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Company Spotlight: Nectir
A student-first way to communicate and collaborate
For those less familiar with the start-up financing world, an “angel investment” is different than the early-stage investing we do at SEI, my day job. In addition to using personal money to make the investment, I use different parameters for evaluation. None of this should be considered an endorsement of the companies by SEI.
If you want to learn more about what angel investing is and/or the different stages of start-up funding, I encourage you to read this article.
Also, Company Spotlights are a new format for me, feedback is welcome!
With that, let’s talk about Nectir!
What is Nectir?
Nectir is a communication and collaboration tool for university students, faculty, and administrators. It’s a lot like Slack, but designed intentionally for a higher ed (HED) audience, particularly students.
Kavitta Ghai and Jordan Long founded Nectir while they were students at UCSB. They built it due to their frustration with the way communication worked in their classrooms and around school. Have a question about an upcoming test? Email the professor and *hope* they respond before the test date. Want to know where to go for Accessibility help? Good luck! It isn’t on the UCSB website.
Nectir allows students to ask these questions and get answers, from both their peers and university employees, in real time. The average response time to a question at UCSB was < 1 hour last semester. In one math section last semester, there were 39,000 messages sent in 10 weeks!
Most importantly, 27,000 UCSB students, faculty, and administrators used Nectir last semester. Why is that impressive? Because it means every single person at the university - 100% - used Nectir.
That’s the overview. Now that you know what Nectir is, I’ll go into the three things I look at when considering an Angel investment: People, Product, and Market
One of the best parts of investing is I get to meet and hang out with some really wonderful people. Clayton Dean first introduced me to Nectir’s CEO, Kavitta Ghai, back in April. It took all of 30 minutes on the phone with her for me to text him back “Kavitta is a rock star.”
The reason that Kavitta, and her co-founder Jordan (who built the product solo), stand out is they problem solve with velocity.
Kavitta and Jordan took a problem in their life and turned it into a revenue-producing product. That alone is commendable. But, they didn’t stop with a simple fix, they added things that a university audience needs, like:
A (low-cost) traffic controller to help route questions to the right forums/people, whether students or university employees
Extending the “channels” their product covered beyond individual classes to entire university functions, like accessibility resources
A highly detailed guide for the…less than tech-savvy…instructors who would be needed to win over administrators, converting a free product to paid
On the go-to-market side, every time I talk to Kavitta they have a new pilot going. They’ve now expanded to 7 universities across the US in less than 12 months as full-time founders. Velocity like this is a critical skillset for early-stage founders.
Finally, I don’t want to steal Kavitta and Jordan’s thunder by writing too much about their current round. But, I will say that their story is resonating with a great cross-section of folks with an eye for talent and deep experience in EdTech.
I make this point not to burden Nectir with such lofty comparisons, but to highlight that people who are not in an (initial) target audience are horrible prognosticators of user adoption.
So, when I compare Nectir’s product to Slack, I encourage you to move past “well, Slack could just do that.” Stewart Butterfield and his new Salesforce overlords…erm colleagues…have a lot on their plates and are used by less than 6% of Higher Ed today.1
The design is modern and easy to use. Its mobile-first and fast. Its worth the friction of a teenager/twenty-something downloading a new app, a bar that is getting harder and harder to clear. And Kavitta and Jordan are just getting started. Until recently, it was, quite literally, coded in a dorm room!
Ultimately, the reason I love Nectir’s product is because students - Nectir’s target audience - love it.
In the VC world, we think a lot about TAM, or Total Addressable Market, when considering how big a company could grow to be. Calculating TAM takes both art and science. The reality is that most companies morph and shift over the course of their lives and today’s TAM could be completely inaccurate for what the company tries tomorrow.
As a result, I also like to think about “Is it crazy to think that the company could grow to $X size in this market?”, where $X is dependent on the company’s stage and the growth needed to make the next funding round.
In Nectir’s case, they are a pre-seed company playing in the US HED space. They will need ~$1-2M in revenue to get their next round of funding. Can they get there?
There are a couple of heuristics we can use to size the HED audience quickly. All are rounded to keep the math easy.
# of faculty members: ~1.5M. I always forget how big this one is! Granted, 50% are adjunct (non-fulltime employees with less purchasing power/job stability) and < 25% are tenured
# of colleges/universities: ~4000. <— Great chart. Historically, this number has risen, but looks to have peaked in 2014.
Using those numbers as our addressable market, let’s assign a value of $5 per student, $1K per class, and $50K per university (again, easy math) to see how hard it is to build a $1M business.
Student model: $1M / $5 = 200K students out of 20M, or 1% of HED students
Class model: $1M / $1K = 1,000 classes out of 1.5M faculty members, or .01% of HED faculty2
University model: $1M / $50K = 20 universities out of 4,000, or .5% of universities
For those whose eyes glazed over from all that math, I’ll summarize: Nectir does not have to win over a high proportion of HED - regardless of whether they monetize at the student, faculty, or university level - in order to build a business big enough to make their next round of funding.
In fact, I think the assumptions to get there are quite reasonable ; )
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Normally, I try to stay un-biased in this newsletter. In this case I am, pretty obviously, quite biased. For a list of other biases that might creep in, see here:
Slack cites 1.2M HED users here, but does not define what a “user” is or whether this is US vs. Global. I assume this includes students, faculty, and administrators, but was conservative in my < 6% estimate, giving them 1.2M students out of a total pool of ~20M US HED students.
This is actually conservative, as most faculty teach multiple classes