3 Tips For Edtech Startups Looking To Grow

Technology is changing the world, no more so than in the field of education.

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Technology is changing the world, no more so than in the field of education.


3 Tips For Edtech Startups Looking To Grow

Technology is changing the world, no more so than in the field of education.

Share this article

In a seminal 2011 essay Why Software is Eating the World, Marc Andreesen argued that all companies would eventually become software driven or be replaced. He has proven prophetic: the tech companies he highlighted - Google, Apple, Facebook, Netflix - have since seen their stock prices grow 5-10X while establishment rivals have withered.

One sector that Andreesen viewed as critical but lagging was education. In the last 7 years, however, the factors that propelled the software revolution in the corporate world, namely internet enabled devices and broadband access, have become more ubiquitous in schools and homes.

Meanwhile the appetite among employers for new skills has increased with 1.5M unfilled job openings for software developers alone projected in Europe and the US by 2020

In short, the pieces are in place for a boom in technology-enhanced education at a time when the demand for educated workers is at an all time high.

Indeed, Edtech is one of the fastest growing sectors in the UK with an expected market value of £2.4bn by 2021. Growth to date has already made Great Britain first in edtech venture capital funding in EuropeCompared to the average equity for startups, you can see why this sector is ideal for some major growth for savvy entrepreneurs.

Yet competition in the $6 trillion global education market is fierce, with more disruptors entering the space everyday. To succeed, entrepreneurs must stand out in increasingly specialised and novel ways. Here are three crucial tips for anyone looking to grow an edtech startup.

1. Secure a differentiated market position (with a moat!)

Competing in the education market requires a clear and differentiated value proposition, ideally, from an investor’s perspective, one that has international potential. For example, one of Brighteye’s portfolio companies, Ornikar was the first to offer an online on-demand driving school in France.

Their value proposition is easy to understand: learn to drive more conveniently at half the cost. This position has helped them become the largest driving school in France. Moreover, Ornikar is well placed to expand internationally as learning to drive remains an onerous analog process in many countries.

Over the long term, because all successful products inspire a legion of imitators, robust businesses also require a ‘competitive moat,’ i.e. a competitive advantage bolstering their value proposition that persists over time.

Among the most coveted moats are “network effects” that make a product more useful as it gains users (think Facebook), but there are a number of others including: creative IP, technological IP and systems of intelligence.

It’s important for any entrepreneur to understand where their competitive advantage is and ideally to be able to demonstrate it. For example, if your product exhibits network effects then your cost of user acquisition should decrease and the lifetime value of customers should increase over time as the product becomes more attractive and valuable.

2. Bolster motivation

Education technology sits at the frontier of something that changes very fast, technology, and something that, arguably, hasn’t changed for millenia, human nature.

No matter how good the technology, learning requires repeated interaction over time in order to take hold in the learner’s brain and most people struggle to prioritize and complete long term goals such as acquiring a new skill.

One can see this struggle in the completion rates of MOOCs (Massively Open Online Courses) like EdX. Despite largely free access to top notch classes taught by MIT and Harvard professors, only 5% of students complete the courses they start.

Importantly, MOOCs have traditionally provided very little support outside the course material itself which, while informative, is often pretty dry.

The best learning products, in contrast, help motivate users to persist.

For example, Epic!, a digital library for children that helps them learn how to read, inspires children by incorporating books with characters that kids love (eg Sesame Street, Kung Fu Panda, etc), tailoring book suggestions to kids’ preferences and tying classroom learning and home reading together in a way that both parents and teachers can provide encouragement.

Epic! is now in use in over 85% of US schools and results in millions of books being read (note: Brighteye is an investor in Epic!)

3. Measure learning

Educational products often derive a lot of benefits from effectively measuring the benefits for the end-user over time. Counterintuitively, this is not often a requirement of sales to early adopters who usually viscerally understand the problem you are solving and just want something that works.

However as you scale, further proof will be required from more skeptical users who will require evidence that your product works and measuring learning over time is the best way to anticipate this request.

A good example of this is language learning app Lingvist’s knowledge map, which provides an overview for each learner of the degree to which they have mastered content in a constantly updated and comprehensive format.

This provides not just proof of learning but can help motivate users as they see progress being made.

The edtech sector offers a world of opportunity for founders. Much of what’s required to grow does not differ enormously from other sectors, but it’s vital to bear in mind what you as an edtech entrepreneurs have to pay special attention to.

Edtech has the potential to change the lives of those who use it, so make sure you and your users are equally dedicated.

Benoit Wirz is investment partner at Brighteye Ventures.

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3 Tips For Edtech Startups Looking To Grow

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