Reach Capital, one of the first venture firms to focus exclusively on edtech, closed its last investment vehicle during an unprecedented boom within tech. The San Francisco-based venture firm saw an increase in digital infrastructure, remote learning, and society’s ever fickle attention as an opportunity – and unsurprisingly, those same tailwinds then helped Reach close its largest fund to date.

Fast forward two years, we’re now in a different world, socially, politically, and technologically. Beyond the fact that no one is talking about Zoom school or learning pods anymore, edtech startups raised $10.6 billion last year, down 49% from the year prior. So, has edtech’s venture pitch changed?

“I think the fact that edtech may not be in the news so much anymore, it’s a good thing,” says Esteban Sosnik, partner at Reach Capital. Repeating the common adage of other investors these days, he says that there’s never been a better time to start a company. In education specifically, he adds, less capital means less competition: “if you manage to build something, there’s 10 times more likely that you will have success.”

Less capital for some is a win for others: Reach announced today that it has raised its largest fund to date, a $215 million investment vehicle to back early-stage startups based in the United States and abroad, with a specific eye on Latin America. It has also closed a $4 million sidecar fund, dubbed Reach Founders Fund, which brings together capital from 40 portfolio companies. As mentioned, the new capital was raised against a very different backdrop from the prior; but the team says history makes a difference.

“There were a lot of fly-by, tourist investors that came into the space over the last two, three years, so having a fund that has been long standing investor prior to the pandemic seemed to be a real value proposition and work in our favor,” Wayee Chu, co-founder of Reach Capital, said. Chu said that LPs also resonated with the “educated bench” of investors at the firm, which bring together over 20 years of public school experience.

Not much is changing for Reach Capital’s strategy between funds (Chu says that edtech valuations are starting to come down to March 2020 levels). But what’s old doesn’t mean they’re going to ignore what’s new: exuberance around artificial intelligence.

Reach Capital has made around 5 investments in AI companies since starting the firm, but given the boom in the space and recent technological advancements with ChatGPT, the firm is eagerly looking at net new startups to back. Chu tells Techcrunch that they are currently in diligence with four AI startups. “We’re seeing a lot of technology in search of a solution,” Chu said, saying they prefer “founders who start with the actual pain point and solution and then decide which technology enablement will solve that – we’re seeing a lot of fun new tech, but it still seems to insert something not deep enough of a pain point.”

Reach’s Sosnik, meanwhile, wants to remind founders that AI isn’t new. The investor urges founders to focus on collaborating with researchers, unique data moats, and measurable impact.

As he wrote recently, “As we’ve seen from the rollercoasters of crypto, metaverse and VR, adoption hinges on whether or not the product delivers better experiences and outcomes. More simply put: How is AI making lives better?” Ironically enough, the same question he sees as vital for AI, is the same question that edtech success has always hinged on: can it work for the right people, at the right time, in the right, most equitable way?

In edtech, history matters: Reach Capital just closed its largest fund to date by Natasha Mascarenhas originally published on TechCrunch