Working Capital Aids Education Technology Company’s Growth to Acquisition Stage
May 10 2022
Miriam Altman-Reyes and Alexandra Meis founded Kinvolved in 2013 because they were passionate about a mission: making sure kids showed up for school. Miriam, a former New York City educator, and Alex, a parent support group leader in the Bronx, developed a software platform that helped the city’s schools connect with families to increase attendance. Called KiNVO, the platform sent caregivers an SMS text message (instantly translated into the family’s preferred language) when a student was absent. The idea caught on, and by 2018 Kinvolved was serving school districts in seven states and Washington, D.C. But the founders wanted to reach more families and students, and they needed working capital to grow.
Because Kinvolved was pre-profitable at that point and had annual revenues of less than $1 million, Altman-Reyes and Meis worried that it would be a challenge to secure a line of credit. Then one of their investors, the Draper Richards Kaplan Foundation, suggested RSF. “We were pretty sure that if RSF wasn’t going to support us,” Altman-Reyes says, “it was unlikely that any other lenders would take that level of risk.”
Tapping into the resources of the Women’s Capital Collaborative
Kinvolved needed a line of credit to manage its cash flow. Because it worked with school systems—which were often slow to close contracts or cut checks—cash flow was difficult to predict. “We were looking for a little bit of a cushion to continue operating without having to be too concerned if we had a month where we came up short,” Altman-Reyes says.
RSF immediately understood what Kinvolved was trying to do and its potential to make a huge impact. Several decades of research have shown that attendance is a primary indicator of whether students will graduate from high school—and that chronic absenteeism is particularly acute in communities hit hard by poverty and systemic racism. “We appreciated that Kinvolved was really focused on education equity,” says Amy Bird, a senior manager for social enterprise lending at RSF.
Kinvolved was too small to quality for RSF’s social enterprise lending program, so RSF offered a loan from its Women’s Capital Collaborative. The WCC is a philanthropic fund that provides growth capital to women entrepreneurs when they need it most. “There’s often a real disparity in women’s access to equity or early-stage capital,” Bird says. “The WCC was created to address that.” In the spring of 2018, RSF issued Kinvolved a $200,000 line of credit.
The freedom to take risks
Kinvolved’s founders didn’t tap into the line of credit much initially. “But it provided a sort of buffer so that we could take risks that we may not otherwise have been able to take,” Altman-Reyes says. That included working with districts that couldn’t pay quickly or that had a longer sales cycle. With this greater freedom, Kinvolved expanded to 16 states and now serves some of the largest school districts in the country, including New York and Los Angeles. It more than doubled its market.
But what Kinvolved really cared about was the impact it was having on students, which was demonstrated in a 2021 Harvard study of District of Columbia Public Schools that used Kinvolved’s Digital Attendance Postcard intervention. The schools’ daily absenteeism decreased by 8% on average within weeks of adopting the KiNVO platform. Some campuses increased their attendance by 30%.
Once the pandemic hit, however, Kinvolved leaned heavily on its RSF line of credit. It drew down the entire loan amount to hold onto as much cash as possible while it figured out what was happening with its business. RSF also gave it a $10,000 emergency pandemic grant.
Ultimately, Kinvolved became a lifeline for schools, which led to both strong retention and growth. When districts struggled with remote learning and absenteeism grew worse, educators used KiNVO to get kids back to class. One district in Georgia even relied on KiNVO to distribute more than 4,300 breakfasts and lunches, using the app to alert families of kids who qualified for free meals when their food was ready to pick up.
Ready for the next step
In February, Kinvolved was acquired by PowerSchool, which notes that as a women-owned education technology company, Kinvolved aligns with its mission and environmental, social and governance pillars, including its commitment to social impact and diversity, equity and inclusion. With the leading provider of cloud-based software for K-12 education in North America behind it, Kinvolved will be able to significantly expand its scope.
Kinvolved couldn’t have reached this stage without the financial stability to take risks and grow. “Having that extra layer of flexibility when we were a small and really cash-strapped business,” Altman-Reyes says, “enabled us to not only breathe a little easier but also service districts and pursue pathways that would have been out of reach.”