You only have to type in “lack of female coders” into Google to get 1.4 million results that will provide affirmation that this statement is in fact a “fact.” Unfortunately, when it comes to careers in the STEM (Science, Technology, Engineering, Math) field, we have a significant disparity between male and female participation.

This should be an ongoing concern for all of us, because that largely means that most of our future technology will be dictated by a set of viewpoints that only represent about half the population. I for one, am not comfortable with this, and think we deserve better.

However, before we all go jumping to point fingers at the Uber’s and Amazon’s of the world to fix this issue, we should realize that this is a much deeper rooted problem that starts in childhood development.

The reality is many young ladies start losing interest in STEM around the age of 11. A recent study conducted by Microsoft in partnership with KRC Research found one of the main drivers of this loss of interest in STEM to be related to a lack of educational resources that engage females in the right way.

If this is indeed a fundamental issue that causes females to lose interest in pursuing educations and careers in STEM, then we can fix this issue by providing them with educational solutions that they do find engaging. That is where our latest startup recommendation comes into “play,” quite literally.

SmartGurlz wants to provide a solution to this insidious problem of females losing interest in STEM fields at a very young age. SmartGurlz aims to fill a gap in the ed-tech coding market that reaches young ladies with a set of educational toys that promote coding in a way that is engaging and exciting to this specific demographic.

The team has built a hardware and software platform that enables girls to begin coding in 60 seconds through interactive verbal-emotive exercises and games that promote step-by-step coding exercises with stories to go with it. SugarCoded, the app that comes with the hardware provides ebooks, and tutorials that players can take at their own pace.

Remember how we mentioned this issue that many young ladies will lose interest in STEM around the age of 11, because they find educational solutions to not engage them? SmartGurlz has followed research that has indicated that young ladies are more likely to interact well with play patterns that include elements such as creativity, stories, and cooperation (in place of competition). The constructive games and missions allow users to learn about coding in an environment that promotes exploration of coding through story.

This product is a brilliant idea that has shown early signals of product-market fit with revenues growing 620% in 2017 to $765,000. Though some of this by all means comes from the Shark Tank appearance, you can be sure that future growth will continue to be fueled through established distribution channels including Walmart, Amazon and Learning Express.

1. Significant Ed-Tech toy tailwinds: Never has there been a time in history when parents were more engaged and willing to purchase edtech toys for their children than now. Be it the Baby Einstein toy series or other “smart” toys, the market for providing educational toys for children is on-trend. Technavio pegs the global edtech toy market at a 10% CAGR through 2021. That’s why there has never been a better time for more niche toy providers like SmartGurlz to come into this market to provide a solution that both meets a growing need, while also meeting the buying patterns of modern-day parents.
2. Platform approach: SmartGurlz is approaching the market with a sustainable and recurring revenue model by developing an app program that girls can subscribe to, which provides access to more AR games tied to the first robotic purchase. Finding ways to keep their hardware production cost low, while ramping up software development to provide a scalable subscription service that keeps users coming back for more is a brilliant way to build a longer term revenue model if they can execute well.
3. Reasonable Valuation: At a $7M valuation, the company is essentially applying a 10X multiple on last year’s revenues. If this were a traditional toy company that valuation would give me more pause. However, there are two factors that make it feel as though the valuation is in reason. First off, I don’t think all of the revenue growth can be attributed to a one time Shark Tank bump, because they have established a strong presence in several key distribution channels. Additionally, they have established several partnerships with organizations such as The Girl Scouts, and BlackGirlsCode, which will provide efficient marketing avenues. Second, this company can’t necessarily be evaluated as a traditional toy company, because they are really a tech platform building a recurring subscription model around the software component of the business. This should help to reduce long term cost of goods sold, and increase profit margins, while building stickiness and larger recurring revenues amongst the user base.
4. Well suited for licensing: SmartGurlz has a terrific platform to build licensing agreements off of, with major brands like Disney and Nickelodeon. A major component of the product differentiation comes from this focus on storytelling, which fits the needs of female users. Being able to capture this audience for large companies like Disney and Nickelodeon that want to tell their stories around their characters will be a highly attractive opportunity down the road as they build their user base.
5. Intriguing acquisition target: The team is capturing a demographic of young ladies between the ages of 5 and 12 that is highly valuable to other major toy manufacturers. For the toy manufacturers, SmartGurlz can provide a growing brand with higher margins to traditional toys that are more manufacturing heavy.

Sharmi Albrechtsen, the CEO and Founder of SmartGurlz has spent 20 years in the communications industry across organizations including Ruder Finn, Sonion and ALK Abello. She has also worked in the non-profit space and wrote her own book. Throughout her career she has led and managed many organizations and though she has never had to act as the head of an organization, she comes with deep experience as a people manager and as an effective communicator, which is key to early stage startups.

Additionally, she comes into this business as an individual who developed this company out of a need she saw from her own need as a customer, desperately in search of an engaging ed-tech toy that would help her own daughter learn how to code. This mixture of long term management experience along with her intimate knowledge of the market she is trying to serve is a positive indicator that she is a sound leader for the position.

The CMO of the organization Martin Pidel helps round out the strong management team with experience as the VP of Global Brand at Hasbro and EVP of International at LeapFrog. Needless to say, his experience in building some of the most iconic brands in toy manufacturing will help Sharmi to find their market positioning and win in this industry.