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Venrock’s Willerer sees promise in Make School’s bachelor’s program with unusual tuition structure

Venrock’s Tom Willerer, an edtech specialist, sees promise in the unusual pay-for-performance tuition structure of Make School, the firm’s first investment in the field.

The Palo Alto, California, firm recently led a $15 million Series B funding of Make School, a coding boot camp that recently began offering a fully accredited bachelor’s degree in computer science.

Learn Capital and Kapor Capital also joined the round for Make School. The San Francisco company has now raised a total of $30 million.

One goal of the Make School program is to boost the numbers of coders from underrepresented groups. A statement from Venrock said just 15 percent of U.S. computer-science students are black or Latino. Nearly half of Make School’s students are minorities.

The degree can be completed in as little as two years, which appeals to students looking to minimize living expenses. Make School is very intensive with an accelerated schedule and without any long breaks, said Ashu Desai, co-founder of Make School.

The program is entirely project-based, closely replicating real-life problems worked on in Silicon Valley’s leading tech companies.

Applicants to the school, located in San Francisco, have two ways to finance the two-year program: $70,000 up front or 20 percent of their income each year for the five years following graduation, Desai said.

Ashu Desai, Make School co-founder. Photo courtesy of the company.

They pay tuition only if their annual income exceeds $60,000. Students’ salaries are verified via W-2 forms, Desai said.

Desai noted that Make School’s annual tuition is almost as high as that of some private colleges. But he said that graduates of the program start their careers after only two years of study, earning an average annual salary of $95,000, almost a third higher than the national average of around $66,000 a year.

Some 90 percent of the students at Make School have chosen the income-sharing arrangement, Desai said.

The income-sharing plan “makes sure that incentives of Make School and students are aligned,” Willerer said. This arrangement ensures that students are taught the skills that will get them hired.

Several four-year universities are experimenting with this tuition-payment structure, including Purdue University, Willerer said. Make School and most of these institutions offer the arrangement through Vemo Education, a fintech startup.

In late 2017, Willerer left online education provider Coursera, where he was chief product officer, to join Venrock as a consumer-technology partner.

Willerer is focusing on startups that are helping people launch careers and said he has a lot of interest in agreements like the one at Make School.

In the wake of the student-loan crisis, income-sharing agreements may be attractive to students because they won’t be asked to pay tuition unless they have lucrative jobs, said Willerer.

Another aspect of Make School that stood out for Willerer is that the company targets college-age students, an untapped demographic. Most three- to six-month boot camps are attended by older people who already have bachelor’s degrees, he said.

Desai said the fresh financing will be used to launch a Make School in New York and potentially to introduce other majors, like computational biology. The current capital, however, should be enough to get the startup to breakeven within two to three years, he said.

Willerer has invested in another edtech deal, cutting a smaller check than the one Venrock put into Make School. He declined to specify that deal, but said that the company also uses income sharing agreements.

Venrock has a long history. In 1978, it led Apple’s first venture round; in 1995 it put up Series A money for Check Point Software, the firewall pioneer.

These days, how much Venrock will invest in companies depends on whether it is leading the deal or putting in money toward a follow-on investment, Willerer said. Generally, its Series A and Series B fundings will range from $5 million to $8 million, he said.

The firm is interested in various aspects of healthcare and technology, including consumer technology, enterprise software, fintech, artificial intelligence and machine learning, robotics, biotechnology, health IT and education.

Venrock invests into seed rounds but limits the number of deals it does at that stage. “Even if we don’t take a board seat at seed stage, we may take a board seat at round A or B,” Willerer said.