Esteban Sosnik (Reach Capital) on building a sector specific fund, challenges of digitizing education and new value unlock through AI

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On this episode Pat sits down with Esteban Sosnik, Co-Founder and GP of Reach Capital, an edtech specialised VC firm based in Silicon Valley to talk about the evolution of the industry, how AI changes the game and what are the opportunities he sees in emerging markets You will learn about

• Building a sector-specific fund
• The evolution of the edtech space and where we are heading
• The right way to upsell into different age groups and how to deal with age related churn of your customers
• The inflection point that is AI

You can find Esteban on LinkedIn here.?

Tl, dr?

• Massive Untapped Market in Digital Education: Education is a $6 trillion industry, yet only about 5% is digitized. This gap highlights an enormous opportunity for EdTech growth, particularly as only a small fraction of learning has been transformed digitally.
• Impact of COVID-19 on Digital Adoption: During the pandemic, digital adoption in education briefly skyrocketed from 3% to 100%, but has since settled at an estimated 5-7%, reflecting a substantial but still incomplete transition to digital learning tools.
• Sector-Specific EdTech Challenges: There are four major EdTech segments—early childhood, K-12, higher education, and workforce training. The varied demands within these segments make a one-size-fits-all solution challenging, as each has distinct needs in terms of technology and learning styles.
• Gaming Dynamics Drive Engagement in Learning: Games like Duolingo illustrate how game dynamics—achievements, rewards, and low-stakes environments—make learning engaging and motivate users across age groups. The gamification approach as key to fostering sustained interest and retention in digital learning.
• Expansion Strategies for Sustainable Growth: EdTech founders should focus on three growth strategies -? expanding their business model from B2C to B2B, diversifying products to offer more for the same age group, and considering geographical expansion

Dive into the full episode on

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Previous Episodes you might enjoy

[Operator Stories] Hamdi Tabbaa (Abwaab) on scaling edtech in MENA, market expansion for a highly localized product offering and upselling

[Investor Journey] Dave Nangle (VEF) on successful founders go macro as well as micro, timing your entry moments and building global dealflow

[Operator Stories] Every cycle is a new cycle - Marco Fisbhen (Descomplica) on scaling edtech, acquisitions & cultural fit and growing as a leader

[Investor Journey] Tackling poverty through financial inclusion - Monica Brand Engel (Quona) on the intersection of profit and purpose, measuring impact and managing boards

Gamifying Learning?

Esteban's journey into EdTech began with his experience in the gaming industry. He discovered striking parallels between game dynamics and education:

"There are many, many parallels between games and education. And I was really fascinated by that intersection."

This fascination led him to co-found Reach Capital, an EdTech-focused fund that has raised over $500 million in its 10-year lifespan.

So, why has digitizing education been such an uphill battle? Esteban shares a thought-provoking perspective on the challenge of creating engaging, gamified learning experiences that hold learners’ interest. However, he sees a huge opportunity in translating the dynamics of gaming — achievements, rewards, and low-penalty learning environments — into digital learning experiences.

?“People of all age want immediate results.”?

For Estaban, Duolingo is the gold standard of applying game mechanics to education, proving that digital learning experiences can captivate and motivate just like a video game.

Building a Purpose-Driven Fund

Reach Capital’s journey began in the nonprofit world, securing funding from organizations like the Gates Foundation and the Chan Zuckerberg Initiative.?

“Our early LPs were inclined toward educational impact. We proved that impact and returns aren’t opposites—especially in education.”

This impact-driven approach has resonated; Reach’s latest fund raised $215 million, quadrupling their initial fund size. Now backed by leading pension funds, endowments, and family offices, Reach is in a position to choose projects that truly align with their mission.

“We’ve shown that if you deliver quality products that positively impact students, teachers, and workers, that impact translates to strong financial results.”

The fund has over the years also expanded its focus beyond the U.S., now investing in Europe and Latin America as well.

Breaking down the EdTech Landscape

Esteban breaks down the EdTech industry into 4 primary segments:

• Early Childhood
• K-12
• Higher Education
• Workforce Training

Within each, EdTech products are designed for B2B and B2C models. He notes that while education is a $6 trillion industry, only about 5% is currently digitized, presenting enormous opportunities for growth and innovation. The challenge lies in tailoring solutions for varied learning contexts—what works in a school may not work for corporate training.?

A collaborative endeavor?

One of the biggest questions in the field is why education lags behind industries like finance and retail in adopting digital solutions. According to Esteban, a key reason is that education is inherently collaborative:

“Education is not a solo endeavor. It’s collaborative… you need the accountability, the relationship, the scaffolding that another human being provides.”

While many learners can benefit from personalized, self-directed content, learning is social in nature. The integration of teachers and peer learning makes digitizing the field complex.

COVID-19: The Digital Surge That Fell Short

The pandemic sparked rapid digital adoption, yet Esteban observes that the momentum didn’t fully carry over:

“We went from 3% digitalization to 100%…and now it's back down, but it’s not at three percent. It's probably five or seven percent.”

Challenges in infrastructure, access, and teacher-student readiness prevented edtech from realizing its full potential during the shift online, especially in underserved regions.

Unlocking Potential in Emerging Markets

Emerging markets present a unique landscape where edtech could bridge significant educational gaps. However, Latin American parents and students, for example, often allocate their educational budgets to traditional schooling instead of supplementary resources.?

“Digitalization of schools is just getting started…schools are conservative, and without a push from the system, they're not likely to change.”

While fintech in Latin America has seen rapid growth, edtech’s focus on consumer education is still developing—highlighting an opportunity for startups willing to tackle these traditional systems.

The Transformative Power of AI

Esteban is optimistic about AI’s potential to support “contextual learning” and to help educators make sense of unstructured data:

“AI…can now make sense of unstructured data…not only in content but also in the dialogues we have in a classroom. It’s going to take time, but I think that’s where the incredible potential to deliver on promises lies.”

However, He envisions AI enabling a future where learning is personalized and contextual, seamlessly integrating knowledge into everyday experiences, whether on a commute or at home.

Building a Lasting EdTech Company

For founders, Esteban offers three core strategies to scale sustainably:

1. Business Model Expansion: Consider moving from B2C to B2B or adding complementary services.
2. Product Diversification: Develop additional offerings for the same age group.
3. Geographic Expansion: Entering new markets to extend your customer base.

He emphasizes that the most sustainable models will align with real needs, engage users meaningfully, and be adaptable across contexts.

Dive into the full episode on

?? Spotify

?? Apple Podcasts

?? All others

Previous Episodes you might enjoy

[Operator Stories] Hamdi Tabbaa (Abwaab) on scaling edtech in MENA, market expansion for a highly localized product offering and upselling

[Investor Journey] Dave Nangle (VEF) on successful founders go macro as well as micro, timing your entry moments and building global dealflow

[Operator Stories] Every cycle is a new cycle - Marco Fisbhen (Descomplica) on scaling edtech, acquisitions & cultural fit and growing as a leader

[Investor Journey] Tackling poverty through financial inclusion - Monica Brand Engel (Quona) on the intersection of profit and purpose, measuring impact and managing boards

If you haven’t yet subscribed, join?the?+3,000 Enthusiasts?via Substack, Medium, or LinkedIn and follow the show wherever you are getting your podcasts. If you enjoy the work we are doing, drop us a review or rating on your preferred podcast app.