Sam Chaudhary doesn’t like to talk about money. But he’s certainly good at raising it, able to woo investors even though the 8-year-old company only recently started generating revenue.
In describing ClassDojo’s latest fundraise—a $35 million Series C round—Chaudhary, its co-founder and CEO, says “it wasn’t a very long process,” which wrapped up in late 2017. The entire process, he claims, closed in a mere two months.
Even more, he adds: “The best way to raise money is when you don’t need it.”
It’s a comment that may sound a tad too casual, and perhaps stoke the jealousy and bewilderment of his peers who are trying to raise funds for education companies that actually do need the capital.
To date, the San Francisco-based company has raised $65 million in venture funding. Co-leading this deal are GSV and Signalfire, with previous investors including General Catalyst and Uncork Capital chipping in. When the company closed its previous round—a $21 million Series B in 2016—it couldn’t articulate a business model on record.
Chaudhary accredits his fundraising success to “picking investors who believe and are aligned with our long-term thesis,” and setting clear expectations from the beginning about the amount of time that it will take to grow the company. Most investors want to exit within seven years. It took that long for ClassDojo to make its first dollar.
ClassDojo’s vision, which he’s clearly sold some investors on, is “helping every child on Earth get an educational experience they love.” It’s a statement that sounds audacious, grandiose and perhaps a little cloying, along the lines of Silicon Valley’s “let’s make the world a better place” trope. The company ultimately aims to connect educators, students, parents and school leaders around shared learning experiences through its suite of digital tools.
Here’s how that vision has manifest in its tools so far. ClassDojo launched in 2011 with a digital tool that allows teachers to award or deduct digital points to students to reinforce positive classroom behaviors. Since then it has added features that allow teachers to share classroom updates and student portfolios with parents, and partnered with Stanford and Harvard researchers to co-create animated videos introducing concepts around empathy and mindfulness.
All those offerings were available for free. Last fall, ClassDojo released its first money-generating offering: Beyond School, an app that charged parents for access to educational content and activities to do with their kids at home.
Some of the offerings in Beyond School were inspired by the popularity of the animated videos, which have been watched by more than 15 million people, according to Chaudhary.
“What we found was that students would do growth mindset exercises in the classroom, and then share what they did with their parents at home,” he says in an interview. “It wasn’t by design, but this informed that there was an audience for these activities at home.”
Reaching homes across the world is now the new priority for the company, which is now focused on growing its international presence. “That means more experiences being available to homes through updates to Beyond School, and more things we’re doing for the classroom,” Chaudhary hints.
While the company’s revenue has grown at a snail’s pace, it boasts a vast footprint. ClassDojo says it has at least one user in 95 percent of U.S. preK-8 schools. Overseas, hundreds of thousands of schools also use the tool, including 25 percent of primary school teachers in 10 countries including Australia, Spain and the U.K. Last year, for the first time, the majority of ClassDojo’s came from outside the U.S.
All this has been done with a headcount that has hovered for several years in the 30’s—a modest number, relative to the $30 million it had raised prior to this round. Expect that number to grow to 50 as the company looks to fill product and engineering roles with this latest cash infusion.
In a blog post about the fundraise, Chaudhary claims all of its user growth has been organic, adding that “we haven’t spent a dollar on advertising.”
In lieu of revenue, the company’s consistent user growth and financial discipline have so far kept its investors happy. “Patient capital” is a phrase that so-called “social-impact investors” often toss around, and ClassDojo is certainly testing the limits.
“Most things worth building take time,” says Chaudhary, “and people forget because we like to tell stories of overnight successes.”
