Nepris

Sabari Raja

Austin, Texas
Cofounder & CEO, Nepris (Acquired by Providence Strategic Growth Fund)

Nepris is an education technology platform that enables educators to connect their students with industry professionals to bring real world relevance and career exposure to every student. Through Nepris employers have an opportunity to engage their current workforce with the future workforce, helping bridge the workforce pipeline gap.

I went to school in India before moving to the U.S. and earning a Master’s degree here. Out of school, I went to work for Texas Instruments in their education technology group. Ed tech at the time was very nascent. Working in the space, I got firsthand insight into how technology can impact students’ learning and bring equity of access in education. It became evident to me that stakeholders in education, government, nonprofits, and companies were doing a lot to bridge the workforce pipeline gap, but they weren’t really leveraging technology to expose students to experiences outside of their immediate network—which especially impacts girls, rural, and minority students. We thought that someone should be making the connection between industry and students earlier—when first graders are learning about rocks, connect them to a geologist, for example—rather than once they’re about to look for jobs. That’s the basic idea that led my cofounder and I to build Nepris.

We raised two seed rounds before raising our Series A in 2020. While COVID presented challenges, it also presented a lot of opportunities for us. Things were going well—we had plenty of runway, were near profitability, and were growing at 100 percent year over year. But the edtech space had grown up, too—rather than being something niche there were now dozens of competitors to keep pace with. We thought that acquisitions might be a way to accelerate our growth. That wasn’t something we were equipped to do as founders, so we ran a process with Vista Point Advisors, through which we had our choice of private equity firms and ended up choosing Providence Strategic Growth Fund (PSG).

As first-time entrepreneurs, we initially had a very stereotypical view of PE—PE buys failing companies and picks them apart, so you don’t want to be acquired by PE, you want a strategic buyer, we thought. After talking with founders that had been through the process, we realized that the right PE firm actually might be a better fit for us. With a strategic buyer, you have to slot in that company’s products somewhere, you might be locked in for a time, and how well the integration process goes—both cultural and technical—really depends on the company. While we had interest from strategic buyers and PE firms, for our goals of continued growth, a PE buyer that had experience and a good playbook for growth through acquisitions seemed like a better fit. For us, that was PSG. And they had recently acquired a company called Virtual Job Shadow whose strengths paired really well with ours. We merged with Virtual Job Shadow earlier this year and became Pathful. I’ve since transitioned my duties to a new CEO and become a board member and Chief Strategy Officer where I coordinate our growth strategy.

As you found a company, you have pretty realistic expectations—you know not every company is headed down the IPO path. Overall, very few education technology companies are public companies. Going from one to five million dollars in revenue was tough. Going from five to 10 million was even tougher. Taking it from 10 to 100 million—at minimum where you need to be to think about IPO—is a completely different ballgame. And unlike the early stages where it’s exciting and you’re innovating everyday, it is very operational. A lot of founders aren’t suited to that challenge, get fatigued, or both. So for most founders, growth through acquisition is the realistic and feasible path.

One thing that is really helpful to the startup ecosystem is Qualified Small Business Stock tax treatment (QSBS)— and so few people know about it. I didn’t learn about it until we were going through the acquisition process. Then the Build Back Better bill came out with retroactive changes to QSBS that meant we would’ve missed the favorable treatment by two weeks. Thankfully those changes did not pass, and with the tax savings as a result of QSBS, I was able to invest in six seed-stage startups just this year. Angel investors are really important for early-stage funding and QSBS plays a big role in keeping capital in the ecosystem and helping angels fund more companies to grow the ecosystem. I am excited that I have the opportunity now to continue paying it forward in supporting early stage entrepreneurs.