Kaleidoscope was built to give college students and scholarship providers a one-stop shop to disburse scholarship funds. A recent $2 million funding round is helping the Minneapolis-based startup expand and work on new innovations to streamline the process.
The series A2 funding round was co-led by Rally Ventures and 3x5 Partners, the lead investors, and had participation from existing angel investors.
“We firmly believe that Kaleidoscope's platform has the potential to revolutionize the way scholarships and grants are managed,” Justin Kaufenberg, managing director at Rally Ventures, said in an announcement of the funding.
Kaleidoscope aims to simplify the scholarship process, from creating the scholarships and criteria to reviewing applicants. CEO Jason Von Bank said the company has made some recent enhancements that improve connection between scholars and clients, improving communication and making it easier to deploy capital directly through the platform.
Kaleidoscope has about 450 existing scholarship organizations in its ecosystem, which do about $160 million a year in disbursements, $25 million of which is disbursed through the platform.
In March, 30% of its workforce was laid off and founder Greg Dehn stepped down from his role as CEO. The layoffs were part of a company reorganization for a "more focused business strategy" to launch Kaleidoscope into its next phase of growth, according to Business Journal reporting at the time.
Von Bank said the company is now on the right track. While a 50% year-over-year revenue bump was expected, he thinks Kaleidoscope will exceed that goal.
“What Rally [Ventures] and the team did prior to me coming was just rightsizing the organization, making sure that we were providing a product and offering for what the clients and market wanted,” Von Bank said. “The clients and market have been responding tremendously well.”
Kaleidoscope is looking to add tuition insurance in future iterations, and right now the company is focused on bringing in corporate clients for scholarships. It’s been mostly focused on public charities and foundations so far. He also said margins have improved “tremendously” and the startup has gone from negative gross margins to close to 60% by the end of the year.
“We’re coming out with pretty exciting stuff in the next quarter,” Von Bank said. “We're kind of relaunching to the market in an exciting way to better articulate who we are and what we do for whom.”
