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XEncantos' Plans for a More Diverse Future of EdTech
Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

When Noramay Cadena opened the bilingual children's books she had been gifted after she gave birth to her son last year, she was quickly taken back to her own childhood in Mexico. The book featured a Spanish-language lullaby, "The Pin Pon Song", about a cute cardboard doll, which Cadena described as both extremely silly and culturally significant.
"That's when I knew this was content that was by the community, for the community," she said. "As a user, I was really blown away by how they combined entertainment with education." She also thought the quality of the books was far higher than what she'd expect from what was then an early-stage startup based in L.A.
That would be Encantos, a publishing firm-turned-content house set on becoming the next big thing in edtech.
In addition to being a mother, Cadena is also an investor. In 2015, she co-founded L.A.-based MiLA Capital, a seed-stage firm "that invests in tech you can touch." Smitten by the Encantos product, she was disappointed that the company didn't align with her fund's focus on tangible products. But earlier this month, after Encantos decided to extend its seed round, another fund Cadena helps lead – Portfolia – was able to get in on the action through its Raising America Fund, which is devoted to people of color and LGBTQ founders, along with companies that serve those populations.
Encantos, which raised over $2 million in February to expand its brands and product mix, recently launched its subscription app, which chief executive Steven Wolfe Pereira told dot.LA will lead the company's shift toward a "direct-to-learner" platform. Encantos extended that seed round to take advantage of the increased demand for edtech that's combined with kids and family entertainment, Wolfe Pereira said. He added that the company is at 120% of its fundraising goal and still waiting for a few investors to confirm their check amounts before the round closes in September.
"We believe we're building the most important, impactful and beloved entertainment edtech company on the planet," he said.
Cadena is bullish as well. "I see this brand becoming a billion-dollar business," she said.
Encantos' leaders and investors point to three factors they think will help it get there.
The Right Recipe of Entertainment, Education and Technology
"We start with character and story," said Encantos Chief Creative Officer Susie Jaramillo, who co-founded the company with Wolfe Pereira after becoming a mom and quickly recognizing the dearth of Latinx-oriented children's content. She took two years off "to literally just draw," and designed Encantos' flagship brand: Canticos, about three little chickens. Those pollitas – which stem from another beloved Spanish-lanugage lullaby – evolved from a children's board book to Emmy-nominated Nick Jr. television show.
"If you don't have a strong character and a strong story, you have nothing," she said. The growth of Canticos established the playbook for Encantos to build out its other brands.
The educational component follows the story, Jaramillo said. Her colleagues in charge of the learning design look at the story and characters. They then decide what skills it lends itself to, and strategize how to incorporate those skills and stories into lessons across the company's products.
"It's not a counting story every time," Jaramillo said. "It's problem-solving, creative thinking, skills that will help you in the workplace. We make sure we're checking the box on (a range of) character traits (across our suite of stories and products)."
Then comes the tech, namely in the form of the recently launched subscription app, which Wolfe Pereira said has over 200,000 subscribers so far. The hope is that as kids engage with the app and the various stories and characters over time, the company will be able to develop a "learning graph" personalized for each user.
"If we do this right, we can take the wonderful data visualization that exists in enterprise or consumer products like the Apple Watch and understand each kid's learning journey over time," Wolfe Pereira said.
Courtesy of Encantos
A Range of Physical and Digital Products
Along with shows like "Canticos", Encantos offers a variety of physical products including books, toys and games, in addition to its subscription app. This diversity of products is key to its strategy: according to a company pitch deck shared with dot.LA, the digital products are meant to drive revenue, while the books and other physical products build loyalty.
Marlon Nichols, partner at L.A.-based MaC Venture Capital, which has invested in Encantos, likes how "they have a number of monetization schemes and strategies and models that all center around a theme of creating high-quality children's content."
Cadena also points to the range of ages that the company can serve as a big draw, from both a user's and investor's perspective. Encantos is aiming to design products for kids aged 0-2, 3-5, 6-8 and 9-12.
"There's no single company that owns a portfolio of products that appeal to kids throughout all these phases of childhood," Portfolia wrote in its press release about the recent investment.
Building on Cultural and Demographic Trends
Wolfe Pereira says the growing generation of millennial parents want more culturally relevant, useful education for their kids. He looks at the fact that Latinx characters appear in about 5% of childrens' books even though Latinx youth comprise over 25% of the U.S. population under 16 – and how their parents' purchasing power is growing. Wolfe Pereira also sees the pandemic driving up homeschooling, remote learning and video streaming, as well as the value of animated content — which is safer for studios to produce in a pandemic. These trends lead him to conclude that "we check all the boxes in an interesting way."
Jaramillo pointed to the growth of the Black Lives Matter movement as further evidence that the demand for new, diverse characters is here to stay.
Encantos' next brand, Issa, is slated to launch on "a major streamer," probably in late 2021, according to Aliya LeeKong, who created the character whose magic cookbooks help her to travel the world to share food and culture with new friends. LeeKong said Issa was inspired by a realization she had, when she had her own daughter, that there were few places for children to learn about food and nutrition, and even fewer children's characters who looked like her kid.
Encantos' diversity permeates its leaders and investors. As a public benefit corporation, it is beholden to stakeholder value, not just shareholders. Cadena says this authentic incorporation of diverse perspectives at the highest level enables content and products that other, less diverse funders and executives might overlook – like her old lullaby buddy, the cardboard doll who goes by the name of Pin Pon.
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Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake
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LA Tech ‘Moves’: LeaseLock, Visgenx, PlayVS and Pressed Juicery Gains New CEOs
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
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LeaseLock, a lease insurance and financial technology provider for the rental housing industry named Janine Steiner Jovanovic as chief executive officer. Prior to this role, Steiner Jovanovic served as the former EVP of Asset Optimization at RealPage.
Esports platform PlayVS hired EverFi co-founder and seasoned business leader Jon Chapman as the company’s chief executive officer.
Biotechnology company Visgenx appointed William Pedranti, J.D. as chief executive officer. Before joining, Mr. Pedranti was a partner with PENG Life Science Ventures.
Pressed Juicery, the leading cold-pressed juice and functional wellness brand welcomed Justin Nedelman as chief executive officer. His prior roles include chief real estate officer of FAT Brands Inc. and co-founder of Eureka! Restaurant Group.
Michael G. Vicari joined liquid biopsy company Nucleix as chief commercial officer. Vicari served as senior vice president of Sales at GRAIL, Inc.
Full-service performance marketing agency Allied Global Marketing promoted Erin Corbett to executive vice president of global partnership and marketing. Prior to joining Allied, Corbett's experience included senior marketing roles at Disney, Warner Bros. Studios, Harrah's Entertainment and Imagi Animation Studios.
Nuvve, a vehicle-to-grid technology company tapped student transportation and automotive sales and marketing executive David Bercik to lead the K-12 student transportation division.
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
This Week in ‘Raises’: Curri Scoops Up $42M, Mosaic Scores $26M
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
A local logistics platform raised fresh funding to put toward product development, infrastructure and sales and marketing initiatives, while a San Diego-based fintech company closed its Series C funding round to expand its investment in AI which will empower high-growth SMB and mid-market finance leaders.
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Venture Capital
Curri, a Ventura-based logistics platform, raised a $42 million Series B funding round led by Bessemer Venture Partners.
San Diego-based financial platform Mosaic raised a $26 million Series C funding round led by OMERS Ventures.
AHARA, a Los Angeles-based startup focused on providing personalized nutrition suggestions, raised a $10.25 million seed funding round led by Greycroft.
Per an SEC filing, San Diego-based developer of peptide therapeutics designed to assist in the treatment of autoimmune diseases and disorders selectIon raised $5 million in funding.
Miscellaneous
Los Angeles-based Sensydia, a company working on non-invasive cardiac diagnostics, said this morning that it has received $3 million in a NIH grant.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Decerry Donato (decerrydonato@dot.la).
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Why a Downturn in Esports Investments Isn’t Something To Fear
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
Last year, global venture capital investment in esports dropped by more than 40%. Investors have been rapidly selling off teams and franchises, and the industry has witnessed a consistent decline in ad spend. This has prompted many critics to coin the term “esports winter,” referring to a fall-off in the industry, an indication that VCs believe their investments didn’t achieve success as expected.
A recent article in The New York Times highlighted two major esports leagues that recently divested from their teams: Madison Square Garden sold its team CounterLogic Gaming to NRG in April, while Team SoloMid sold its League of Legends Championship Series team in late May.
Arguing that the industry still has potential for growth, several gaming executives at a LA Tech Week panel said that instead of an “esports winter,” the industry was experiencing a period of “normalization.” The panel at SoHo House in West Hollywood featured Brian Anderson, CEO of Culver City-based esports outfit FlyQuest Sport, Gene Chorba, head of developer relations at Roku and Felix LaHaye, founder of United Esports.
“I'm actually very skeptical of the claim of an esports winter,” Anderson said. “I think that what I'm seeing in the market right now, ultimately, is just a lot of venture capital firms that deployed capital into the eSports space that are not generating the returns that they were looking for, and have now done the press junket and are labeling it an esports winter.”
“In reality,” Anderson said, “esports, in my view, is alive and well.”
Anderson said there were a lot of “unrealistic expectations” around esports since it became popular in 2016, and the current decline was a sign that the market was correcting itself. “This is a necessary pain point that any nascent industry is going to go through as it matures and develops, and I think that in, let's say, 24 months, 36 months, esports will be in a much better financially sustainable place,” he said.
“I think we're having a little bit of a normalization,” Chorba said. “We saw the entire economy was being shot to the moon, with nothing behind it… we were seeing valuations of companies, public and private, that just didn't make sense for what they were building.”
Other tech industries have experienced a similar “normalization” in recent years. Cryptocurrencies, NFTs and big tech have all seen a downturn in recent months after being flooded with VC interest for many years.
According to the panelists, the existing viewer base for esports was a clear sign that the industry still had potential for growth. “There's still a ton of attention on professional video games. There's still so much grassroots fan support,” Anderson said. “As long as organizations and developers are able to figure out how to actually monetize that fan base, I think esports is still alive and well and here to stay for a long time.”
According to Insider Intelligence in 2022, there were 532 million esports viewers globally, with nearly 30 million viewers in the U.S.; this is expected to increase to 34.8 million by 2026.
Chorba explained that the reduction in ad spend and brand deals in esports shouldn’t worry investors because these crucial revenue streams have slowed down for other industries as well. “Ad-supported is hemorrhaging money and really just trying to wait out what's really a bad economy right now,” he said. As more people stop paying for cable, Chorba said, eyeballs will move onto streaming sites like YouTube or Twitch to watch gaming content.
LaHaye and Chorba said that one of the reasons for the decline in esports investments could be that executives and VCs are running esports companies like tech or SaaS companies. “As a matter of fact, they are not tech companies. They are ad-supported entertainment products,” LaHaye said.
By taking their companies to IPOs too early, certain esports companies ruined their chances in the market, LaHaye added. “There's also a downswing that's done by a rush to [go] public,” he said. “There are some fairly poor business models in esports that are going through a rougher time.”
“[Game publishing] is a hit-making business,” LaHaye said. “I think there tends to be confusion between what is a fundamental issue for the esports industry itself and some business models within the esports industry being bad business.”
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Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.