Miami — David Velez isn’t the only Velez making headlines these weeks. The Nubank founder and CEO’s sister, Maria Velez, is the sole founder and CEO of Crack the Code, an edtech based in Lima, Peru that just raised a $2.7 million seed round led by Kaszek Ventures. This is Kaszek’s first investment in a Peruvian company.
The company, which Velez founded in January 2018, was largely bootstrapped and paid for itself until now, with the exception of a $95,000 pre-seed round, Velez said.
Crack the Code is a startup that offers online coding classes to kids 5-18 years old.
“Parents go online, select a course - we have what we call ‘learning pathways’ - and they select a schedule,” Velez told Bloomberg Línea. “So it’s basically a small group tutoring class focused on digital skills,” she added.
The company employs professional teachers as well as college students who go through a selection process and training, allowing college students to make about $300-$500 per month, on average, Velez said.
While the classes are taught in Spanish, coding is traditionally done in English, so by learning how to code, kids get to practise their English skills, too.
The company, which has 31 full-time employees, will use the money from this round to invest in tech and marketing talent, position the brand, and invest in marketing across the region.
Looking ahead, Velez said she’s set her sights on the U.S. Hispanic market. “Latin parents that live in the U.S. want their kids to practise their Spanish, too,” she said.
Edtech and healthtech are two sectors that have long fought for VC dollars in the region. And in both cases their funding and support have been positively affected since the pandemic hit. “Edtech has been an under-capitalized but promising area of tech innovation in Latin America in recent years representing only 4% of VC investment (by number of deals) in 2019,” according to a LAVCA report. LAVCA is the Latin American Venture Capital Association and it provides research and data on startups, funding, and trends in the region.
In 2020, we saw a total of $83 million invested in edtech in LatAm, but that’s nothing compared to this year’s (mid year report!) of $299 million.
The Double Bottom Line
While Crack the Code is primarily a B2C company, Velez said they have also started working with companies that want to offer the classes as a philanthropic gesture, which achieves one of Velez’s goals of hitting the “double bottom line.” A double bottom line is when a company is able to make money and also make a social impact, which she said is one of the aspects that attracted her to this business venture.
“When I decided to start my own company, I looked at healthcare and edtech, because I wanted to make an impact,” she said.
Just another coding school?
An online coding school isn’t a novel idea, but according to Hernan Kazah, co-founder and managing partner of Kaszek, Latin America’s most prestigious venture fund, Velez’s platform is far better than others the investment team has seen.
“We had some of the children of our partners [try it], and many of us have had experience with other solutions, and we found this product was superior. What we saw made us feel very confident in investing in the company,” Kazah told Bloomberg Linea.
Additionally, Kazah said they are playing a long strategy here; one that could benefit them for years to come.
“We realized that there’s a significant need for more digital education in the world. We see that with our portfolio companies that are always hiring talent, and they can never find enough. I also see it as a father, my daughters need to learn that,” he said.
One might think that Velez had it easy when it came to raising money, and while she certainly benefited from some introductions from her brother, when it came to analyzing the deal, Kazah said they had very strict parameters.
“We’re doing this because she’s really extraordinary, not because she’s David’s sister. It was something we put on the table very quickly,” he said.