See­ing Fit

Heather Hiles, founder of Pathbrite, an ed­u­ca­tion tech­nol­ogy com­pany, wants to help founders find the right in­vestors— and be pre­pared to sell to them.

Inc. (USA) - - UP NEXT - By Yasmin Gagné

How did Pathbrite start, and when did you seek out­side fund­ing?

I worked in ed­u­ca­tion tech­nol­ogy and in­vest­ing for 25 years, and I saw how port­fo­lios—a dig­i­tal way to or­ga­nize im­ages and other types of me­dia—could be used as a learn­ing tool. I saw an op­por­tu­nity for ed­u­ca­tional in­sti­tu­tions to use them to help stu­dents, and I wanted to pro­vide an easy way for peo­ple to ar­chive or show­case their work. Stan­ford was our first cus­tomer. I had used my own cap­i­tal to build a pro­to­type of my prod­uct, but to get se­cu­rity clear­ances to have ac­cess to stu­dent data like tran­scripts, we needed a new level of sta­bil­ity that re­quired us to raise out­side funds.

Pathbrite is in San Fran­cisco, but you found your in­vestors in New York City. Why did you de­cide to raise money on a dif­fer­ent coast?

The in­vestor com­mu­nity in Sil­i­con Val­ley likes pat­terns they can rec­og­nize. Maybe they think the best en­trepreneurs are dudes of a cer­tain age who wear hood­ies and come out of cer­tain schools. But I don’t look like Mark Zucker­berg and I never will, be­cause I am a proud black gay woman. I thought I could get more re­spect and ac­knowl­edg­ment for my ex­pe­ri­ence, so I went to New York to raise money.

Why did you de­cide to sell Pathbrite to Cen­gage Learn­ing?

Cen­gage had in­vested in us and was us­ing our en­gi­neer­ing tal­ent. And its CTO be­came chair of my board. I learned a good les­son: When you take money from and have re­la­tion­ships with strate­gic or­ga­ni­za­tions, chances are they’ll want to buy you. Take deals with in­vestors only if you think you would have a good exit with them.

This year, you’ve started a pri­vate eq­uity fund, Im­mi­nent Eq­uity. What have you taken from your ex­pe­ri­ence at Pathbrite into your new role?

I know how some in­vestors can end up tak­ing con­trol of the busi­nesses they in­vest in. Some will say any­thing to make a deal go through. With my new fund, I want to re­shape com­pa­nies so they are well po­si­tioned for growth while re­al­iz­ing it’s im­por­tant to re­spect founders.

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