Bringing Tech Innovation To The Education Space

Teachers have a lot to deal with, but collecting money, managing funds and reconciling expenses may no longer have to be tasks added to their lists. Neil Steinhardt, President of ClassWallet, sat down with PYMNTS to discuss why taking a digital approach to educational spending is making a difference for both educators and administrators looking to use discretionary funds without the burden of disbursing and tracking every cent.

PYMNTS: How does the ClassWallet technology work? 

NS: We built a platform that makes it easy to fund teachers, or users, as we have expanded a little bit out of education. Basically, we work with funders, people that give money to teachers, to track the discretionary spend, and we do that by creating a digital wallet for the users and combining that with our eCommerce platform. We have about 45 vendors available on the eCommerce platform, such as Amazon, Best Buy and Scholastic. The vendors accept ClassWallet as a form of payment. So while our users can shop on their site, they actually checkout from ClassWallet, and then we provide the funders line item reconciliation of how those funds were spent.

PYMNTS: What was the inspiration behind ClassWallet? Can you talk a little bit about the journey from concept to platform launch?

NS: My partner is Jamie Rosenberg, and about 15 years ago he founded a company called AdoptAClassroom.org, the largest social philanthropist platform, to make it easy to fund teachers and out of that concept grew ClassWallet. I met Jamie while I was managing director of Skrill USA and really loved what we were doing. We had a meeting of minds, and I joined Jaime. Now we are taking ClassWallet to a broader and wider audience.

PYMNTS: ClassWallet recently closed a round of seed funding that brought in $1.9 million. Can you tell us about how you’re going to spend that money? 

NS: A lot of it is going to fund our operations; we are also spending on a platform rewrite and scaling our marketing efforts. That seed round was actually pretty interesting. We graduated from the Kaplan TechStars Accelerator, so we have some venture funding from Kaplan Ventures as well as NewSchools Venture Fund. We have been expanding a little further, so we received some pretty important EdTech and FinTech angel investors as well.

PYMNTS: You’re dealing with the education system, and that is a system known for being notoriously strapped for cash. How do you think ClassWallet can succeed in a financially challenged space?

NS: Education is a huge market, and it’s a very fragmented market. Where we attack is the discretionary spending. For example, the discretionary spend for student activities could fall between $600 and $700 a year, while parent philanthropy is probably about $18 billion a year. When you look at discretionary funds compared to the overall budget, it is actually kind of small. When speaking with school administrators, the discretionary area may be the smallest part of their budget, but it actually creates the biggest pain to reconcile.

Typically, the actual class wallet is very often your child’s backpack. The teacher might request funds, and you then put the money in the backpack to send to school. The teacher must then take those funds to the office, the office has to book it, put it in the bank and then the teacher has to spend it. It’s a very time-consuming process.

There was a study at Arizona State University that showed these single payment transactions generally have about $100 to $200 worth of costs associated with them. Some of these costs are borne by the teacher while some is borne by the administration, but no matter if it is a check request, a purchase order request or a teacher spending and asking to get reimbursed, there are a lot of parties involved in the transaction. ClassWallet digitizes the entire experience, taking a very costly transaction and making it almost free, while shortening the time period from weeks down to hours.