5 Questions Investors Will Ask You Before Investing in Your EdTech Startup
In 2018 alone, India's EdTech startups have received close to USD $700M funding and this is field to explore
Old school models in education are being disrupted with new-age technology and innovations. This is driving opportunities for a variety of EdTech businesses.
While these are definitely reasons for optimism, there are still quite a few “uniquely EdTech” problems that investors want entrepreneurs to have solutions to before they decide to invest. In business, no preparation is enough, especially that comes as easily as this article. So here are some questions investors are likely to ask you before investing in your EdTech startup.
Is Your Product or Service a Must-Have or a Nice-to-Have? OR Does the Market Really Need Your Product or Service?
EdTech solutions are unique in the fact that the customer and the end-user are, in most cases, different – the parent or school is generally the decision-maker, while the student is the end-user. Despite changing attitudes about their children’s education, parents, by and large, are still highly concerned with their children’s grades. If a solution won’t directly help the student’s academic performance, it won’t be a priority. In fact, it might even be deemed a distraction for the child, making parents wary of buying. Demonstrating a clear link between the EdTech solution and improved academic performance to the parent(s) is crucial. This will need clear messaging and some level of product evangelism
Is There a Measurable Outcome for Your Product or Service?
People like to see tangible positive outcomes when they spend money on an EdTech product. If there isn’t a definite positive outcome linked to the solution like better grades, being admitted to elite institutions for higher studies or better job prospects in the future, few will be willing to buy it.
Is the Platform Sticky Enough to Get the Customer to Pay Every Year?
The product or platform needs to demonstrate that it provides enough continued value to the end user, such that they renew their subscription to the platform/buy add-ons for the product year after year.
Are You Selling Your Product or Service to Schools?
Selling to schools has a unique set of challenges – long sales cycles (6-12 months) and rigidity in the existing system makes it difficult to quickly implement solutions. Once set, these, however, can be productive long term engagements. Having an experienced sales person who can effectively sell to schools and a solution that integrates with the schools existing framework is a good way to navigate this. Additionally, the ticket size of the EdTech offering needs to justify having a full sales force that is generally needed to sell to the innumerable schools in India. This means that an EdTech entrepreneur needs to be certain that selling to schools is the right way forward for their solution and must have experience selling successfully to schools.
Is This Scalable Across Learners of Different Economic Backgrounds?
India has a number of schools at various fee points – ranging from government schools to affordable private schools to international schools, and their students are from widely varying economic profiles. Additionally, we are seeing a growing number of learners in the employment sector; learners who want to upskill for career growth or those who want to upskill and gain employment. While the EdTech market being vast is positive, the needs across these segments are not uniform – needing some amount of customization in the product or service offered. Schools will require different features as compared to solutions for young adults who are already part of the workforce, and both these segments will have different needs based on the learners’ economic backgrounds.