Nectir Part 2: From Flat Round to The Biggest AI Deal in Education

Hi friends. It's me. Josh Muccio. Welcome to THE PITCH. On our show today, markups!

Or at least, one markup. Nectir just raised a 12.5M Series A. And since they were one of our first Fund I investments AND because Kavitta’s original pitch was such a banger, we figured we’d share the news with you all.

This is Kavitta’s original pitch for Nectir, before they launched Nectir AI. And it takes us back all the way to January 2024. Stay tuned for a quick update from Kavitta at the very end of the pitch. And with that, here’s me in 2024:

I’m Josh Muccio, welcome to The Pitch. Where real founders pitch to real investors for real money. Let’s meet the investors.

Mac Conwell with RareBreed Ventures

Mac: As a unicorn hunter, I want to see every unicorn.

Charles Hudson with Precursor Ventures

Charles: I wish that had been your open. That was so good.

Elizabeth Yin with HustleFund

Elizabeth: Do you love the problem you're working on?

Paige Finn Doherty with Behind Genius Ventures

Paige: Actually I gained so much respect for her when she said that she did that.

And introducing a new investor to the show - Cyan Banister with Long Journey Ventures

Cyan: That is the definition of a dope founder.

The pitch for Nectir is coming up after this.

BREAK

Kavitta: Hey everyone.

[hellos]

Elizabeth: Elizabeth. Nice to meet you.

Charles: Hi. I'm Charles.

Kavitta: Hi Charles. Kavitta.

Charles: Nice to meet you Kavitta.

Cyan: Cyan.

Kavitta: Cyan. Hi. Kavitta. Nice to meet you.

Paige: Hi. Paige.

Kavitta: Paige. Nice to meet you. Kavitta.

Mac: Mac.

Kavitta: Mac. Nice to meet you. Kavitta.

Kavitta: I'm excited. This is my first time in Miami and for a very good reason, too. So - happy to be here. Thank you for sharing some time with me.

Charles: Of course. Absolutely.

Kavitta: Wooo. Hi guys. I'm ready.

Charles: All right.

Kavitta: My name is Kavitta. I am the cofounder and CEO at Nectir and we are building the classroom of the future. Well, I think the best place to start is why I'm here. I am autistic and I have ADHD, so no classroom that I've ever been in before has felt comfortable for me or my brain to be in. And then I got to college, and I started paying $40,000 to be really uncomfortable, and that's when it became enough of a pain point that I said either I'm going to drop out or I'm going to do something about it. And I had no idea what that something was until I took a class that changed my idea of what education could look like. I took a class the summer between my sophomore and junior year taught by a grad student instructor. So we walk in on the first day and, before he says a word, he turns around and he writes the link to a Slack workspace on the board. And he turns back to us and he says, you're not gonna raise your hand in this class. You're not gonna send me or the TA a single email. You're not even gonna come into office hours. If you have any questions, whether it's in the middle of lecture or it's 3 in the morning before a midterm, your first line of action is to put it in the Slack chat, because I guarantee that one of the 149 people around you will have a better and faster answer for you than me or the TA will. And he said, on top of that, if you answer someone's question really well, I'll give you extra credit for it, because that lets me know that you understand the material so well you can then turn around and teach it to the person next to you. When he said that, the entire energy of the class shifted. It was like 150 people turned into 15, and it felt like elementary school again when you're sitting with your six table mates and you know you're going to be best friends by the end of the year. I left that class with the highest grade that I got in college and more friends than I had ever made before. And for the first time, experienced what it was like to actually be in an accessible classroom for me and everyone else. I walked away from that class and I approached UCSB and I said, somebody explain to me why, if me and 26,000 other people are paying you $40,000, why can't you put Slack in all of our classes? Why do you keep giving us technology that looks like it was built by someone who hasn't seen a classroom for the last ten years? And they very kindly sat me down and walked me through the logistical hell of putting a separate Slack workspace in 1500 classes every quarter, teaching professors who are on average 55 how to use an enterprise level tool that they haven't seen before, and then paying an enterprise level cost for 26,000 students every year. They said, it sounds good in theory. But this will never work across an entire campus because Slack isn't built for schools. And I think you could literally see a lightbulb appear above my head in that moment, and I said, then I'm going to build it. We - my cofounder and I spent the next year in that same office, asking them what would you buy? What does it have to look like for this to work across an entire campus? And we built exactly that. A year later, we got all 26,000 students at UCSB using Nectir in almost every single class, with the instructors being the champion of it. And we got UCSB to pay us $60,000 a year for it, so we got our tuition back.

[laughter]

Kavitta: After that, we went on to raise our pre-seed round, and those same professors were our first investors. Eight months ago, we launched Nectir to the world, and since then I, as our one-woman sales and marketing team, have built a $35 million pipeline and we've already closed five campus-wide contracts from that. And now we're here to raise our $3 million seed round to help us finally build out our sales team, and partner with the right investors who can teach us how to build this into the billion dollar company that we know that it can become, and who want to be right by our side when we usher in the next iteration of teaching and learning around the world. Thank you.

Mac: Amazing.

Paige: That was - yeah, that was great.

Kavitta: Thank you.

Mac: So - I - tend to hate ed tech. Like, with a passion.

Kavitta: Understandable.

Mac: With a burning passion.

Kavitta: Yep.

Mac: And a lot of it's around the sales cycle.

Kavitta: Totally.

Mac: Most ed tech companies fall apart because they run out of capital before they can figure out the sales cycle to be sustainable. You said you've been doing this for eight months and you got five campuses? Walk me through your sales process, please.

Kavitta: Yeah. Absolutely. So I think the first thing that I want to get out of the way is we have two very distinct sales cycles. For contracts that are under 20k, that's a four to six week sales cycle. If it's within the 20 to 100k, it's gonna take three to six months. If it's over 100k, that's the typical nine to 12 month sales cycle that everyone hates, but we have gone through it before, and we're going through it right now with four different schools that have contracts over 100k, and we're already at the contract negotiation point with them. But - I've actually been working on this for five years. Two and a-half of those were when we were in school, and we made sure that we did not go raise money until we actually knew what we were doing. So the number one thing that I think people don't realize about ed tech is, there is one evergreen tool that every single school must have. It's the LMS. The learning management system. So that is where you're registering for your classes, you have your grades, all that good stuff. When you bring a tool to a campus, as good as it may be, if it doesn't integrate with that LMS, they won't use it. And so what we did was we took that LMS integration a level deeper. We made an iframe integration. Seems like it's a simple thing to do, but nobody else has done it. So what we've built, essentially Slack for schools, it sits actually housed inside of the LMS, and we see 79% of our usage come directly through that.

Mac: One follow up: like when you go to a new campus. Who do you talk to? Who's the champion? Who's the decision maker and who has to say yes?

Kavitta: Yeah. So easy first answer off the bat - the CIO and the Vice Provost are the person in higher education who are usually making that decision, if it is a campus-wide contract. If we're doing a department contract, then it's the Dean. The way that we were able to get a 34% reply rate, 17% meeting booked rate on our first cold outreach ever, was we decided to go the hyper personalized route. So we built a scraper that found any article that mentioned ChatGPT that had dot edu at the end of it, and that meant that a school was already talking about ChatGPT. And then we found the author of the article, and whoever they mentioned in it, and we emailed both of those people and asked for a user interview. And that is pretty much how we built the entire pipeline and the product itself.

Mac: And tell me a little bit about the activity level of - for the schools that are currently using it. So this is in every class. Every class has it. But then like what percentage of the classes are actually using it? What percentage of students use it? Like, do you have any information on the activity level?

Kavitta: UCSB's probably the best example, because we've been there the longest. Every year, UCSB has 6500 new students, so those are freshmen and transfers. For the last three years that we've been on that campus, we get all 6500 new students to sign up with no more marketing whatsoever. And that's how we know the network effect is working. But what we realized very quickly is that vanity metrics are just that. They don't actually care about how many messages are sent or who's going on there. They care about: does it have pedagogical effects? That's what they're buying it for. And so we actually just did our second renewal last week. And we doubled the price of that contract because they were so happy with the results of it. So the school was Arkansas State University Mid-South. It is a tiny little campus in the middle of nowhere. And it's one of those schools where they just see so many students dropping out. They are not able to get students to actually get to the finish line. And they said, we need to be building a sense of belonging amongst them, because that's what's going to save them from dropping out, and we totally agreed. And we said, okay, let's stay there for a year and see what results we get if every single student on campus uses this. We just got the results last week: every single class that used Nectir was able to increase the class average by a full letter grade. That is the usage metric that we're looking at.

Mac: Fair enough.

Charles: When people don't buy, why do they not buy? It sounds like you've had a great experience with conversion, but when they don't?

Kavitta: The soft no's that we've gotten, and we have not gotten a hard no yet, which is nice, but it's because they don't have an AI sort of committee yet. I think that's the main thing that's stopping a lot of larger campuses, is they want to make sure that they have guidelines in place for bringing on AI technology. So what we've done with Nectir is every single class channel comes built in with SOMA, which is your AI teaching assistant. And essentially, we have created AI infrastructure where the school gets to choose the LLM that they use, so schools like Stanford, Harvey Mudd, they're actually using this with their own LLM. And then the teacher in that channel gets to upload the data of their choice, their syllabus, their lecture notes, whatever they like, and that sets the parameters for what SOMA is able to answer for the students in that channel. And so we can give you a way where you know your content is the only thing that's being fed back to your students, they still get the advantage of being able to use AI and get an instant answer, but then you have visibility into how your students are using it. But for the schools that have said no, it's because they're just not ready to bring on AI yet.

Mac: Is - is there a way for you to help them with that? Or help them through that?

Kavitta: Absolutely. So before we even built SOMA, we did a thousand user interviews with faculty, staff, admin and students, anyone who would take our call, and we said, what scares you the most about AI? What excites you the most about it? And for teachers we said if you had a magic wand and you could take one thing off of your plate forever, what would it be? And the consistent answers that we heard across the board were: I'm scared that my students are going to go to ChatGPT and get information that isn't correct, and I won't be able to catch it in time. Once it's in their brain, it's there, and I can't correct it. And when they said what they never wanted to do again, they said, I never want to answer a stupid question again, because I get dozens of emails asking me about something that is in the syllabus, and I have to just sit there and keep answering it. And we said, we can fix both of those.

Mac: So I hate to be monopolizing the mic, but two questions for you. The first one is, talk to me about your pricing strategy. You know, what is your pricing model and how much are you making in revenue with your current five customers?

Kavitta: Nectir is a dollar per student per month. So $12 per student per year. So we're at 80k in revenue, and that is four contracts that are under 20k, and then UCSB is at 60k.

Mac: Got it. And my second question was - you said you're raising a $3 million seed round. How much of that do you have committed, if any at all? And what is the valuation you're looking for for this round?

Kavitta: Yeah. So we actually started this round mid-October, which, I know, wonderful timing right before the holidays. I just love to challenge myself. We have out of that three, a million circled, and we're saving one and a-half for our lead, and so we have 500,000 still open right now. And I am in the middle of diligence with 11 funds, one where I'm in confirmatory diligence for our lead. And now it's time for us to bring on one of the major ed tech VCs, because that puts a lot of firepower behind the name for other schools. And so it's a bit more of a strategic round, in my opinion, obviously other than needing that capital infusion.

Paige: And - sorry - what was the valuation on the round?

Kavitta: Yeah. So our pre-seed round, we did two and a-quarter at an eight post. And to be honest, I'm really not looking for a huge bump in valuation. I know it might be foolish to say, but in this market, I'm willing to do a flat round because I know that based on our projections, that $35 million pipeline, worst case scenario, gets us to 2 million ARR by Q4 of 2025, at which point I know I'll have the leverage for a really good series A. And so I want to keep the valuation to a conservative place at this round.

Paige: Wait, can I stop you right there. So you've raised 2.25 on eight?

Kavitta: Yes.

Paige: Okay. And then I guess like I would - I want to like I guess take off my investor hat for a little bit and just like push you on like why you want to raise on the same valuation.

This was shocking to the room of extremely interested VC’s. Kavitta just said she’d be willing to do a flat round. Which means, raising at the same valuation as her last round, from 3 years ago. That’s a red flag! It’s one thing to be willing to do a flat round if a VC asks, it’s another thing entirely for the founder to suggest it.

Is this a sign that there are problems in the hive, or is Kavitta just selling herself short?

That’s coming up after this

BREAK

Welcome back to the classroom of the future.

Kavitta was acing this exam. The investors, even those in the room that hate edtech, were bought in to her every word. Except for two. FLAT. ROUND. Can Kavitta turn things around in the room? Here’s Paige.

Paige: I want to like I guess take off my investor hat for a little bit and just like push you on like why you want to raise on the same valuation. like - I'm cognizant of the dilution that you're taking on as a founder, and like for a founder in our portfolio that would be more dilution than I'd be comfortable with them taking on. So have you thought about raising at a higher valuation? Obviously, it's like contingent on the investors that you're working with, but for me that would be like one of my hesitations.

Kavitta: Absolutely. I think, if I'm being very self-aware about it, there's definitely a part of this of being a female founder. You go out and take what you can get. And so being in such a terrible market, I know that I'm going up against all of the challenges. The sales cycle, the market itself. And so I'm at a place where I know that this company will thrive. I know I can build this into a billion dollar company and change the world. I just need to find the right people early on who believe in me to do that. If it comes down to it, I think that we would do it, because I want to have the extra capital. So my previous investors did let us know -

Mac: So let's ..

Cyan: Don’t negotiate against yourself.

Kavitta: Yeah.

Mac: Let's - let me ask a different question. What valuation would you like to see for this round?

Cyan: There you go.

Kavitta: Okay. Good question.

Paige: Yeah. Good question.

Kavitta: I went into this with the hope of 12 pre, 15 post. And that to me feels fair, because I know what we've been able to achieve that other companies in our space have not in a much longer time than we've been around.

Mac: It's always better to start a little higher -

Kavitta: Okay.

Mac: - to give room for negotiation.

Kavitta: Okay.

Mac: Eight's your floor. Fifteen's where you want to be.

Kavitta: Okay.

Mac: Start with the 15 -

Kavitta: Got ya.

Mac: Let em talk you down to 12 to 11 or 10, but

Elizabeth: You should definitely not negotiate with yourself.

Mac: Yes.

Kavitta: Thank you.

Elizabeth: Kavitta, I really like your tenacity and your sales. I feel like at Hustle Fund, we're probably just not the right fit. We're investing in much smaller rounds, much earlier. We also don't really invest in a lot of ed tech. On 500 investments, I think we have one ed tech company, so it's not a space I really know a whole lot about, nor really have honestly a passion for. So I think unfortunately I'm out. But I've absolutely loved, you know, getting to know you in this conversation.

Kavitta: Thank you. And I totally understand. I have been following you and Mac on Twitter for years -

Elizabeth: Thank you.

Kavitta: And you guys have taught me so much. So I feel like I've already gotten so much value from you.

Elizabeth: Thank you.

Kavitta: So I really appreciate it. Thank you.

Elizabeth: Thank you.

Charles: How many people are in the company right now?

Kavitta: Six including my cofounder. Four engineers, one head of community that manages the active schools, and then I am all of sales and marketing.

Charles: What kind of sales people - I'm just thinking about the three buckets of sales you have. Like, where do you think you could get the most leverage with more people?

Kavitta: Ah. Okay. So the issue that we're running into is because I am the only person who's on the actual sales calls, it's limited to my schedule. And so I need to bring someone in who is able to manage the under 20k contracts, because I know how to do those longer contracts.

Charles: Like a BDR?

Kavitta: Exactly. And I have the relationships with those schools, so I know that I will always be the closer. So I need someone who can come in and those two to four week contracts, they take two meetings to close. They can handle those.

Charles: And you haven't seen any movement from Slack on like educational pricing or?

Kavitta: Slack, before Covid, had 6% of higher ed institutions using them. That number has not increased much after Covid. If you have a Slack contract, it's $15 per student per month, which is impossible to pay.

Charles: Yeah. You can't pay that.

Kavitta: And then it requires the teachers themselves to create a brand new workspace every quarter. So it's just not feasible. And actually we have three schools in the pipeline that have Slack right now, and have come to us in order to convert.

Mac: In your contacts with these schools, how long are they?

Kavitta: So schools usually come a year earlier and start looking for the tools and setting it all up, because in January is when they start writing those items into the budget for that following school year.

Mac: What I meant was, when you sell this product into those schools, you should start thinking about how to set it up so that the contracts are three and five year lifetime -

Kavitta: Ah, got ya.

Mac: Three to five years in length, with non-competes added in.

Kavitta: Mhm.

Mac: Or even if at some point you start to have a competitor come into the market, legally they can't even play with it.

Kavitta: Right.

Mac: Just an idea.

Kavitta: Thank you. Yeah. UCSB is on a ten-year contract right now.

[laughter]

Paige: I have like a good amount of context for this space. So like one of my favorite portfolio companies, a company called Prof Jim, and they take text book texts and build it into basically like 3D avatars and like interactive lessons within the school, and they're growing super fast. um I really like this space. I also teach a class at SDSU. We use Slack for our students. I ran into the same problem of like having to do a new workspace for our class this year. I also like graduated college during Covid, so I was like in that very messy transition to online learning. umm So I'm very interested in investing. The check size that I would be looking at is around 250k. My one contingency is like I definitely don't want to see you raise a flat round. somewhere between 11 and 12 pre, based on what you're looking to raise, would work for me. But like you said, lead sets the valuation terms. but yeah, I'm definitely interested.

Kavitta: Thank you. That's awesome. And I love that you have that experience of not only teaching a class yourself and using it and seeing the problem, but then being on the student side yourself.

Paige: Yeah.

Kavitta: Because I think that is exactly what we're looking for in this round, is those partners who are going to come in and be just as angry as we are that for some reason we're still using a 400-year-old classroom model.

Paige: Yeah.

Kavitta: And be the ones to really help us change that.

Paige: Cool.

Kavitta: And I will say, nobody mentioned flat round, and I always do this to myself. I - okay -

Paige: Don't say it!

Kavitta: I don't know why no one said it to me, and I was like, I'll do it! And I keep getting this reaction of like, you don't have to. And I'm like, no, it's okay, I'll do it.

Cyan: Well, a lot of investors will just take it.

[crosstalk]

Kavitta: I know.

Elizabeth: Yeah.

Kavitta: And I'm lucky that I haven't -

Cyan: We're trying to like protect you here.

Kavitta: Thank you.

Cyan: Don't say it ever again.

Kavitta: I will never say it again.

Mac: A hundred percent.

Kavitta: Yeah.

Paige: Cyan, you want to go?

Cyan: Yeah. So our firm can lead a round like this, but we um are not ed tech investors. So we have Descomplica and Wonderschool. But I don't know if that's enough. So I don't know what you're looking for, because we're generalists. But I love you.

Kavitta: Thank you.

Cyan: And I love this company. And so I would like to participate, but I can't just write a check -

Kavitta: No.

Cyan: - of this amount without talking to one other partner.

Kavitta: Okay.

Cyan: But if we're not a fit, then I would like to help fill out the rest of the 500k.

Kavitta: Awesome. Thank you.

Kavitta: And on the lead, the main thing that I'm looking for is help with hiring, because this is my first job ever, and that is definitely the hardest part, because I know that I'm gonna need good people in early to help me build this. I think that if you don't have the ed tech experience, but you are willing to teach me everything that you know and help me with hiring, then this could be a fit.

Cyan: Okay. I think that would be tough. I'll tell you why. We can help only to a certain point. Obviously, I kind of think of our founders, we have a bat phone and you can call us.

Kavitta: Right.

Cyan: And you can ask for whatever you want and we'll try to give it to you. But we have 100 plus companies that we oversee -

Kavitta: Right.

Cyan: And so I never like to overpromise, because there's a lot of funds that'll do that. They'll say, we're value add, you know. But I think if you're open to a meeting after this just to see if we're a fit, that'd be great.

Kavitta: Absolutely. Totally.

Cyan: Because I do want you to be obviously really excited about whoever your partner is, but I never try to say that I can do all those things. We try our best, but you can always talk to Chris from Wonderschool and from some of the other companies that we've worked with and see for yourself.

Kavitta: Awesome. I think the relationship is the most important part, so.

Cyan: Cool. No, I'm excited.

Charles: I actually have a lot of ed tech in our portfolio.

Kavitta: Awesome.

Charles: Like, Clever, Wonderschool, Top Hat, Knack.

Kavitta: Very cool.

Charles: Ribbon. The one thing I have to -

Elizabeth: Nicely done.

Charles: Well, you know. There'll be some others that, you know, didn't work out. We have those. So I have - I'm interested in participating. I have one caveat. We are investors in a company called Campus. This was like a part of their legacy business. It is not, as far as I know, well, I have high confidence this is not an essential part of the product anymore, but I think it might be a part of the product, and so I would be interested in being a part of the round but given that that’s one of the largest positions in our firm, I'd want to just make sure that there's no conflict. But provided that there's no conflict, I would love to be a part of the round at the sort of 50 to 100k range.

Kavitta: Awesome. Thank you.

Mac: You're incredible.

Kavitta: Thank you.

Mac: You had me when you started going through how you do the sales. I also appreciate how much you've been able to do in eight months. It's very impressive.

Kavitta: Thank you.

Mac: I like everything about this except for the fact it's in ed tech, I could get over myself on that. My hang up, similar to Charles, is not a company I've invested in, but I'm an advisor to a company called MyQVO.

Kavitta: Okay.

Mac: I would love to find a way to participate. I just don't know if I can from ethical standpoint. But I will say this, even if I can't, before you leave here today, you will get my cellphone number.

Kavitta: Thank you.

Mac: And if you ever need anything, you can reach out to me. I want to find a way to support you in one - in any way I can.

Kavitta: Thank you so much.

Mac: Yes.

Kavitta: It's funny because, years ago, when I followed both of you on Twitter, I remember saying to myself, I'm going to find a way to get in front of them one day. I don't know how I'm going to do it, but I'm gonna do it -

Cyan: So you manifested this.

Kavitta: 100% we did. It was like four years ago, but - thank you. That means so much to me.

Paige: I love that.

Mac: Absolutely.

Elizabeth: I love that.

Mac: Thank you.

Josh: So - this is a little weird. But The Pitch, the listeners of the show, would love some allocation in this deal, but it sounds like it's pretty competitive, so... You have 500 left? Paige is putting in 250. Where are you at, Cyan?

Cyan: Whatever Charles and I, I guess -

Charles: Yeah.

Cyan: - and then if you - kind of whatever's left.

Josh: So do we arm wrestle for it, or what?

Cyan: Also, also I possibly could lead. So.

Charles: We'll make some space. We'll make some space. How much did you have in mind, Josh?

Josh: Well, our check sizes at this valuation would be 100,000.

Kavitta: Wow.

Josh: We also -

Kavitta: Definitely not a flat round.

Josh: Yeah. Definitely not a flat round. We also have a syndicate. So there's potentially more money here as well, but it depends on how you wanna play it.

Elizabeth: Good problems to have.

Mac: Good problems to have.

Kavitta: Exactly. Thank you. I actually would be very curious to get all of your advice on this. On the last pre-seed round, we got offered 3 million at 15. And we turned it down because we said it's 2021 and this is crazy, the valuations people are getting, and I don't want to set myself up for a down round. So we said no and we took the eight, and it was the best thing that I've done in this history of this company.

Elizabeth: Yeah. Yeah. I think that was smart, actually.

Charles: Yeah.

Paige: Yeah, me too.

Kavitta: And so with this round, based on just what you know from today, what would be your advice to make sure that I don't set myself up for a down round in the future? What are your thoughts?

Elizabeth: So I think just to sort of rough rules of thumb that, honestly, who knows where they came from, but just kind of what VCs think about, is every round you want to somewhat double your valuation. It's not a hard and fast rule. But I think even if you were around the 15 plus or minus, then you're talking about the next round, the series A would be like 30 maybe 40 post, which is a pretty common series A -

Kavitta: Okay.

Elizabeth: - as the valuation. And so what do you need to do to hit series A metrics? You're talking, you know, I think people like traction closer to call it 3 million revenue run rate. And so if you think with this amount of funding, like, can you help go through some of the pipeline to hit these milestones that we're talking about, roughly speaking, does this make sense?

Kavitta: Yeah That makes me feel a lot better.

Elizabeth: But you know I think as the non biased party in the room, my unsolicited advice here would be: you are in a very good position right now. Like, you're talking about being oversubscribed here, and once everybody learns that you're basically oversubscribed, that will make people even more excited, and you'll have even more demand, right.

Kavitta: Right.

Mac: And I will say, um When you have this much interest, that means you can now dictate who you take money from and at what valuation. So be very clear about that.

Kavitta: Okay.

Cyan: You also don't have to give up a board seat.

Kavitta: Okay.

Elizabeth: There are other things besides valuation that's important. And make sure to do your due diligence once an investor says, hey, we want to invest. Like, to make sure you want to work with them.

Kavitta: Okay.

Mac: Here is a secret for all of the founders out there. Don't ask the investors for references to founders. Go to their portfolio list on their website and find a company that's no longer in existence, and reach out to that founder on LinkedIn. A founder of a failed company's going to give you a lot more information on an investor than a founder of a company that's doing well.

Paige: Totally.

Elizabeth: How an investor acts during a bad situation is probably more telling than anything.

Paige: Yeah.

Kavitta: Thank you. Yeah That's actually really good. I'm gonna do that.

Paige: Cool.

Charles: Thank you so much.

[thank yous etc]

Kavitta: This was awesome.

Cyan: Right. Well, you're awesome.

Kavitta: Thank you. Very excited to work with you all.

Paige: Likewise.

Kavitta: All right. I'll talk to you guys -

[byes and thanks]

[applause]

Mac: Play the clap track.

Elizabeth: It's like a football game

Paige: I love that.

Cyan: I love that too.

Charles: Yeah.

Josh: You guys were like waiting on bated breath for her to say - finish every single answer to your questions.

Mac: Because she had good answers.

Josh: We've only ever had ed tech companies come on the show and completely fail. So we were psyched when we met her. We were like, there's something different about this one.

Paige: It's cool. I - one of the things that like really stood out for me was I worked at a company before called Work West* and it's like a compliance API, basically. They do like SSO and directory sync and like the integrations she's talking about with the learning management systems that she's built were like super impressive. Like, those are so hard to build. And learning management systems in specific are like very challenging to integrate with, so the fact that she could go through like all the compliance, she did a thousand customer interviews, like she really knew what product to build and sounds like built it well and proved efficacy, so.

Cyan: Very crafty lead gen. Very crafty.

Josh: Yeah.

Mac: And also, the only time I ever get interested in ed tech is if I ask you, tell me about your sales cycle and you can tell me [snaps] - she knew it right off the bat. She knew all her numbers, she knew where to start, she knew how to sell, she knew why they would like it, she knew why they wouldn't like it. You don't see that every day in founders.

Josh: Yeah.

Mac: And the interesting part is when she started her story, she started her story saying I'm somebody who struggles learning. Like, she was vulnerable and she led with I struggle with learning. And then knocked our socks off with all the things she's done and learned.

[agreeing laughter]

Mac: Right. She's worked harder than your average person, and this means so much to her that she was going to put in that work.

Josh: Yeah.

Mac: I invest in dope founders. That is a dope founder.

Cyan: That is a dope founder.

Paige: That is a dope founder.

Cyan: That is the definition of a dope founder.

A dope founder indeed. Alright, this is 2026 Josh Muccio again. Back to the future.After the pitch, Kavitta ended up raising $1.45M from the investors in the pitch room - with Cyan at Long Journey leading the round. Charles Hudson, Paige Finn Doherty and The Pitch Fund also participated. And listeners invested $207,000 through a syndicate. In total Kavitta raised a 4m seed round that was not flat. And then it was time for Nectir to take on the world. What happened next after this……..

BREAK

Welcome back.

It’s 2024, Kavitta had just raised 4 million dollars. She had a few small pilots with individual schools,

But she wanted to go after a whale of a contract. The entire California Community Colleges system. CCC for short. 116 Schools, 2.1M students, 40,000 faculty. And she wanted them all using Nectir’s new product, an AI course assistant.

She told Lisa about it at the end of 2024 on one of their quarterly check in calls for The Pitch Fund.

Kavitta: Three years ago, I told Jordan and the team, I want this deal with the California Community College System. It is the largest school system in the world. I'm gonna make it happen. And our board was like, please don't chase this large deal. Like they've never done it before. It's so hard to get, like, just focus on the smaller schools. And I did, I focused on the smaller schools, but in my free time I was like, I'm going to get this deal. I, I just know I am. And when I say I'm gonna do something, you know, I will do the thing.

Lisa: Yeah. Yeah.

Kavitta: And so I, got the deal.

And by got the deal, she means, she got the pilot with the CCC. Her pitch to them went like this. California should be the first state to safely adopt AI for all its students. And community colleges — not Ivy Leagues — should get the technology first. The CCC said, let’s do it.

Kavitta: We're doing about 10 to 15 schools, about 50 to 60 classes, and we're gonna measure, does it have the same, you know, 20% boost of GPA, 36% boost of intrinsic motivation to learn. If we can show the same results that we've been getting at other schools. Then we'd be looking at the first statewide deal that we'd get done.

Lisa: Wow.

Kavitta: And that would be just a complete game changer. California would essentially set precedent for every other state in the US to start adopting AI technology in the classroom at a really widespread, immediate scale.

Lisa: Okay. What is the thing that scares you right now? Or is like, feels like the biggest hurdle or challenge that you have to get over?

Kavitta: I think it's on the flip side of that. The blind faith that you have to have, that all of these things are just gonna work out.

Lisa: Yeah.

Kavitta: Like if this deal does come to fruition, how the hell am I gonna hire like a hundred people overnight to make this come to life? What is that going to look like when the time comes?

Lisa: Yeah.

Kavitta: Will the time come? Is everything gonna work out the way that I want it to?

Lisa: Yeah.

Kavitta: I don't wanna sell a pipe dream to my investors. I want to be honest with you guys about what's happening and also the fact that this all sounds great, but a lot of things have to come to life for the entire picture to appear.

Kavitta: I have had all of the odds stacked against me in every way, shape and form. Like why would someone trust a 27-year-old who started this company and has never done anything else in their life to be able to put an AI tool across the entire state of California? But I believe in myself and I believe in my team, and I know that we have gotten here one way or another, and we will get to where we need to be. The same way we did this. So it'll all work out, but you just sometimes have to have like an insane, a truly delusional amount of faith.

While Kavitta was having existential dread about the future, the pilot ended up going even better than they hoped. Instead of the 50-60 faculty they had planned for, 300 faculty and 8,000 students signed up. And a few months later, they got the results.

Kavitta: we got pretty the same standard, 13% increase in GPA in the class that used Nectir AI versus the one that didn't. But what I think is even crazier is we raised the number of students passing the class by 17%.

Lisa: Wow.

Kavitta: So there's 17% more students who will not have to pay to retake that class that happened just because we gave them an AI course assistant.

Those results were good enough to land them a meeting with the CCC. Where they talked about potentially converting to a full blown contract for the fall. Which would be unprecedented. School systems sign deals with Google and Adobe, not with startups. But if it worked, the deal would be huge.

Kavitta: 116 schools, 2 million students. // Part of me is like, how the hell do we hire enough people to manage that, and how do we onboard 2 million students? And then the other part of me is like, oh my God, we would become a billion dollar company overnight.

In November 2025 Lisa and I sat down with Kavitta to get the rest of the story. To get this deal done, she needed to present the plan to the CCC Board of Governors.

Kavitta: This is a huge, like, this is like recorded, televised to the state of California. It's a big deal.

Josh: Tell me you were nervous.

Kavitta: Oh, oh yeah. Oh, you guys know this, that I love doing presentations. Public speaking is my bread and butter. This one, I was nervous for sure.

Unnamed speaker: Ok at this point in time we’ll invite Kavitta and Professor Guerrero.

Kavitta: Good afternoon everyone, thank you so much for having me here today. My name is Kavitta Ghai and I am the founder and CEO at Nectir. I’m a first generation student, and on top of that, lucky me, I’m autistic and I also have ADHD. So no classroom that I’ve ever been in before in my life has felt comfortable for me or my brain to be in. And then I got to UCSB, and I started paying $40,000 a year to be really uncomfortable, and that’s finally when it became enough of a pain point for me that I said, either I’m going to drop out or I’m gonna do something about it. And I’m very very happy I chose the latter choice. Next slide please.

Kavitta: And then had to literally leave from the Board of Governors meeting, pick up my bags from my apartment, go straight to LAX. Like I was not even in LA for a full 24 hours. 'cause I had to get back to New York that night for VC meetings the next morning with a bunch of Series A investors. It was an absolutely insane time.

Lisa: Bah

Josh: Bah?

Kavitta: We…

Lisa: Bah. It sounds terrible.

Kavitta: Exactly. So I send over this huge proposal, like the whole team worked on. I actually can't take credit at all for the proposal. My team spent so much time on it, and there's no timeline. Like we don't know when they're gonna say yes or no. Like we have no idea. We just have to sit there and twiddle our thumbs. And wait.

Josh: Did anyone on your team say Kavitta, like, like,

Kavitta: This is crazy?

Josh: Reign it back in? Or The VCs?

Lisa: Yeah.

Josh: Like the people on your board, like

Lisa: Yes.

Josh: At some point, like hey.

Kavitta: Yeah.

Josh: Can we talk?

Kavitta: Totally. Every single person on our cap table that I talked to,

Josh: What were they saying to you?

Kavitta: Every VC was like, are you sure you can do this? Because this is make or break, right? It's, we've gotta make the best first impression possible because it's, the whole world is watching us right now. This is truly the first time that AI has been deployed at this level with the leading state. If we screwed this up, this was not just gonna affect us. It was gonna affect students everywhere and how quickly they get access to this technology. And so there was a lot riding on this.

Josh: // But then you started going to actually pitch VCs to raise your Series A, even though you didn't have a contract. No revenue yet.

Kavitta: Yep.

Josh: Tell me about that decision, like how much runway did you have left?

Kavitta: Yeah, we basically said there's gonna be two scenarios that happen. Either I go and start raising this round and we don't get the contract and we'll probably have to do, you know, a seed extension or just an emergency bridge to get us to the next milestone to be able to raise a round. Or everything works out in the best way possible. And we're able to go raise the most kick ass series A ever.

Josh: Okay. But those conversations had to be so strange because you’re talking about a theoretical round.

Kavitta: Right.

Josh:. Because they're not gonna, they can't give you a term sheet.

Kavitta: Exactly.

Josh: 'cause they need to know what's happening with the CCC. But like, you went out to New York, so like

Kavitta: oh yeah.

Josh: There's like a, a disconnect there. Like how are you actually pitching VCs?

Kavitta: It was a leap of faith for sure. And I think the key here is. I am really good at raising money and I know how to craft the narrative, and I also know how long it's gonna take. And so I…

Josh: This is not the same Kavitta Ghai that was on our show that thought she was gonna have to raise a flat round.

Kavitta: Yep, exactly. I went into it just saying. I believe in this. I know that we're gonna get this contract signed and I get there and start having all of these meetings with some of these folks I've been talking to for like three or four years. Like people I would dream of having on the cap table. This is the first time I'm ever raising around in person other than on The Pitch Show. And I've gotta tell you guys, that was actually why I went to New York because I realized on the pitch show there is such a difference being in person. The energy that you can feel, the way that they can see and feel, my authenticity, like, oh shit, she really is gonna go do the damn thing.

Josh: Yeah

Lisa: Yeah.

Kavitta: I knew I needed to replicate that magic again. So I went there to basically make my own Pitch Show. We had three VCs who were interested in leading, and we had 12 million soft circled from smaller checks and follow-ons. //

Josh: Alright. // Here we are. It's November 2025. Do you have a contract?

Kavitta: I do. //

Josh & Lisa: Yes!

Kavitta: With the largest school system in the world. The California Community Colleges. 116 schools, 2.1 million students, 40,000 faculty, and I am just so, so pumped. This is like the craziest thing that I could have ever dreamed of, and I can't believe we're here.

Lisa: Yeah.

Josh: Oh my word.

Lisa: I love it.

Josh: Congratulations.

Kavitta: Thank you so much. It has been a long

Josh: So massive

Kavitta: Long time coming.

Josh: Can you say how big the contract is?

Kavitta: How can I hint at this?

Josh: I mean, it's 2.1 million students.

Kavitta: Yeah.

Josh: It's not free.

Kavitta: It is certainly not free. Um. Ahem. I'll give you this. My VP of business development has 20 years of enterprise sales experience. This is the largest deal she's ever seen.

Lisa: There you go.

Kavitta: Yeah.

Josh: Brilliant. Perfect. //

Kavitta: I’m getting revenue. Finally

Josh: Customers!

Kavitta: If we didn't have the contract, we would do 3X year over year growth in revenue.

Josh: Mm-hmm.

Kavitta: Which, that's okay, but it's certainly not enough to go raise a Series A. With the contract we did 18X year over year growth.

Josh: Oh geez.

Kavitta: And that is enough to go raise a Series A.

Josh: Where do you go from here? You just got the biggest contract you could get. You're the person who's gonna go after the biggest, craziest contract.

Kavitta: Yep.

Josh: What do you do now?

Kavitta: One state down 49 to go

Lisa: Ahhhh

Kavitta: I'm gonna go get the entire nation using Nectir AI and you guys are gonna have a fun time watching me do it.

Lisa: Awesome.

Josh: You are the outlier. how do you feel like

LIsa: yeah!

Josh: This is the outlier all these VCs are hunting for. It is you.

Kavitta: Fucking amazing. Oh my God. It's the best goddamn feeling I've ever had in my life. Holy shit. A 28-year-old first time founder, woman of color, didn't even go to business school. I have no idea how the fuck I'm sitting here doing this right now. Not a goddamn clue.

Josh: I'm gonna go bench press 400 pounds, let's goooo

Lisa: Stop.

Kavitta: Yes. Exactly. That is literally, that is exactly what it feels like. This is why I don't need coffee, you guys, because every single day is an adrenaline rush. All day long.

Lisa: Oh my gosh. That's hilarious.

Kavitta: Yeah.

Josh: Just so happy to be on this journey with you.

Kavitta: Me too. 

Josh: I do have one regret though

Kavitta: Which is?

Josh: I wish we would've invested more in your company.

Kavitta: Well, series A is still open….

Kavitta: I saw this on the calendar and I was like, what are the chances? that we would have our check-in.

Lisa: I know.

Kavitta: The day after series A closes. 

Lisa: Yay.

Kavitta: Yay. We did it. Oh my God. I can't believe it

Lisa: Congratulations.

Kavitta: Thank you. Thank you so much. It's a crazy feeling.

Lisa: I bet. Tell me plainly, how much did you raise and at what terms?

Kavitta: We raised 12 and a half million dollars. We are bringing on three new investors on top of all the follow-ons, Gingerbread VC, Strata, and ECMC. All of the people that we brought in, these are relationships that I've been building for years, truly, that's what it takes.

Lisa: Congratulations.

Kavitta: Thank you. I'm so excited. Everyone keeps texting and asking, how are you celebrating? What are you gonna do? And I'm like. I haven't even processed that this has even happened. I have no idea.

Lisa: That's awesome. Aw

Kavitta: Yeah.

Kavitta: it just feels really good to be at this place where we know that we have a product that really works. It really helps students. It's increasing their GPA. It's getting them to stay in class longer. It's actually boosting their motivation to learn. So instead of all of this that you hear about AI taking away your critical thinking skills, for us, we have proof that it's doing the exact opposite, which is amazing.

Lisa: Love that.

Kavitta: And it just makes me feel really good that at this time where I think the world is pretty afraid of AI and what it's gonna do to us and our humanity, we found a way to really harness this for good and create the product that students and teachers really need.

Lisa: Yeah.

Kavitta: So I'm excited for the future. I'm really excited for where AI takes all of us, and seeing companies like Nectir who are doing the right thing and building this technology in the right way gives me hope that it's not just us. …

Josh: I forgot how dynamic of a founder she is.

Lisa: How could you forget that?

Josh: I don't know. It's been a while since I've listened to her episode.

Lisa: Yeah.

Josh: But. Even then when she like came on the show, it was like she was coming into her own.

Lisa: Yeah.

Josh: But it feels like now

Lisa: She's in her own.

Josh: It's definitely infectious.

Lisa: I've just reminded on how impactful her pitch episode was. People wrote in about, you know, my kid’s neurodivergent and this means so much to me, and as parents of a neurodivergent kid

Josh: mm-hmm.

Lisa: Makes me, makes me wanna cry.

Josh: Mm-hmm.

Lisa: Because the world feels like such a difficult place for someone who's neurodivergent and I think Kavitta represents hope.

Josh: Mm-hmm.

Lisa: And I think what she's built really does help level the playing field.

Josh: Mm-hmm.

Lisa: And when it feels like you or your kid is like constantly hitting a brick wall. Or being told like, you don't fit here.

Josh: Yeah

Lisa: You don't belong here. Like, hope is really powerful.

Josh: Yeah. It is.

Lisa: It's not just the product that she's built that is so amazing, for someone who's neurodivergent, but also it's her.

Josh: Yeah. I heard Cyan and the team at Long Journey talk about how like there are people were like on this earth to do a thing, like it is their life's calling to build this company.

Lisa: Mm-hmm.

Josh: Whenever I hear that concept, I think of Kavitta.

Lisa: Yeah.

Josh: I think I'm really starting to believe Kavitta, like fully, you know what I mean? You, like, you, you have to believe it as a founder, but everyone else has to kind of take it with a grain of salt.

Lisa: You get it.

Josh: Yeah. I don't need a grain of salt anymore.

Lisa: You're drinking the Kool-Aid too?

Josh: Drinking the Kool. Oh gosh. So many metaphors, Kool-Aid and salt.

Lisa: Ew.

Josh: It's an electrolyte.

Lisa: Oh my gosh.

Josh: That's what it is, anyway. Holy crap. Could that be our outlier in Fund I?

Lisa: Yeah, it really, it really could.

We decided to follow on and wrote another check out of The Pitch Fund I, for $218k alongside Long Journey and Precursor Ventures. It’s our first follow on check in a Series A round.

But to be clear the round is now closed, no offer to invest in Nectir AI is being made to the listening audience on today’s show. But you can invest in the next Kavitta by becoming an LP in The Pitch Fund. We’re raising Fund II now. Learn more at thepitch.fund

–

This episode was made by me, Josh Muccio, Lisa Muccio, Anna Ladd, and Enoch Kim. With deal sourcing by Peter Liu, John Alvarez, and Phoebe Sun.

Music in this episode is by Breakmaster Cylinder, The Muse Maker, Boxwood Orchestra, Joya, Our Many Stars, Carey Haynes, Memory Fields, and Kevin J. Simon.

The Pitch is made in partnership with the Vox Media Podcast Network.