‘Weird And Maybe Uninvestable’: How Reach Capital Spots Its Venture Winners

Before James Kim assessed education startups professionally, he relied on their tools inside his own classroom.

The Reach Capital partner began his journey as a Teach For America high school math teacher after completing an astrophysics degree at Yale. He subsequently spent time in college access and Yale admissions, and earned graduate degrees in business and education from Stanford prior to joining Reach. During his teaching tenure, he utilized ClassDojo early on, labeling the experience “game-changing.”

His investment firm, Reach Capital, has similarly transformed over time. Established in 2015 via a spinout from NewSchools Venture Fund, the San Francisco-based enterprise initially concentrated on technology designed for K-12 schools and districts. Its scope has since broadened to encompass learning, health, and work, backing businesses such as ClassDojo, Cartwheel, Stepful, and Replit.

In August, Reach unveiled its fifth fund—a $265 million vehicle that elevated its total assets under management to nearly $1 billion. Having already supported more than 180 companies, the firm intends to fund roughly 50 additional teams through this latest initiative, focusing on pre-seed, seed, and Series A rounds.

Crunchbase News met with Kim to discuss how Reach’s foundational roots in education shape its wider strategy, the attributes it identified in AI detection startup GPTZero, and the reasons behind some of its top investments initially dividing the internal team. The discussion also covered how ownership stakes and secondary market transactions influence the firm’s capital return strategy.

This interview has been edited for length and clarity.

Crunchbase News: You started your career as a high school math teacher. How did that shape your view of education technology?

Kim: I taught ninth through 12th grade, primarily Algebra I and geometry. I was an early adopter of ClassDojo. Back then, it functioned as a straightforward classroom management tool, and it proved to be game-changing for my teaching. Although it has since expanded into an extensive suite, I already understood back then that technology could move the needle.

Reach began as an education investor. How did the firm’s focus evolve into learning, health and work?

Kim: Reach launched in 2015, and our initial concentration was strictly on learning and education technology—specifically, software and hardware sold directly to schools and districts.

Our founding partners observed the rising adoption of devices in schools, a shift toward one-to-one device ratios, and expanding broadband penetration. The prevailing thesis was that a wave of technology would soon emerge to serve students, teachers, and administrators while meaningfully impacting educational outcomes. That is precisely what unfolded. Several of our early investments are now household names within edtech, including Newsela, Nearpod, and ClassDojo.

Reach spun out of NewSchools Venture Fund, where three out of our four founding partners had already begun conducting for-profit seed investing prior to 2015. Gradually, we expanded beyond K-12 into higher education, followed by consumer learning.

We also experienced a natural pull toward healthcare and employment. Because health and wellbeing directly influence a learner’s readiness for the classroom, we gravitated toward mental health, behavioral health, and developmental health. On the workforce side, formal schooling typically concludes with college, yet individuals still require a bridge to employment. Once employed, continuous learning remains vital, particularly given the current economic climate.

A few years ago, we officially cemented our focus across learning, health, and work. The unifying thread is that these three pillars represent the core systems driving human development and flourishing.

Thus far, our portfolio breakdown sits at roughly 50% learning, 25% health, and 25% work.

These sectors have different buyers, regulations and business models. What did investing in education teach you that translates to healthcare and work?

Kim: Education is heavily regulated, and institutional purchasing is intricate. Multiple stakeholders must weigh in, and decisions frequently demand board-level approval. We were already well-acquainted and comfortable with regulated products and sophisticated go-to-market strategies.

Selling to a university or a K-12 school district involves a level of complexity, regulation, and policy alignment that is very comparable to selling to a healthcare system, hospital network, or insurance provider.

Cartwheel serves as an excellent illustration of where our sector experience provided an edge. The company offers mental health teletherapy, but its primary customer is the school district and care is delivered directly within the school environment.

While behavioral health was relatively new to us at the time of that investment, we possessed deep familiarity with selling to school districts and implementing interventions inside educational settings. That background gave us a distinct advantage both in securing the investment deal and in supporting the company afterward.

Reach talks about “elevating human potential.” What makes an investment fit that mandate?

Kim: We search for products and services that expand access to quality education, quality care, quality earnings, or a combination of these elements. We must be able to clearly identify the mechanism driving that outcome.

It is insufficient for founders to pitch a software-as-a-service (SaaS) or AI product by simply claiming, “This will boost workplace productivity, so employees might earn more or enjoy their jobs more.” While plausible, that falls short of a rigorous theory regarding how the product genuinely broadens access to quality earnings.

Several members of our team, myself included, are former educators. We prioritize tangible, impactful results.

We tackle access from both the demand and supply sides. On the demand side, we support products that create delightful, high-impact experiences for consumers: Brilliant, Stepful’s allied healthcare training program, and Replit for what its founder refers to as “citizen developers.”

On the supply side, our investments help schools, healthcare systems, and businesses operate more efficiently and effectively. WorkWhile, for instance, assists logistics and hospitality companies in hiring hourly workers more effectively while treating them better. We evaluate challenges from both sides of the marketplace.

Reach backed GPTZero, which agreed to join Superhuman. Was that an investment in solving a problem created by AI?

Kim: That was not actually our investment thesis. In my view, they offer the finest AI detector available on the market. However, their underlying philosophy was that AI usage in educational settings should not be banned. It ought not to be punitive or devolve into an endless cat-and-mouse dynamic between educators and learners.

Given that professionals across all industries utilize AI in their daily work, students should learn to navigate it responsibly and thoughtfully. It was the first AI detection company I encountered with that specific positioning, rather than merely assisting schools, districts, and universities in clamping down on AI implementation.

That is what drew me to it. I do not consider it harmful for students to leverage AI for specific tasks like brainstorming, thought organization, and editing. GPTZero assists educators in collaborating with students to teach responsible AI utilization.

Do you see other opportunities to build companies around the problems AI creates?

Kim: Yes, most notably within AI governance and evaluations.

Returning to regulated industries, one must ensure that AI does not improperly handle personally identifiable information within education or healthcare sectors. These domains enforce stringent regulations, and infrastructure firms are currently emerging to help guarantee that AI products interact securely with sensitive data.

I certainly believe viable opportunities exist to build large, successful, and profitable businesses specifically addressing challenges generated by AI.

What does GPTZero’s sale tell you about which AI products can become durable standalone companies and which belong within larger platforms?

Kim: I am uncertain whether GPTZero serves as a definitive example of either category. They had been fielding acquisition inquiries from quite early on. This specific opportunity materialized earlier this year, presenting a compelling synergy with Superhuman, formerly known as Grammarly.

The founders and the board mutually agreed that merging the companies made strategic sense. Yet, they could just as easily have maintained independence. Another AI detection startup named Pangram is exceptionally strong and continues to operate as an independent, venture-backed enterprise.

It remains unclear whether this market segment is incapable of sustaining standalone businesses. We evaluate situations on a case-by-case basis. Until we observe the long-term trajectory, financial viability, and market evolution, it is impossible to know definitively whether pursuing a strategic acquisition or growing independently—perhaps eventually targeting a public listing—is the optimal path.

Reach has backed more than 180 companies. What patterns have you noticed among those that exceeded expectations?

Kim: The fundamental reality of venture capital is that a minuscule fraction of investments generates the vast majority of financial returns. Given the outlier nature of those wins, identifying a universal set of rules that reliably predicts a successful exit is difficult. If such a formula existed, we would exclusively execute those deals.

Nevertheless, several commonalities tend to run through our most successful portfolio companies. First is an exceptionally smart, gritty, and genuinely mission-driven founder or founding team, frequently possessing a direct personal connection to the problem at hand.

Second is a nonconsensus perspective regarding the market. This insight often stems from experiencing the pain point firsthand as industry practitioners—such as a former educator.

Third is a business model that is both defensible and scalable.

The presence of a nonconsensus insight is ironic because it frequently causes these startups to appear unconventional and potentially uninvestable during their early stages. Even internally among our team, these proposals generate significant polarization. When votes are tallied, a number of team members might vote no, but the deal secures just enough affirmative votes to pass. A decade later, it emerges as one of our strongest portfolio assets.

People often lose sight of this dynamic in the current market environment: the premier opportunities frequently stem from the strongest nonconsensual viewpoints. Those scenarios attract the most creative and compelling founders, allow us to secure early entry at reasonable valuations, and enable us to help transform them into mainstream consensus bets.

Reach says its first two funds have returned investors’ capital. What produced those returns?

Kim: We are certainly not immune to the power-law distribution characteristic of venture capital. Our inaugural fund has achieved a 2.2x return driven literally by just two investments. Our second fund has delivered a 1.2x return anchored by a single investment. These figures represent actual cash distributions.

Particularly within the second fund, substantial unrealized value remains, so we will monitor how high that multiple climbs. Securing one fund-returning exit is fantastic; achieving two or three is extraordinary. That remains our ongoing objective.

How has that experience changed your approach to ownership and follow-on investing?

Kim: We have experienced notable exits where, considering the sheer prominence of the company, observers might be surprised to learn that our financial share of the outcome was relatively modest. That comes down entirely to simple ownership math.

From our first fund up to the present day, we have intentionally scaled up our initial ownership targets. We currently aim to secure equity stakes as close to 15% upfront as feasible.

Achieving that requires writing slightly larger checks, reserving a smaller relative portion for follow-on rounds, and concentrating capital in the initial investment. This balance is critical for optimizing ultimate exit and distribution math.

What role do secondary transactions play in getting liquidity?

We have grown highly proactive and deliberate regarding liquidity opportunities. A substantial portion of the distributions returned to our investors originates from secondary transactions—selling portions of our equity stakes during subsequent funding rounds prior to a final company exit.

Whenever an opportunity arises, we assess it thoroughly. We weigh how long we have held our position, the capital we can successfully realize, and the projected upside that remains.

As private companies choose to remain private for extended periods, early-stage investors are increasingly securing liquidity via secondary transactions. I like to think our firm recognized this trend early, but it has unquestionably become standard industry practice today.

On occasion, when we project sufficient future upside, we actually acquire additional secondary shares. GPTZero serves as a prime example: following our initial Series A investment, we purchased secondary shares, and I am genuinely pleased we did because the outcome proved rewarding. For us, we execute sales frequently, but we occasionally buy as well.

Related Crunchbase query:

• Global Venture Investment In Edtech And Education-Related Startups In 2026

Related reading:

• ‘Nobody Wanted to Give A Former Principal Money’: How An Educator Built An Edtech AI Startup With $63M From VCs

Illustration: Dom Guzman

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Frequently Asked Questions

• What is Reach Capital? Reach Capital is a San Francisco-based venture capital firm founded in 2015 that invests in early-stage startups across learning, health, and work sectors.
• What types of funding rounds does Reach Capital target? The firm targets pre-seed, seed, and Series A funding rounds for high-potential startups.
• How large is Reach Capital’s recent fund? In August, Reach announced its fifth fund valued at $265 million, bringing its total assets under management close to $1 billion.
• What is a secondary transaction in venture capital? A secondary transaction involves selling existing shares in a private company to another investor or buyer during a funding round before a company’s final liquidity event like an IPO or acquisition.