The Journal The Authority on Global Business in Japan

Ten years ago, Allison Baum would not have imagined that she would be an emerging star in the education sector. For Baum, education was synonymous with form-filling bureaucracy, conformity, and inefficiency. 

Efficiency-focused and business-minded, it made sense that the Harvard-educated economics graduate would choose a career on Wall Street, many miles away from the village of Burr Ridge, just outside Chicago, where she was raised. 

Joining a Goldman Sachs’ equity derivatives trading team, for years Baum thrived in a corporate culture that was full of smart, driven, well rounded, and passionate people. 

But when the global economy went south in 2009, she found herself in an industry in the midst of unpredictable economic winds. What’s more, Baum was suddenly filled with a desire to do something where her skills and abilities could have the greatest impact. 

It was then that the she interviewed with a number of tech startups in New York. Finding her feet at General Assembly, she established and grew the company’s programs for education, business and design first in New York and then in Hong Kong.

Since 2014, Baum has been a managing partner at Fresco Capital, an early stage venture fund with a diverse mix of investments, including education technology (EdTech) startups. 

In a wide-ranging and exclusive interview with The Journal, Baum spoke candidly about Fresco Capital, entrepreneurship, startups, and being a woman in a male-dominated world of venture capitalists (VCs).

Allison Baum (second from left) was a panelist at the Talent Unleashed Awards in Hong Kong, 2014.

Allison Baum (second from left) was a panelist at the Talent Unleashed Awards in Hong Kong, 2014.

What is Fresco Capital and what is your role at the company? 

Fresco Capital is a global, early stage venture fund. We invest in tech companies at the early stage, and help them expand globally. As managing partner, I’m involved in all aspects of operations and fund management—I make investments, fundraise, work with existing portfolio companies, and source new deals. 

What is EdTech and how is it impacting education? 

We define EdTech as any company using technology to solve problems in education. Technology has impacted the way that we live our lives in almost every way: it’s changed the way we communicate, date, order food, or dress ourselves. But it has not even begun to affect education. 

So the education environment—from early childhood and kindergarten all the way through higher education as well as continuing education—is still based on a model that is part of the pre-technological era. We are going after companies that are part of that untouched vertical. 

There are four ways that we think technology can impact education. One is increasing access to content. You can read or learn almost anything, if you have access to the Internet. 

The second is improvements through educational businesses. Right now, a teacher goes to a school and spends 50 percent of their day grading papers by hand. We think technology can do a lot to automate those processes. 

The third area is improving outcomes. The traditional educational environment is one where students are required to learn at the same pace, because it used to be that the only way you could transmit information is that you had a teacher standing in front of a room full of students. 

But now, with technology, you have the ability to personalize information and delivery: students can learn at their own pace and in their own way, and get help on specific topics. That improves outcomes because students are able to learn better and faster. 

The fourth is providing more job-relevant skills. If you look at the digital economy, most of the growth is happening in the tech area—most jobs these days have some sort of tech-related outlet, but none of that is taught in traditional education environments. 

This is a US-centric statistic, but, right now, 65 percent of students that are in grade school end up with jobs that don’t exist yet—that’s how quickly technology is advancing. We need to be preparing people for those jobs: web development, digital marketing, and user experience design are examples. 

What’s been your experience in spearheading the company’s entry into Japan? 

It’s been an interesting meta-experience. We, as a fund, are entrepreneurs ourselves—we are in the process of scaling up, developing our strategy, and fundraising. We are also in the process of investing in entrepreneurs who are doing the same, and then in helping out our portfolio companies to do that. 

When it comes to Japan, my role is threefold. One is to help build relationships here that we could help leverage on behalf of our portfolio companies. The second is to fundraise. Last summer, we launched an EdTech fund, and we have been working to bring strategic limited partners into the fund, as we do for all of our funds.

The third thing we do in Japan is to help our portfolio companies expand. To this end, we brought in a local venture partner, Riki Yoshinaga, as I realized very quickly that, as a foreigner, there is so much opportunity here, but we need the right partner to be working on the ground. 

A classmate from Harvard, Yoshinaga has been doing a lot of market entry projects for foreign companies looking to come into Japan—Fresco Capital is an example of a market entry project. He is also working with our individual portfolio companies that are in the process of coming into Japan.

Last fall, Allison Baum was a panelist at the Japan E-Learning Awards 2015, where discussions included the future of EdTech products and services.

Last fall, Allison Baum was a panelist at the Japan E-Learning Awards 2015, where discussions included the future of EdTech products and services.

What do you look for in a startup? 

There are three levels to how we evaluate an investment. The first is the people. We look very carefully at the founders: why they are creating the business; have they experienced the problem they are solving first-hand? 

Are they curious; are they courageous; are they driven; how do they deal with challenges, and so on? We also look hard at their co-investors and advisers. That is our people first approach. 

The second is improvement through educational businesses’ operational efficiency. Typically, we look for technology companies that are solving a mission-critical problem—that is something for which there is a short-term need for adapting the product or service. 

The business also needs to be part of a macro trend. In general, venture capital is about investing in the future, so we want to look at something that is riding a wave or a bigger trend happening in the marketplace. This drives adoption in the existing market, but is also a growing market over time. 

The third is the deal structure. We invest in the early stage, and those are typically companies raising Series C, Seed or Series A rounds of capital. That’s our strategy because returns are better when you invest at the early stage.

What’s been your experience as a woman VC in a sector that is male-dominated? 

I could talk about this for hours and say so many things that I shouldn’t say. My experience as a woman in VC has been very different in the United States, Hong Kong, and Japan. 

In the United States, there are clear, unconscious biases against women entrepreneurs and VCs. This is because people want to invest in other people that look like them. 

The idea is that, when you’re investing in someone, there is a lot of unknown [risk], so people invest in people that are like them because they know how they make investment decisions; they know how they make choices; and they know how they will behave in the future. 

It’s completely natural and people are not honest about their own biases. So in the United States, I think those things ran under the surface. 

But there is a strong community of women entrepreneurs and VCs that are working actively to support each other [there]. So the ecosystem for women there is stronger than in other places.

However, it is bifurcated—there’s a women’s ecosystem and separate a men’s one. You even see the concept of “separate but equal” happening with some of the diversity funds that are being set up. 

To me, that is counter-productive because you are setting up women as a separate group from the rest of entrepreneurs, when you should be investing in the best entrepreneurs, no matter what they look like or where they come from. 

Allison Baum speaks about EdTech in Tokyo, 2015.

Allison Baum speaks about EdTech in Tokyo, 2015.

In Hong Kong and in Japan there are just fewer female VCs in general. So it is a lot harder to have this strong network that is supporting each other in the same way that you see in the United States. 

But in some way, over the long ran, maybe that is better, because it means that the women that are being successful and are pushing forward are going to be integral to the entire system, as opposed to being part of a separate system. 

In Japan, there are very few women in VC. But in some ways it’s more refreshing here, because my identity is that of a foreigner. If there are two levels of bias here—that against a woman and that against a foreigner—I’m able to identify myself as a foreigner as opposed to struggling with issues of being a woman. 

Another thing that I think is interesting [about being in Japan]—and that I appreciate—is that the structure of Japanese business very clearly establishes that I am in a position of power within the company. 

When I’m in the United States or Hong Kong, people look at me and assume that I’m not a managing partner: they’ll look at me and think, “She’s a woman; she’s probably an associate; or she’s some lower level position.” 

So I would end up having a meeting where people don’t even look at me or don’t speak to me and only speak to my male partner. They didn’t mean it, but they just assumed that I’m not a decision maker. 

In Japan, because the business structure is so structured—where I sit and what order I give my business card matters—people know. They may think, “It’s kind of weird; and this is unusual,” but, at least, they know very clearly that I am a managing partner. 

What can be done to increase the number of women VCs? 

I think awareness raising and role models are really important, including highlighting women that have been successful. There also needs to be a larger re-structuring of how women are portrayed and represented in the media. 

The conversations in the tech world are typically around: “How do we get more female entrepreneurs?” And I think that’s really important, but the answer is having more female VCs.

And similarly in the media: a lot of people are saying, “How do we get more diverse faces on TV?” First, you need a more diverse writing room. You have to treat the disease and not the symptom.

Where does your passion for education come from? 

I never wanted to be in education, to be honest, as evidenced by the fact that I went to Wall Street. But there are a few things that led me into this area in particular.

When I decided that I wanted to start looking outside of Goldman Sachs, I was interviewing in a couple of tech startups in New York. And I never really knew what I wanted to do long-term, but I knew if I invested in education in Harvard, and I invested in a career at a place like Goldman Sachs, that would give me options down the road. 

When I was interviewing, I remember talking to ZocDoc, Google and a bunch of other tech entrepreneurs, and they said, “Yes; it’s great that you went to Harvard, and it’s cool that you were in Wall Street and worked at Goldman Sachs. 

“But we actually don’t care, because those skills are not relevant. If we are going to hire you, you may need to be a product manager, or a digital marketer, or a user experience designer, or a data scientist, or a web developer.”

These were all the skills that I didn’t have, and I didn’t even know what they were. I remember thinking: “I’ve never even heard of that—a user experience designer. What is that?” 

So I think I experienced first hand this promise that is made by the traditional education environment, which is that if you have a degree, you will be able to be successful. 

But, really, what was needed in a digital economy was very different. And that made me interested in trying to solve that problem—which is why I ended up at General Assembly, because that is what they have been doing. 

So I felt that pain first hand. And then I think that the more you think about problems in the world—war, hunger and so on—you realize that literally any problem can be solved by education. 

To me, therefore, if you want to have an impact on the world that lasts, education is the only thing you should be focused on.

You wrote a thought-provoking piece for—titled “It’s not me; it’s you”—about being a woman entrepreneur. What was the motivation behind it? 

There were a number of experiences that I had had around feeling like people weren’t giving me credit or that they were not taking me seriously or that things were challenging because I’m a woman.

At the same time, I was also going through some personal experiences—I’d been in a relationship for a long time, and was starting to date again.

[As I was in] Asia, I thought, “I’m experiencing these challenges and it must just be because I’m doing something that is different from other people. But when I went back [to the United States], and was catching up with a lot of my really close personal and professional friends, I realized that many of them were experiencing the same things. 

And every single one of them had the same reaction that I did—that is, “What am I doing wrong?” For example, I was catching up with my roommates from Harvard, who are all beautiful, intelligent, amazing women who were going on these dates.

But because it was not working out, mainly because their dates were frankly [no good], my friends would say, “Maybe I wasn’t communicating well enough, or I wasn’t trying hard enough to show him that I was committed.” 

My reaction was, “No! You’re amazing; this guy sucks.” But due to our internal dialogue as women, we automatically question what we are doing wrong. That’s when I thought, “If these women are feeling that, and they are the most amazing women that I know, there is something wrong here.” 

And then, on the startup scene, I was catching up with a bunch of friends that were in very senior level positions at well-established startups or women that had also established their own funds, and they were experiencing the same dismissal or lack of respect that I was experiencing in a lot of situations. 

Again, my thoughts were, “Maybe I should dress differently to get people to take me more seriously. Or maybe we should change the way that people are talking about our fund.” 

What I realized was that, at the end of the day, the system is built for a very specific type of person to succeed, and sometimes it does not work in your favor. 

Which begs the question: why are we trying to fit into the system? Let’s create a new system. But it takes us saying, “Hey, it’s not our fault that we cant fit into this; the world has to change, too.” 

How does being a VC differ from your previous career? 

Serial entrepreneur Allison Baum seeks EdTech startups in Japan.

Serial entrepreneur Allison Baum seeks EdTech startups in Japan.

It’s the best job in the entire world. I love it. I get to meet tons of interesting and passionate people that are taking risks and trying to change the way things are and creating a new future—and I get to be a part of that. 

I always say, and this is sort of true, that when I was on Wall Street, I was functioning in a world that was 2D—it was pretty vibrant, but it was two-dimensional. 

And then you go into startups, entrepreneurship, and VCs, and you find yourself in a 3D world. The depth of conversations you have, the businesses you build, and the type
of people you meet is unparalleled here. 

John Amari is a writer and editor from the UK who specialises in articles on startups, entrepreneurs, science and tech and business.
Most jobs these days have some sort of tech-related outlet