How to Start an EdTech Startup
The global education technology market was valued at a whopping USD 89.49 billion in 2020! It is predicted to grow at an annual rate of almost 20% from 2021 to 2028! We can expect more advanced technologies, more edtech companies, and apps, as well as more widespread use of digital learning platforms all around the world. The ideas are there, the investors are there, and the audience is waiting. The time to get into Edtech is now!
Perhaps you already have a great idea and are looking to develop it, but it just seems too daunting and undoable. You may think that the competition is just too large and you won’t get noticed, or that you don’t have anything new to bring to the table. In fact, it’s quite the opposite. The edtech market is not even close to being saturated, and there are plenty of opportunities to be explored. So if you’ve decided to put your doubts aside for a while and are looking for the answer to – “How to start an Edtech startup?” – then keep on reading!
How to start an Edtech startup?
Before starting any sort of development, you need to be absolutely clear on the purpose of your idea – i.e. what problem does it solve? I know this might seem like a redundant question – of course you know the purpose of your idea! But it’s really not so simple. Your solution will determine your niche, which will in turn help determine your entire edtech startup business model. The development process can only start once the purpose has been unambiguously detailed. So, what can you do that can help you better establish your niche?
Market research is incredibly important, especially for a startup. First of all, you need to know what the market has to offer, what kind of products exist, and which are popular. Doing this you can find out if you have a potential audience. Next, you need to check out your direct and indirect competitors. This will help find a way to stand out from your competition, or improve features users feel are lacking in existing products. Finally, all this information gathered from the market research will aid you in determining your own marketing strategy!
Define the roles in your startup
The next important step is building your team. Who will be your co-founders and what will their roles be? What will your role be as founder? If you have a small team, you and your team members will probably be taking on multiple roles and responsibilities. Therefore, it’s important that everyone knows what they are supposed to do and do it well. Otherwise, inefficiency will cause delays and mistakes which can spell disaster for your product. It’s also important to decide who will actually be doing the product development – an in-house development team, or will you outsource to a dedicated software house?
Edtech Startup Funding
Probably the most challenging topic for any edtech startup – how to get funding?
Bootstrapping your startup means funding your business with little to no outside funding. This means relying on your own savings and business-generated cash flow. It’s a risky, but doable option. By using your own money, you remain the sole business owner and are free to choose the direction of your company. Things will get tricky though if funding runs out, or there is not enough capital for growing and scaling the company.
Most banks will loan you the money you need for your startup. The good thing is – the bank doesn’t have any say in your business, and paying monthly installments is pretty straightforward. The bad thing is that you are obligated to pay back that money regardless of the success or failure of your company and be prepared to deal with the consequences in case of a default.
Grants and sponsorships
Many government and educational institutions, as well as private companies, offer edtech startup grants – either as one-time payments or monthly installments. These are great options because startups are generally not required to pay that money back. They do, however, need to fulfill certain prerequisites and requirements in order to get the money or meet certain deadlines in order to continue receiving funding.
Investors are usually experienced business experts who provide funding in exchange for a percentage in your company. While that means relinquishing some creative control and ownership of your business, investors bring with them priceless qualities like mentorship and business contacts.
Crowdfunding has become more popular than investments in the last few years, and it’s easy to see why. It means gathering small amounts of money from a large number of people in exchange for a gift or non-monetary premium once the product is launched. While you will need to have some sort of marketing plan already in operation to get people acquainted and interested in your idea, it can bring in a large sum within a month!
MVP Beta testing
Launching an MVP lets you test your idea while investing a much smaller amount of money than that needed to develop the full product. By having real users test your product you will get invaluable feedback regarding features, likes and dislikes, and potential bugs in the system. It’s worth noting here that many successful (edtech) startups have outsourced their MVP development. While it may seem counterintuitive, it’s actually a cheaper option than doing it in-house, and you will have access to experts in the field of edtech software development.
Marketing should be a part of your investment plan – no ifs, and, or buts. It shouldn’t be something you do as an afterthought, or just for name’s sake. A well thought out marketing strategy is absolutely crucial for the success of your edtech product. You can create a great product, but if it doesn’t attract and retain an audience, then ultimately it will be counted as a failure.
Mistakes to avoid
While elearning is becoming more relevant and the edtech market is crazy competitive, this just means that there are many more challenges. Some of the most common reasons for failed edtech startups are:
- Fundamental incomprehension of the educational system
- Complicated or ineffective edtech product
- Lack of market research
- Lack of monetization
- Not measuring KPIs
- Poorly chosen team members
If you’d like to read more about the challenges of edtech development today, read our blog post on the topic. If you are still unsure where to start and you need professional consultation for starting your edtech startup, don’t hesitate to contact us here at Redvike.