul Orlando, with a wave of new accelerators now following. Education was added to the mix when my partner Allison Baum brought General Assembly to Hong Kong, and there are currently several options for learning the basic skills about startups.

So what’s next?

First, we need more of everything. More entrepreneurs, more talent, more angel capital, more accelerators, more education and, yes, even more co-working spaces.

Second, we need to pass the mom test. Right now, entrepreneurship has entered the consciousness of the younger generation in Hong Kong. That’s a great start. But to really make it go mainstream, we need to convince all of the moms in Hong Kong, including the tiger moms, that entrepreneurship is serious option for their children. Of course we need heroes, but rather than simply creating idols for worship, it is important to show these moms that entrepreneurship is a diverse ecosystem where people with different skills can find successful and meaningful careers. Joining a successful and fast growing startup as an employee with equity is actually more rewarding than being the sole founder of a project that never makes it off the ground. Working as a service provider who supports the startup ecosystem is a meaningful way to give back to society. Becoming a lifestyle entrepreneur can provide the flexibility for people to balance work and life. As a startup ecosystem, we need to reach out to moms all across Hong Kong and get them on board.

Third, we need private sector investors, limited partners, in home grown early stage venture capital funds. All anecdotal evidence, both formal and informal, suggests that startups are able to raise angel funding in Hong Kong but when reaching Series A they typically look outside of Hong Kong for investors. Not only is this frustrating for the startups, it creates a real risk for Hong Kong that these companies will scale up their operations elsewhere just as they reach the sweet spot of growth. There are many institutional investors based in Hong Kong, but their investment focus is traditional sectors like property, foreign markets or later stage growth capital. Other countries have successfully built up early stage venture capital based on the foundation of local limited partners. Hong Kong is already a powerhouse global financial centre with strong growth and late stage capital but to build a sustainable startup ecosystem the connection between finance and startups needs to be strengthened.

Let’s make the next five years of the Hong Kong startup ecosystem as productive as the last five. To reach the next stage of evolution, we need more of everything and also two additional factors: passing the mom test and local limited partners for early stage venture capital funds. As Hong Kong legend Bruce Lee said, “There are no limits. There are plateaus, but you must not stay there, you must go beyond them.”

Every company is unique, with its own challenges and opportunities. But the traditional approach towards corporate venture capital ignored this reality. Historically, companies set up a venture capital division that invested in startups with the hope of strategic synergies. Typically, the synergies disappointed, there was turnover at the venture capital team and finally the entire initiative was starved of resources. It was like painting only with black and white.

During the past few years, however, as companies have re-entered the corporate venture capital market more aggressively, there has been more willingness to experiment with a variety of approaches. There are several approaches to consider depending on the the specifics of each firm.

1. Classic Corporate Venture Capital
When done well, the classic corporate venture capital model looks like Intel Capital, with more than 1,400 companies invested and more than 570 exits since 1991 across a variety of sectors. In addition to investment, they leverage their corporate brand, global customer base and technology expertise to support portfolio companies. If your company is thinking about starting a corporate venture capital fund in the classic sense, this is the benchmark, and it is not easy to meet. Intel is exceptional at execution in its core business, and so it is not surprising that it has also done well as a venture capital investor. Instead of blindly trying to create a poor copy of Intel, it is worth considering some of the other models because doing this well over decades is not easy.

2. Focused Corporate Venture Capital
Historically, very few businesses are able to create a tight fit between their operations and their venture capital investment and many times forcing these two together creates friction. When it works, however, the model can be very powerful. Salesforce is a great example of a focused venture capital model. The company invests across stage but with a primary emphasis on companies that are built on the Salesforce Platform or listed on the company’s AppExchange. Therefore, the operating fit is clear and natural, resulting in a genuine benefit for both the portfolio companies and the fund.

3. Moonshot Venture Capital
Google Ventures is part of a broader strategy at Google which emphasizes breakthrough technologies to transform existing industries or create new ones. This strategy can only be implemented with deep pockets, and the company has committed to provide US$300 million per year to maintain an aggressive pace of investment. The fund invests across sectors, the largest of which so far has been health care and life sciences. In addition to the fund, the company also makes direct investments, for example SpaceX. While many of these moonshot investments are not directly related to the business of search, of course Google Ventures provides additional support beyond money by leveraging the company’s significant pool of talent and assets.

4. Limited Partner Venture Capital
The reality is that most companies do not have the resources or ability to launch a dedicated venture capital fund. Fortunately, that constraint can be turned into a competitive advantage by investing as a limited partner in a strong external venture capital fund. For example, WiL is a venture fund backed by several Japanese corporates as limited partners, including Sony, Nissan, Benesse Holdings, the NTT group, ANA Holdings, Isetan Mitsukoshi Holdings and Daiwa Securities Group. As part of the relationship, WiL is also committed to training employees of these companies about venture capital investment. For most companies, investing in an external venture capital fund is the most practical approach to create a successful outcome in terms of both financial returns and learning.

5. Multi-Strategy Corporate Venture Capital
Large companies have the scale to combine multiple approaches. The strategy of Siemens Venture Capital includes direct invest at the corporate level in core areas such as Infrastructure and Healthcare, a corporate venture capital fund, Industry of the Future Fund, and investments in more than 40 external venture capital funds through Siemens Global Innovation Partners. This diversified approach gives the company a broader network of external partners and therefore a better picture of the latest opportunities. Siemens has recognized that working with external partners is complementary, not competitive, to their in-house team.

The rapid evolution of corporate venture capital during the past few years is a significant positive force to create meaningful change at scale. Companies should be actively engaged with venture capital. For most companies, the best first step is to invest in an external venture capital fund. For companies with more significant resources, there are now several options to consider, including the multi-strategy approach of having both in-house and externally managed venture capital funds. Overall, this structural change in corporate venture capital is like moving from painting in black and white to painting in vibrant colour: the impact is transformational.

Sources:

http://www.intelcapital.com/

http://www.salesforce.com/company/ventures/

https://www.gv.com/

http://www.bloomberg.com/news/articles/2015-03-09/google-ventures-bill-maris-investing-in-idea-of-living-to-500

http://venturebeat.com/2015/02/10/google-confirms-it-put-900m-into-spacexs-1b-round/

http://wilab.com/

http://asia.nikkei.com/Business/Deals/Fund-to-give-Japanese-business-giants-close-links-with-startups

http://finance.siemens.com/financialservices/venturecapital/portfolio/pages/portfolio.aspx