Top Hat and Toronto

We announced an investment in Toronto based Top Hat yesterday. I RT’d my partner Albert‘s post on the investment with this bit:

Toronto is a great place for startups. In addition to five investments of ours that are HQ’d there, I know of at least one other USV portfolio company that has much of their engineering team in Toronto. The talent, mindset, and quality of the people in the Toronto/Waterloo tech/startup community is really top notch and we love investing there.

Top Hat is an interesting investment. It’s a bet that interactive learning tools for college classes can be a platform to re-imagine how the college textbook market should work. Here’s is Albert’s post in full about all of that.


Top Hat

Even back when I was in graduate school, I found the price of textbooks to be high and their quality to vary widely. Now that I have children taking college courses, I was shocked to find textbooks that cost over $200 and are still large physical objects that have to be lugged around! The high prices and lack of innovation are the result of a market structure which has become highly concentrated among just a few textbook publishers. That’s why I am excited to announce that USV has led a new round of financing for Toronto-based Top Hat, which last year launched a content marketplace for higher education.

I first met Mike, the founder & CEO of Top Hat, shortly after he had started the company. He told me about his exciting vision for bringing innovation to the higher education market. But then he said he was getting going by replacing Clickers. For starters I didn’t know what those were as they had come after my time in college. Once I figured out what a Clicker was, I admittedly thought going after those was, well, boring. But Mike was right and I was wrong. Starting with classroom engagement turned out to be the perfect basis for establishing a large footprint in higher education. We stayed in touch as Top Hat grew and then last year the team successfully used their user base to launch a content marketplace.

While it is still early there are many positive signs about the potential for the content marketplace that remind us of other successful marketplaces we have invested in over the years such as Etsy and Science Exchange. In addition to individual professors adding content by themselves there are also new behaviors emerging and we are particularly excited about collaboratively developed content. Much work remains to be done but the company is now well funded to execute on that.

Our investment comes from the USV Opportunity Fund, which we set up in part for this type of situation where we have developed a relationship with an entrepreneur over time. Also worth noting is that Toronto continues to impress us with its quality and diversity of companies. We now have five investments there, placing Toronto third as a location in the USV portfolio after New York and San Francisco.

#hacking education

Comments (Archived):

  1. JimHirshfield

    Congrats. A great city, as I’m sure William will chime in on down here.Also, I heard about a program to place tech workers there… those having trouble getting US visas.

  2. Shaun Dakin

    I am an adjunct professor of digital marketing at George Mason University and have used Tophat for almost as long as it has been around. I love it and my students enjoy the interactive environment. I use it to grade participation. It is awesome for international students who can’t speak up in class as often as native English speakers.

    1. fredwilson

      Do you plan to use their content marketplace?

      1. Shaun Dakin

        Not at the moment. I use Stukent.com for content (book, videos, simulation).

  3. Connor Edwards

    Why is it, Fred, that more VCs don’t have a presence in Toronto? I’m thinking boots on the ground in the form of a Toronto-based Associate or Principle. I’ve been pitching the Toronto-KW corridor to US-based VC’s for a long time now! Strong cluster of support.

    1. William Mougayar

      Toronto is only 1 hour away from NYC. That’s nothing for distance.

      1. awaldstein

        Then how come you don’t come down here more often?

        1. pointsnfigures

          too expensive and there is that whole border thingy : )

          1. awaldstein

            too expensive for a famous author and VC?and to visit the financial center of the world?

          2. pointsnfigures

            : ). CME does more notional volume in one day than the NYSE does in a year. Toronto is also a financial hub. Some very good fin tech DNA there.

          3. awaldstein

            fintech is not my expertise so thanks!this was simply a nudge to see if i could get a friendly response from william.big fan of toronto. back when I was on the road selling the skydome was my account when i was selling early tech for lpainting on live video streams like their big screens.

          4. Pointsandfigures

            I know. I like to tease New Yorkers because they think the end of the earth is the Hudson River, and then there is a different planet to visit on the other coast. : )

          5. awaldstein

            Ha!

          6. Girish Mehta

            “View of the World from 9th Avenue” – Saul Steinberg for the New Yorker. https://uploads.disquscdn.c

          7. PhilipSugar

            Yes. My house was less than 20 yards from Steinberg Dietrich.

          8. LE

            Ah. Sniff. Prime fraternity and campus real estate. Wharton UG had the best campus location of any school.I actually graduated before it was Steinberg Dietrich and the renovation.

          9. jason wright

            is New York designed with any kind of rational system?Vienna has such a system.

        2. William Mougayar

          I was in NYC exactly 10 times last year, and will be there in Feb, March, April, May of this year as far as I see right now 🙂

          1. awaldstein

            then it is clear who your friends aren’t down here 😉

          2. William Mougayar

            i know you’re teasing me.

          3. awaldstein

            duh!

    2. fredwilson

      We believe it is better to have everyone at USV work out of one office and travel as necessary. That’s always been our model and it has worked well for us

      1. PhilipSugar

        That is my philosophy as well.

  4. William Mougayar

    The Toronto/Kitchener-Waterloo region has a powerful startup ecosystem indeed. No wonder Albert has been making so many trips to Toronto 😉

    1. PhilipSugar

      Now I have been to Kitchener (visiting HQ of M&M Meat Shops). I did not find much there.Now Toronto on Richmond Street is as metropolitan as you can get.My wife really loves Ottawa. A beautiful city in the summer with one of the best open markets I have ever seen (We stay at the Fairmont Château Laurier)

      1. William Mougayar

        Kitchener-Waterloo is getting better in terms of living trendiness. It’s still a small town place. Ottawa is charming , yes. Laurier is great…you remember how large the indoor hallways were?

        1. PhilipSugar

          Yes. I like the downstairs Bar/Restaurant a ton.

    2. Joe Cardillo

      =) … and don’t think for a second William we don’t see that you played some part in that!

  5. Jeff Hohner

    Fantastic news Fred and Albert and congratulations. Toronto is indeed a fantastic place and the whole region including KW is filled with so many great people and opportunities. I feel it getting better and better every day (William does as well!). Top Hat is a great company and I know it won’t be your last investment here! Toronto may creep up to number 1 soon enough 🙂

  6. Bill Phelan

    We run a data sciences business in higher ed. Considering the number of colleges (X) the number of majors, there are over 60,000 potential choices a student can make on where to major in something. We rank and analyze every one of them across many dimensions with a big focus on outcomes. I hope Top Hat gets in touch with us. The nth edition of the next big company text book is rarely more than a bit of touch up paint on an old book with dated relevancy.

  7. pointsnfigures

    Your money goes a little farther there with exchange rates as well.

  8. Guy Lepage

    As a Vancouverite, I am very jealous of the startup community in Toronto/Kitchner. I would love to see stronger community growth out on the west coast of Canada as it has a lot to offer with entrepreneurs and talent in regards to livability and lifestyle.

  9. Rebecca Zhang

    Would be nice to see how Tophat can be applied to online education.

  10. Tereza

    I’m also seeing more and more from Canada and especially Toronto. Secondarily Vancouver.

  11. creative group

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