This week I would like to profile an emerging social venture being built by a friend with a very novel and important idea and objective, that the US scholarship system is broken and needs to be reinvented to make it more accessible, transparent and fair. Raise Labs which last year was one of the winners of Facebook and Gates Foundation College Knowledge Challenge, and recently won $75K at the UPenn GSE and Milken Family Foundation Education Business Plan Competition is beginning to turn heads as it has developed an interactive online platform bringing together experienced educators and technology professionals to reinvent college scholarships.
WHAT IS THE BUSINESS ABOUT?
Raise Labs is rethinking how college scholarships are assessed and distributed, particularly for low-income and first-generation college students. The Raise Labs platform enables high school students to earn small “micro-scholarships” towards college starting in 9th grade (instead of at the end of 12th grade) based on their individual achievements, such as class attendance, having good grades or improving them over time, doing community service, etc. and progress towards graduation. Student performance is monitored through an almost game like online platform which allows the students to share his achievements and compare with friends. The platform is based on research from leading universities on how to increase transparency in financial aid and improve student outcomes such as to reward inputs and not outputs, shorten the feedback loop and make aid transparent and predictable. So far Raise Labs has received $36M scholarship commitments from leading institutions and will launch in September.
HOW DID IT START?
Raise Labs was started by two friends who met as students at the University of North Carolina in Chapel Hill. Initially they both pursued business careers but stayed in touch. When one of them was teaching at a high school in India a good student came up to him and expressed his frustration that he would never be able to go to college since he was not good enough to be one of the scholarship recipients. Thus he might as well give up now. The founder wondered what would it take to make scholarships more accessible and transparent to all and how could they be used to encourage students to take school more seriously at a younger age. Raise Labs is the answer to that question.
WHAT IS THE SOCIAL NEED IT ADDRESSES?
There are several social needs Raise Labs is trying to address related to student financing and performance for minority or disadvantage student populations. First of all it is helping students to know before their senior year whether or not they will have any financial aid when they go to university, better enabling them to adjust their expectations along the way. In addition it is trying to increase the number of people who are able to benefit from the nearly $100M of scholarship and financial aid that are given out annually. At the same time it is trying to de-stigmatize the idea that only the best can have access, but by improving attendance, grades and community service more people than just high school valedictorian can also get help to pay for college by getting started at an earlier age. In doing all this they are encouraging more students to stay involved in high school and not give up at an early stage knowing that their families would not be able to pay for their education anyway. Thus hopefully improving overall academic performance. It also makes scholarships more democratic and transparent.
WHAT IS THE BUSINESS MODEL?
- Value Proposition (what value do they deliver customers) – While the key user of the platform are students, the actual customers are the scholarship providers. The value proposition to them is that it makes it easier to identify and track performance of potential scholarship recipients. It also makes the process very transparent (something not all scholarships will want to do). Most of all it gives them an easy to use platform for giving. For the students
- Channels – It is all done online
- Revenue Streams – This one I am not clear on right now. Will they be charging scholarship providers or students to use the portal? My guess is that it makes more sense to charge the financiers/donors as it automates and makes the process much more transparent and to manage. It is almost like a software solution to their needs with the added benefit that it improves student performance and participation.
- Cost Structure – As most web-based social media platforms the major up front costs will be the engineering of the platform and also the business development to get the schools and scholarship providers on board. Once the system is in place they will need staff to control the platform and fact check to make sure that information entered into the system is validated by schools.
- Key Partners/Resources/Activities – Scholarship providers, high schools and universities are all key partners each required to be promoters of the system to make it work for students.
WHAT ARE SOME CONCERNS I SEE WITH THE MODEL?
- How will it make money? Will the scholarship providers pay to use the portal or will the students? Or will they actually make money through add-on services from education providers who may want to advertise to users using the system. Or is their another model?
- How will it select scholarship winners? Some metrics will be easy and fair, such as attendance and grades. But how will the big winners be awarded? Such as the final winner for a full ride, etc?
- Student psychology – making scholarships so transparent at such a young age could be seen as negative for some. I could imagine some students would not want it to be so public how they are doing in terms of raising money for college versus their peers. This could demotivate some students.
- Will the micro scholarships be enough to help students actually go to university. Lets say a student earns only 5-10% of the cost, is this really materially better than having no scholarship if they sill need to take on heavy levels of debt?
- Reliance on scholarship providers, high schools and universities – the model is very partner reliant and vulnerable. Partners will need to be convinced one by one to use the system. Online other social platforms where students can choose to use the system, here if the schools, universities and scholarship providers don’t provide information and resources the system will not work. Also what is to prevent them from creating their own platforms?
- Low barriers to entry – As all technology platforms barriers to entry are low, so building up strong network externalities with partners early will be key.
- Overall I love the idea and wish them much success!
WHAT DO YOU THINK?