Unitus Ventures (formerly Unitus Seed Fund) is excited to announce that we’ve made a seed investment in Hippocampus Learning Centres based in Bangalore!
HLC is building affordable rural learning centres serving base of economic pyramid (BOP, income less than $2 per day) children for Kindergarten and 1st through 4th level (grade). The kindergarten runs during the day and the 1st-4th level program runs after school. The goal is simple: to provide supplemental (tutorial) education to these children so that they can succeed in school.
I first met HLC’s CEO Umesh Malhotra about a year ago based on an introduction by our long-time partner, Suresh Krishna, CEO of Grameen Koota, a leading MFI based in Bangalore. Coming from an educational background, Suresh was very interested in the sustainable approaches to affordable rural education that Umesh was experimenting with. Umesh recently reminded me that our first conversation lasted for 4 hours(!) as I asked him lots of probing questions about his pilots and what he was learning. This interaction with very helpful and I was very intrigued and impressed by how determined Umesh was to figure out a sustainable model.
In April 2011, Unitus Labs funded an additional pilot operated by Grameen Koota leveraging HLC’s learning centre model in about 20 villages in rural Karnataka near Bangalore. This was an interesting experiment with lots of learnings which we will soon publish on our website. The biggest learning is that students were improving in their level assessments which at this stage (K-4th level) are the foundational times for their educational trajectory — and are highly correlated with their future earning capacity.
Why are we excited about Hippocampus Learning Centres?
Education for poor rural families in India is really abysmal. Most of the children can’t afford basic private schools, so they attend government schools. The problems in government schools are well-known including teacher absenteeism, lack of basic furnishings and supplies and very ineffective approaches to learning. We applaud those who are trying improve the government schools, but it’s going to be a long, slow reform process.
We have been also looking at organizations seeking to build affordable quality private schools. The challenges include the high-cost infrastructure setup (especially when you need to meet the latest government regulations) and the requirement that schools must be non-profits. Yes, there are for-profit “school services companies” who work around this regulation, but it is a complicating factor when you are an investor — even a patient investor. The result is that it is very difficult to scale affordable private schools to have the impact that we are looking for.
So, we’re very excited about the community learning centre model that HLC is developing. HLC is able to rent rooms in villages at a very reasonable rent and recruits local unemployed, 12th level (high school) graduate woman as teachers at relatively low salaries. HLC has figured out how to equip classrooms very inexpensively with furniture, books, learning toys and curriculum. All of this means that they can charge families a low school fee and get to cash flow positive with modest class sizes.
Getting centres to cash flow positive fairly quickly means that an investment from an investor like us can fund setting up a lot more classrooms and therefore have much more impact on many more students. As this is proven out and refined, there is the opportunity to attract more expansion capital to realize the potential of education impact on 1,000’s and 10,000’s of villages and many millions (and lakhs!) of children.
Unitus Capital acted as a financial advisor to Unitus Ventures (formerly Unitus Seed Fund) on this investment.