Mindsmith Raises $550K Pre-Seed Investment

Orem-based AI EdTech startup, Mindsmith.ai, announced it has raised a $550K Pre-Seed Round. Grix Venture Capital, based in Salt Lake City, led the round. SaaS Ventures, an early-stage investor based in Miami, FL, also invested in the round. Other participants include Peterson Ventures (Salt Lake City); Actium Partners (Salt Lake City); Austen Allred, angel investor with Utah roots and current CEO/Co-founder of BloomTech, the San Francisco-based coding bootcamp formerly known as Lambda School; and Stuart Fetzer, angel investor and CEO of wellness and fitness company, Kailo Labs (Salt Lake City), who first learned about Mindsmith at the Lassonde Entrepreneur Institute’s Utah Entrepreneur Challenge in February 2023 where he was a judge. Darrin Shamo (Mesa, AZ) also participated in this pre-seed investment. Shamo served as VP of Growth and Marketing at DoorDash when they went public. He now invests in and advises startups

Grix Venture Capital, a B2B SaaS-focused venture fund, is headed by Randall Lloyd. Lloyd was formerly a co-founder of Brighter Option, an ad tech software platform that sold to Salesforce in 2012. In 2017, he joined Peterson Ventures as a General Partner, where he led investments in several Utah-connected SaaS startups (Workstream, Spiff, Grain, Tava Health, Wooly, et al) and many other startups outside the state. Lloyd founded Grix in April 2021, raising $20m for its first fund.

"Grix VC is excited to lead the pre-seed funding for Mindsmith," Founder and Managing Partner, Randall Lloyd told TechBuzz. "We were extremely impressed by the team, their passion for the industry, and the early traction they generated. It was obvious that they were creating immense value in dramatically reducing the time required to create and maintain high-quality training content—as evidenced by the enthusiastic adoption of thousands of early platform users."

TechBuzz sat down with Ethan Webb, Mindsmith’s CEO and Co-Founder, and asked him about his startup and how fundraising was in today’s climate.

“It wasn't a crazy amount of time—about a month. Grix was maybe the fourth VC fund we talked to. We connected quickly. It was really nice to have someone expressing interest early on and then have them turn into the leader of the round.”

Webb and Lloyd got connected through Sandbox, a hands-on two-semester entrepreneurship incubator at BYU that started in 2020. “Back then we weren't really actively raising. But an intern from Grix reached out on LinkedIn and I made a mental note. When it was time to start raising a pre-seed round, I reached back out to him, he just set up a meeting, and it went pretty quickly from there."

Mindsmith’s co-founders, Ethan Webb (CEO) and Zachary Allen (CTO), have been building the company since August 2022. David Blake, CEO of Degreed, is an advisor to the startup.

Mindsmith is an AI-driven elearning tool for instructional designers that streamlines the process of development educational content. It also addresses inefficiencies in the edtech tool market.

“AI is our foot in the door for seriously disrupting the elearning authoring tools industry—an industry that hasn't seen major new innovations over the past 20 years,” said Webb.

“Legacy software developers have developed clunky products that haven't grown with technology as technology has evolved,” added Webb.

Mindsmith is applying AI and thoughtful software engineering to reimagine traditional processes for developing educational content. For example, the company has found a way to improve upon an antiquated file format commonly used in education called SCORM.

SCORM (Sharable Content Object Reference Model) is a collection of standards and specifications developed in the early 2000s by the Department of Defense for handling web-based electronic educational content. As a static file, a SCORM file hosts HTML and media content, and according to Webb, SCORM files can become huge and unwieldy. “Sometimes they become several gigabytes in size or larger, requiring a lot of harddrive space and time to transfer,” he explained.

“But we put a wrapper around the SCORM file and can host it in the cloud,” Webb commented. “Now it takes merely a few seconds to upload it into a Learning Management System (LMS) instead of hours. And it's dynamic. As you change something in the file, it automatically updates it in the LMS, meaning users don't have to delete the file, change it in their authoring tool, re-download a new one and then re-upload the file to the LMS—a cumbersome and tedious process.”

Webb said this innovation represents a quantum improvement over past methods of dealing with SCORM. He said it also means that it is easy to host multiple versions of the same file of the same lesson within one file—critical for different language versions of the instructional content.

“We can have the file itself read the device language of the learner,” he continued. “If their phone's operating system is in Spanish, they can automatically see the content in Spanish. And then they can of course toggle back and forth if they want to also see it in English."

Mindsmith’s innovations have been designed to save LMS admins time. “These things are so obvious and simple," exclaimed Webb. "Other companies would have to totally redesign their entire architecture to output lessons this way, but because we're being built from the ground up, it gives us so much opportunity for disruption.”

“We are highly focused on custom content, which means it has to be highly contextual to the organization,” added Webb. “We incorporate AI into existing workflows for instructional designers. We take guidance on applying prompts to the entire lesson so that AI understands the flow of a module within a lesson. But we also contextualize the authoring tool more broadly within the wider lesson.

He explained how a user might use Mindsmith thusly, “An instructional designer might upload a document, say it is a standard operating procedure, an employee handbook, a product specs, or anything from their subject matter expert, like a PowerPoint presentation. Our job is to then make sure it is well represented in the AI while also holding true to the original vision of the instructional designer. We incorporate AI into every step of the lesson development process."

Though still a young company with just two fulltime employees, Webb and Allen, Mindsmith has witnessed impressive growth. The company’s revenue is growing at about 20 to 40% month over month, according to Webb. The company has 7,000 users that have used the product on its free tier. It has several companies that have licensed the tool, including a large one that is seeing a lot of benefit from it.

Webb shared the details:

“We've closed a few customers that we're really excited about. One of the coolest ones is Tek Experts that does technical customer support for large companies. They do basically all the technical customer support for Microsoft, for example. And they told us that they have experienced a 12X efficiency gain by using Mindsmith. What used to take them at least a day and a half using their old tools now takes them an hour using Mindsmith.”

Webb said 12X to 15X efficiency gains are typical estimates coming from early-adopter companies using Mindsmith. The company plans to roll out the following improvements in the coming months:

Revamped editing experience
UX and UI improvements
New image system (Dalle 3, integrations with other asset libraries)
Improved billing experience
Analytics broken down by person
Better AI voices

Mindsmith is located in Orem at the Business Resource Center at UVU which provides startup teams with low-cost state-subsidized office space.

For more information, visit Mindsmith.ai.