EdTech startup

EdTech Startups: To Invest, Or Not To Invest?

Updated on 17 August, 2021

Education development is traditionally considered the responsibility of government and when we hear the phrase "educational startups" Coursera and Udemy come to mind. However, they are not alone who improve the way we learn. There are more and more companies that try to facilitate the educational process by involving technologies. This results not only from realities of the digitalized present but also from the profitability of edtech startups. Here are the reasons to invest in education technology startups and related challenges.

Table of contents

  1. What is an edtech startup and how to start an edtech startup?
  2. What kind of startups in the education sector do investors put their money in?
  3. What inspires to invest in e-learning
  4. Challenges of investing in edtech
  5. Final words

What is an edtech startup and how to start an edtech startup?

Edtech startup is a startup which introduces IT tools in the classroom to achieve a more engaging and personalized learning experience. It includes LMS, learning platforms, mobile educational apps and much more.

To launch an edtech startup some steps need to be made. Firstly, business strategy should be generated: what kind of problem do you aim to solve in the education field? Think about specific people with specific problems (User Persona) and create a business plan to present to potential investors. Secondly, find a development partner with a proven background in industry. Afterwards, developing an MVP is necessary, which allows you to evaluate the product and improve it in a few stages. Supporting users and collecting feedback by adding feedback and a suggestions section is the next step. After which comes promotion (ASO, SEO, PPC, SMM and Media Advertising) and constant improvement of the product.

What kind of startups in the education sector do investors put their money in?

Education has changed and continues to change. Today's online learning is not only lectures and textbooks that students can use. It uses a variety of resources that involve different channels of perception: video and audio files, animation, graphics which provides tremendous opportunities in developing edtech startup ideas. So it's not a surprise that the ranks of unicorn education startups are expanding.

Chinese giants like Alibaba, Baidu, Tencent generously invest in the industry. For example, Yuanfudao received $ 1 billion from Tencent. It provides live courses and has 160 million registered users in three applications.

Mark Zuckerberg's investment fund invested $50 million in Byju's startup - India's learning app.

Rethink Education, a venture capital fund specializing at education technology, invests in development of mobile learning, which enables creating mobile based courses teaching children via SMS, that is relevant in South Africa, where only ⅓ of the population has access to the Internet.

What inspires to invest in e-learning

Predicting startup development prospects is not easy. That's why startups are a risky business for investors. However, this fact does not stop investors and venture funds from eLearning investing for the following reasons.

The market still has an untapped potential

About 80% of global money is concentrated in high-tech IT projects. Startups - new oil. As for EdTech, innumerable studies, reports and reviews of the market and in particular eLearning indicate that interest in this field is constantly increasing. According to David Bainbridge, the global EdTech market value will reach almost 252 billion dollars by 2020. Clearly, this number will grow with every year.

The iGeneration is closely linked to technology

What previous generations called "technologies of the future" is already present for the Z generation. Whether we are ready for this or not, the commitment of iGeneration to information technologies increasingly defines the face of modern education. Successful edtech startups allow being in contact with the new generation of clients. That's why e-learning software is of interest not only to those who are thirsty for knowledge, but also for those who know how to invest.

Long-life learning becomes a necessity

The rate of obsolescence of knowledge in our days is increasing every day. What students learn today will become obsolete in 4-5 years by the time they graduate. From medicine and IT to the geopolitical situation - everything will work completely differently. The only right way out of this situation is to learn. And employees are eager to learn and upgrade their skills to adjust to the changing business environment. Therefore, the LMS development industry has a great potential. Business uses a learning management system to organize employees training from scratch or to automate the existing staff development system. Examples of such systems abound: Litmos LMS, Docebo, eCoach, etc.

Emerging technology and tools in eLearning

The virtual world of information technologies has turned from a separate industry into a platform for the development of all other areas of activity - science, production, everyday life, and education. It is an education where technological innovations can bring real, tangible benefits. Take VR and AR. Despite the costs associated with the development and special equipment, the introduction of AR and VR technologies can significantly save on real exhibits. For example, in medicine, engineering or construction. The explosion of augmented and virtual reality, robots, 3D technology, using AI for apps have implications for e-learning software development that haven't been seen before.

Mobile learning becomes a part of the educational process

The reason why m-learning is so popular with investors is clear. All people on Earth buy mobile devices and consume mobile content at a breakneck pace. Mobile devices can be used not only for entertainment and business. And they are no longer seen as a distraction from learning. mLearning is already an integral part of the whole learning process. It provides access to education on the move - you can open the app and practice in some subject wherever you are.

Microlearning is essential

eLearning can be a perfect addition to a full-time educational process and can have considerable potential to improve the quality and effectiveness of traditional education. The attention of modern students is difficult to concentrate on a single object for a long time. Hyper-attention, in which concentration on a set of objects occurs simultaneously, prevails in students. Classical video lectures are no longer relevant, as the new generation of learners weans off the massive flow of content. That is why many e-learning startups help to focus on specific information modules, in small portions - that is called microlearning.

Challenges of investing in edtech

Despite the growth of the online education market, the entry of technologies into every level of education, investing in e Learning startups still faces challenges.

Complexity of external market entry

Learning English is a global market, because people on all continents want to know English. Most startups consider it necessary to enter the world market, moreover, from the very beginning. However, it is obvious that it is not so simple for e-learning projects: it is necessary to support several languages, and the educational base in different countries varies greatly. Besides, educational market infrastructure varies due to social and cultural backgrounds. Sometimes we think that we are all the same, but cultural and social constructs are in fact unique.

The market still needs new solutions

So far, innovation in education is basically the transfer of curriculum online. Innovations do not offer new solutions which should improve the quality and increase the speed of learning. Digital Universe doubles every 2 years. The speed at which we now learn does not correspond to the explosive growth in data. To win the competition, a new educational app should give something more than the opportunity to print certificates of completion of certain courses. Not every startup succeeds in this.

Lack of student motivation

We understand how to behave in full-time classes from the experience of the school and university, schedule, and external control. Online education gives total freedom: when and how to watch lectures, how much time to devote to learning. It turns out that real online learning requires no less, and maybe even more effort than the classic one. The only difference in eLearning now is that the textbook is converted into video lectures and online tests. Digital education does not yet offer compelling reasons why customers want to get a certificate and pay for it.

Final words

One famous venture capitalist said that it's not so sad to invest in an unsuccessful startup, as not to give money to the next unicorn. If you are sure that very soon the world will experience the greatest educational revolution, and you are trying to bring us closer to this moment and make the coming changes positive, combine your effort with an e-learning development company that will help make your great idea a successful startup.