Heather Hiles founded ed tech company Pathbrite in 2008 before selling it to one of her investors in 2015. From there she went on to found Imminent Equity, a venture capital fund dedicated to nurturing entrepreneurs. Here, she talks raising money, selling her company, and Silicon Valley's diversity problem.
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.