This week, we shared the news of Oak HC/FT investing in Stepful, an AI-powered education platform that trains and certifies allied health professionals to help address the staffing shortage in hospitals and health systems across the U.S. We are humbled that Carl, Tressia and Edo chose our firm to lead their Series B. The Stepful team’s mission-driven focus is a large part of what makes us so excited to have them as a part of the portfolio, in addition to their incredibly capital efficient growth to date.
Stepful’s platform has two core functions 1) training first-time healthcare workers for roles like medical assistants, phlebotomists and pharmacy technicians and 2) upskilling current allied health professionals into surgical techs and licensed practical nurses. While there are other trade schools and community college programs for these audiences, Stepful is meaningfully different with respect to duration, cost and post-program placement.
Other schools for medical assistants can cost up to $10,000 and take 7-12 months to complete. The Stepful medical assistant program is a fraction of the cost and can be completed in about 4 months. This level of efficiency is possible because Stepful is a vertically integrated edtech platform that leverages GenAI for (i) content creation, (ii) student engagement, (ii) educator support and (iv) career services personalization. The company’s proprietary learning management system is designed to deliver high-quality content, in synchronous and asynchronous formats, to make the program more accessible for a broader set of prospective students, as demonstrated by their market leading graduation and job placement rates.
At the end of the Stepful training, students walk out as well-trained as if they had completed a community college program - but with one clear advantage. Stepful has partnerships with more than 8,000 health systems and clinic partners where they place their students in externships (and ultimately full-time jobs) at the end of their program. The company boasts a full-time job-placement rate of +60% within 2 months, +75% within 4 months, and +90% within 6 months. This classroom-to-job pathway is a clear market differentiator for the company and has been a huge driver in their growth story - going from 50 students in 2021 to more than 30,000 in 2024.
When we met the Stepful team, we were impressed by Carl, Tressia and Edo’s shared focus of wanting to improve the lives of people living in historically underserved communities. Carl spent time at Handy and Uber managing operations and market expansion. Tressia was formerly at Udacity and Oliver Wyman as a product lead and consultant, and Edo spent nearly 10 years at Apple as a software engineer on the Siri team. The trio impressed our team on a few fronts. Beyond their desire to create impact in communities that need it most and alignment with our point-of-view on impact investing, they have a particularly unique approach to building and growing marketplaces. Their experience building and scaling these types of businesses rapidly, while still being mindful of customer acquisition cost, is something really special in such a young team.
They are also the embodiment of customer obsession. Carl and team talk passionately about NPS and the importance of understanding their end user. When Carl and team thought about the single mom working two jobs who wants to start a career as a medical assistant, they thought about designing a product that could be consumed in small bites, during down time between life’s very real tasks, in a way where quality was not compromised. This customer passion is delivering business results. Stepful has an NPS of +80 and the approach to flexible learning results in a 75% program completion rate, compared to just 40% for community colleges.
In a market with a high turnover rate, creating this type of employment pipeline is a differentiator for hospital and health system human resource teams. The allied healthcare workforce represents 60% of healthcare professionals in the U.S., growing faster than any other segment. This category of workers also experiences 15-25% annual turnover. We’ve seen the need for continued improvement in allied healthcare training and employee retention throughout our care delivery portfolio, too.
HR teams at health systems and hospitals are increasingly turning to Stepful to help them build out their medical assistant pipeline, as well as help them upskill their existing workforce. These customers can leverage existing state grants or other tuition assistance programs to upskill entry level technicians (at a lower cost than hiring externally) and backfill these roles with externships from the Stepful MA program. The Stepful team intends to use the Series B investment to build out these B2B relationships with health systems and hospitals, and we look forward to helping connect them to the systems and hospitals with the greatest need.
When we think about investing at Oak, we focus on a number of factors, including where we can add unique or outsized value to the founding team. There are a number of ways we do this, including supporting talent development, helping think through strategic M&A or serving on boards to help guide strategy.
With Stepful, we had a specific perspective on how we could be helpful to Carl, Tressia and Edo. Stepful, at its core, is an edtech platform that is selling into healthcare institutions. We are not edtech investors - but we do know healthcare. Our unique value to this team is our connectivity in the space and our ability to help them navigate complex regulatory and organizational challenges based on our experience and network depth.
Because we bring this to bear for our founders, we are able to think more expansively about investing beyond what some may consider the traditional bounds of healthcare and fintech. With this orientation, we can think about investing in companies that target the institutional healthcare and financial services industries as customers, regardless of the core “classification” of their business. Oak can add value to these startups because of our depth of knowledge in these highly regulated, complex spaces. And help our founders navigate them with a level of experience and confidence that they might not get from a more traditional tech investor.
We are thrilled to have Stepful as a part of the portfolio and think they will make a meaningful impact solving one of the most pressing challenges in the healthcare world right now - the clinical worker supply shortage.