#6 Things to Watch Out for While Starting an EdTech Startup
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Global EdTech market is expected to grow at 17% per year to reach $252 Billion by 2020; as a result many entrepreneurs are trying to grab a piece of this pie. In an age when startup entrepreneurs routinely try to come up with a next big idea which can revolutionize this space, they often forget that the fundamentals of great companies have almost remained the same for hundreds of years.
Each startup in EdTech space today promises to transform education, beat the competition and ultimately change the way knowledge is imparted. While the intent is praiseworthy, companies have struggled or are still struggling due to low adoption, financial sustainability, multiple gatekeepers involved in transition to digital learning (teachers, institutions, policy makers, etc.) and a market cluttered with solutions. Hence, in order to succeed in this highly competitive industry, it is recommended to know the following 6 things.
2. Clear Understanding of the Demand Gap for EdTech Products
The education sector is a complex marketplace. An EdTech product should appeal to the decision makers - principals, school administrators & policy makers as well as students and their parents. The product offering should be adaptable to the needs of the end user. Many EdTech companies find it difficult to identify their purchaser, and so cannot find a way into definite education system.
Another problem is that the Edupreneurs try to solve problems related to the perceived gaps in the market rather than focus on actual needs. Thus try to re-package the solutions for already solved problems. EdTech creators should actively figure out what are the current challenges and future requirements of the market.
2. Identifying the Market Potential
In order to create a unique product, it is important to objectively analyze the existing ecosystem and float an EdTech company only if the idea is unique and is solving a problem in a creative way. Once you have decided upon the product, define the pool of consumers or institutions who would consider purchasing them. In other words you should know whether they have a need that your business might help them to address.
3. Comprehending the Competition Landscape
The market is oversaturated with solutions competing for the same pool of educational institutions or for addressing the same need. Because there are so many solutions which are available, regardless of the possibility that you have an incredible item, there is likelihood that if you don't market it effectively, you won't win their business. The ideal approach is to analyze as much solutions as possible and critically benchmark your product against the nearest competition. This will not only help you save time in not creating a replica of an existing product but also effectively provide you with insights for creating a better product and a differentiated marketing strategy to position it against others.
4. The Importance of a "Right Team"
The best EdTech startups will comprise of individuals passionate about creating an impact in the Education space. Due to long sales cycles in education, a good network and relationship of the team can go a long way in getting the purchase order from your perspective customers.
There should be people on the team who are well connected with teachers, principals, parents and other decision makers to get a feedback on the MVP (Minimum Viable Product) and implement iterations to the product design as per user requirements. Also, have a team member who can differentiate the positioning of your product and can actually market it. As per Dave McClure of 500 startups, a great founding team will have three roles: "designer, developer, and hustler." But in education, you need to broaden your horizons. You have a marketing expert, education domain expert, preferably someone who has been in an educator's shoes, and someone who can crack the revenue code. Include people who understand the problem, the customer, and can design and build a solution.
5. Testing the scalability of the Business Model
An EdTech startup is not only about growing a business, acquiring new customers and generating early revenues but also about building a scalable business model. As your investors and customer base will be skeptical of new entrants in the market, it's imperative to have a business metrics which can outline the scalability of the business. Some of the business metrics can be: size of the market opportunity, pricing of existing products, understanding of customer requirements and competitive pricing of your own products.
These metrics will help you to understand whether your business can scale to a developing or existing business sector. Scaling does not mean the same to all the businesses; for example - K-12 student market in India has a base of over 315 million students in India and thus represents an enormous opportunity. This surely represents a huge opportunity, along with this you should be mindful about how you can expand this worldwide in future.
Institutions will collaborate with EdTech companies that can bring solutions to the problems that are important to be solved for betterment of education but not at the core of the functioning of administration of the institution.
These partnerships can only be formed when startups have good network with primary stakeholders of education system and diligently follow the norms and values of education. It is also imperative to sustain the business till the time you start acquiring paid customers and attracting external investments. You should be able to scale the business to the right size till the time you anticipate the funding to come in the business.
In a nutshell, building an EdTech startup does not follow an Internet company's growth curve. Do it because you want contribute to a better future by identifying existing challenges and foreseeing the upcoming problems in education for the next 20 years.