This discussion considers a new pre-service teacher education initiative at the University of Western Sydney, called "Classmates". "Classmates" aims to prepare pre-service teachers to work in diverse and challenging schools. The paper argues that the neo-liberal industrial model of mass teacher education may be limited in its capacity to adequately prepare pre-service teachers for the difficulties they may encounter in a society where sociocultural inequality is growing. It points out that pre-service teacher-education needs to build "teacher capital" to better prepare graduates and to buffer the transition from tertiary student to beginning teacher. "Classmates" offers one way that this may be achieved. Findings from the "Classmates" research clearly point to the pre-service teachers' acquisition of several forms of teacher capital, identified as (i) knowledge about students; (ii) knowledge about teaching and the institution; and (iii) knowledge about professional networks. The continuous "Classmates" practicum was perceived to make a major contribution to the development of this capital.