"Corporate venture capital is fraught with short-term outlooks," explains Mary Lee Schneider, CEO of the Follett Corporation, a nearly $2.6 billion privately held educational publishing and software company based outside of Chicago. "There can be changes in management, lack of commitments and an attention deficit."
This is why Follett, which provides educational technology and content to 80,000 K-12 and higher ed institutions in the United States, partners with Silicon Valley-based Atrium Capital for all of its venture investments.
"We get calls from five companies a week that meet our mission and our goals," said Schneider. "That is wonderful, but also enormously distracting for us. With Atrium, we say 'here are our guard rails. Get to know our business'. It's important that they know what we want to do and don't want to do."
A "hybrid" venture model
Established in 2013 with a $50 million corporate commitment, the Follett Knowledge Fund typically invests between $1 million and $1.5 million in startups approaching a Series A round of financing. Money is allocated for follow-on investments in those companies. To date, the fund has invested in four companies, including leading the $3.2 million Series A round raised by Chicago-based ThinkCerca last month.
ThinkCerca, which develops web-based Common Core-aligned reading assignments and exercises for students in grades 4-12, was identified internally at Follett as a worthy investment prospect with natural partnership opportunities. Atrium, which also manages corporate venture funds for Samsung, Toyota and other companies, led the financial due diligence.
"We act as a virtual extension of Follett's innovation and corporate functions," said Russell Pyne, Atrium's founder and one of six General Partners who began working with Schneider years ago when she was an executive at RR Donnelley. "It's a hybrid venture model where we combine the domain expertise and resources from a company like Follett with the best practices of a VC firm."