HOW TO START AN EDTECH COMPANY?

The global market for educational technology is expected to expand from 2021 to 2028 at a rate of approximately 20% per year. We can expect more cutting-edge technologies, EdTech businesses, websites and mobile applications, as well as increased global use of digital learning platforms.

The audience is waiting, the investors are there, and the ideas are there.

Now is the perfect time to join the educational technology community!

Maybe you already have a great EdTech startup idea that you want to develop, but it just feels impossible and overwhelming. You could believe that there is simply too much competition and that you won't stand out, or that you lack any unique education startup ideas.

In fact, everything is possible. 

There are many untapped opportunities in the EdTech business, which is far from being overloaded.

Keep reading if you've chosen to set your doubts aside and try to figure out how to start an EdTech company.

Why You Should Start an EdTech Company in 2024

If you're an entrepreneur, making money is your first priority while launching an EdTech business. An existing IT company or software house may create an EdTech startup for a variety of reasons, aside from business.

EdTech Creates a Life-Long Learning Process

A Speak-up annual survey on the use of technology in education found that 72% of schools employ cloud technology, 57% allow student usage of mobile devices in the classroom, and 48% offer online courses.

To obtain an education that we can use in the workplace, we attend both high school and college. Well, this idea is becoming outdated. After completing high school or college, the practice of learning should not be stopped. Now, the educational process never ends. In fact, regardless of age, it is essential to keep your skill sets updated in this ever-evolving technology world.

Top companies like Deloitte, Walmart, PwC, and others are emphasizing the value of lifelong learning. From the first day of employment until the end of their professional careers, they teach their staff using eLearning resources. Related article: The 13 most important advantages of corporate eLearning. 

Governmental and commercial entities are in need of EdTech solutions, which an EdTech company can provide.

EdTech Market Isn’t Enough Saturated

The global market for education is predicted to grow significantly to a whopping USD 8 trillion by 2025. Around the world, only 3% of the money is now allocated to digital learning. The figure indicates that the market is not yet fully saturated. A corporation can achieve a perfect market share if it is committed enough to do so. Over 21,000 educational startups are listed on the startup marketplace Angel.co, up from 16,000 in only two years.

Reduced Cost

Over time, traditional educational methods have skyrocketed in cost. It increased costs and had negative effects on the environment.

The US Bureau of Labor Statistics  found that between 2006 and 2016, the price of a textbook increased by 88%. The increase is even greater than the rise in housing costs and university fees, which are 63% and 50% higher.

The world now has an option to avoid paying high prices thanks to edtech. Digital books not only save publication costs but also enable wide-scale distribution among students. Additionally, digital materials are useful for future updates and revisions. Additionally, EdTech has reduced the cost of student transportation.

A startup for educational technology is also extremely rational. A piece of software may now be created for a fraction of the price it formerly did thanks to the rise of open source and the spread of trustworthy outsourcing businesses. The cost of developing a new EdTech viable product has been reduced by 20–50% thanks to open-source technologies.

Unexplored Opportunities 

There are several untapped opportunities available for businesses to seize. Let's examine a few of them.

In the eLearning sector, gamification is a prominent issue. It hasn't yet been used to its full potential, thus additional research is required. The social learning hypothesis, which claims that learning is a cognitive activity that occurs in a social setting, should also be included. Individuals learn best while watching other people in action since learning happens through observation and direct teaching. Related article: Top 7 EdTech Trends for Kids.

Overall, there are a lot of market gaps that your newly established business can cover as well as a lot of popular technologies you may employ to compete.

eLearning Is Interesting to the Investors

The EdTech sector has seen a significant increase in venture capital investments. The quantity of agreements decreases as investment money increases. It indicates that VCs are more selective about the businesses they choose to fund. In such a case, enlisting the support of an incubator or accelerator may be smart.

Democratizing Education

Democratizing education is one of EdTech's non-profitable benefits. In the past, only members of the royal family, the nobles, and the rich had access to education.

The use of edtech might end this prejudice. No matter their social position or location, EdTech can offer everyone a high-quality education. Schools in less developed parts of Africa can offer instruction on par with any reputable educational institution school in rich countries.

Will it be Profitable to Start an EdTech Company?

Starting an EdTech company can be profitable due to the increasing demand for remote learning. Factors like scalability, diverse revenue streams, technological advancements, and the trend of lifelong learning contribute to this potential. However, success requires understanding educational principles, effective technology implementation, and ongoing innovation. Challenges include regulatory compliance, data privacy, and maintaining user engagement. Despite these hurdles, the education sector offers significant opportunities for those who can navigate them effectively.

How to Launch an EdTech Startup?

Identify Your Industry

Defining the precise problem that your product is solving should be the first and main thing you think about when you want to know how to start an education technology  company. Your niche will be specified in the solution statement. It would be helpful if you keep in mind that there are several requirements in the education industry, and no single solution can meet them all.

In order to succeed, you must put in a lot of effort, take calculated risks, and give up a lot of other aspects of your life. You must also exercise the initiative to guide the employees of your new company on the appropriate path.

Validate Your Idea

It is critical to understand that depending on where they are located, various educational institutions may have different needs. The digital learning tools and products you create should also be appealing to instructors, employees, managers, students, parents, and administrators of educational institutions. Related article: Early Adopters: 5 Stages of Technology Adoption.

A specific user's demands should be met by the product being delivered. Because they don't identify their target education market, many edtech businesses fail. You should thus make an effort to pinpoint the ideal market for your product. In addition, avoid attempting to solve issues that have previously been resolved.

Choose the Right Business Model

It's important to set the best company model. An EdTech business plan outlines how you will achieve your objectives. In addition, it helps in establishing the value of your product to the target markets.

You are recommended to create a sustainable business around any particular issue you are motivated to solve rather than concentrating on making money or expanding a sizable customer base.

There are many opportunities available right now in the edtech industry. But if you want to seize the opportunity, you can't save on anything.

Build the Right Team

Putting together a team of qualified, creative, and ready-to-work employees is crucial for every new business. Because of this, you need to assemble professional employees. Make every effort to surround yourself with people who share your enthusiasm for changing the face of digital education. Every team member's responsibilities should be clearly specified.

Additionally, you want to employ people who have strong relationships with the principal, teachers, parents, and other stakeholders at the school. These people may provide them with insightful input, which can then be used to improve your product idea.

Create Quality Content

It's also essential to provide top-notch content. The sad truth is that it is frequently ignored. You should keep in mind how important it is to define a product correctly. Without producing immersive and engaging content, it won't matter how interesting your product is or how many great features it offers.

You can employ freelancers if you don't have enough time to generate engaging content. However, since it characterizes your product, you should never skimp on the quality of your writing.

Start with a Proof of Concept/MVP

By launching an MVP, you may test your idea while spending significantly less money than would be required to create the whole product. Having real customers test your product will provide you valuable insight into its features, user preferences, and any potential bugs. It's important to note that a lot of successful EdTech company have outsourced the professional development of their MVPs. Although it might seem strange, hiring edtech software development specialists is actually less expensive than developing it in-house. PioGroup Software can help you develop any EdTech solution, analyze your business idea and support, maintenance your product after the launch. 

How to Fund an EdTech Startup?

Bootstrapping

Bootstrapping refers to financing your startup with little or no outside funding. This entails relying on your own funds and income flow from your organization. Although dangerous, it is a reasonable option. By funding your business with your own money, you maintain exclusive ownership and have complete control over its course. However, if funding runs out or there is not enough money to expand and scale the business, things might get complicated. Related article: What is the Price of not Providing Employee Training?

Crowdfunding

In recent years, crowdfunding has outperformed investments in popularity, and it's simple to understand why. When a product is launched, it involves collecting small sums of money from a large number of people in exchange for a gift or non-cash bonus. While you'll need to have a marketing strategy in place to spread the word about your idea and spark interest, it may generate a significant sum of money in only one month!

Loans

You can typically get the loan you need from banks to fund your business. The good news is that the bank has no control over your decisions, and making monthly installment payments is simple. The bad thing is that you must repay that money regardless of the success or failure of your business and must be ready to face the consequences in the event of a default. Related article: How Much Does It Cost to Develop an LMS?

Grants and Sponsorships

Many government and private organizations, as well as academic institutions, provide funding for edtech startups, which can be paid out all at once or over the period of several months. These are excellent options because startups are frequently exempt from repayment obligations. However, in order to get the funds or to continue receiving financing, they must meet specific conditions and standards.

Technology Stack for Starting an EdTech Startup

This typically encompasses various technologies and tools required to build the online tutoring platform, deliver content, manage user data, and facilitate interactions between learners and educators.

A typical technology stack on how to start an EdTech startup might include:

1. Web or Mobile Application Framework:

   This is the foundation for building the user interface and functionality of the platform. Common frameworks include React.js, Angular, or Vue.js for web applications, and React Native or Flutter for mobile apps.

2. Backend Development:

   This involves creating the server-side logic, databases, and APIs (Application Programming Interfaces) needed to handle user authentication, data storage, content delivery, and other core functionalities. Popular backend technologies include Node.js, Django, Ruby on Rails, or Laravel.

3. Database Management System (DBMS):

   A robust DBMS is essential for storing and retrieving user data, course content, user-generated content, and other relevant information. Options include relational databases like PostgreSQL or MySQL, or NoSQL databases like MongoDB or Firebase Firestore, depending on the specific requirements of the platform.

4. Cloud Hosting Services

   : Leveraging cloud infrastructure providers such as Amazon Web Services (AWS), Google Cloud Platform (GCP), or Microsoft Azure can provide scalability, reliability, and flexibility for hosting the application, managing data, and delivering content to app users.

5. Content Delivery Networks (CDNs):

   CDNs help optimize the delivery of multimedia content (such as videos, images, and interactive materials) to users by caching content on servers distributed geographically closer to the end-users, reducing latency and improving performance.

6. Additional Tools and Services:

   Depending on the specific features and functionalities of the EdTech platform, additional tools and services may be required, such as video streaming services (e.g., Vimeo, YouTube API), Learning Management System (LMS) integrations, real-time communication APIs (e.gWebRTC), analytics platforms, and collaboration tools.

5 Successful EdTech Startups

Here are examples of successful EdTech startups:

1. Coursera:

   Coursera is a well-known online learning platform that offers a wide range of courses, specializations, and degrees from top universities and educational institutions worldwide. Founded in 2012, Coursera has gained popularity for its accessibility, quality content, and partnerships with prestigious universities and organizations.

2. Duolingo:

   Duolingo is a language-learning platform that offers courses in over 30 languages. It utilizes gamification and adaptive learning techniques to make language learning engaging and effective. Since its launch in 2011, Duolingo has attracted millions of users worldwide and has become one of the most popular language-learning apps.

3. Khan Academy:

   Khan Academy is a non-profit organization that provides free educational resources, including instructional videos, practice exercises, and personalized learning dashboards, covering subjects ranging from math and science to humanities and test preparation. Founded in 2008, Khan Academy has had a significant impact on education accessibility and has been widely used by students, teachers, and parents globally.

4. Udacity:

   Udacity is an online learning platform that offers courses and nanodegree programs in tech-related fields such as artificial intelligence, data science, programming, and cloud computing. Founded in 2011, Udacity focuses on providing job-ready skills through project-based learning and educational industry collaboration.

5. Quizlet:

   Quizlet is a platform that provides tools for creating, studying, and sharing digital flashcards and other learning materials. With millions of user-generated study sets covering various subjects and topics, Quizlet has become a popular resource for students and educators to reinforce learning and prepare for exams.

These examples represent just a few of the successful EdTech startups if you want to know how to start an EdTech startup that have made significant contributions to the field of education through innovative technology, accessible learning resources, and impactful teaching methods.

Why EdTech Startups Fail

Problem# 1: Lack of Research about the Education Ecosystem

One of the primary reasons for EdTech startup failures is the lack of thorough research about the education ecosystem. Understanding the needs, challenges, and dynamics of the educational landscape is crucial for developing effective innovative solutions that truly address the pain points of educators, students, and institutions.

Problem #2: Lack of teachers input and transparency

Failing to involve teachers in the development process and lacking transparency about how EdTech solutions align with educational goals can lead to disconnects between the product and its intended users. Teachers' insights and feedback are invaluable for creating solutions that resonate with classroom realities and instructional needs.

Problem #3: Arrogant Tone

EdTech startups may fail if they adopt an arrogant or condescending tone when engaging with educators or institutions. Collaboration and partnership with educators should be approached with humility and a genuine willingness to learn from their expertise and experiences.

Problem #4: Cold Calling and Irritating emails

Aggressive marketing tactics such as cold calling and sending irritating emails can backfire, alienating potential users and damaging the startup's reputation. Building genuine relationships and providing value-driven communication is essential for earning trust and fostering positive engagement with educators and stakeholders.

Problem #5: The motives are different, and requirements do not match

EdTech startups may struggle if their motives and objectives are misaligned with the needs and requirements of educators, students, or institutions. Solutions that prioritize profit over educational impact or fail to address real educational challenges are unlikely to gain traction or sustain long-term success.

5 Failed EdTech Startups

1. AltSchool:

   AltSchool was a startup that aimed to revolutionize education through personalized learning and technology-infused classrooms. Despite raising significant funding and garnering attention for its innovative approach, AltSchool faced challenges in scaling its EdTech business model and sustaining operations. In 2019, AltSchool announced the closure of its schools and pivoted to licensing its technology platform to other educational organizations.

2. LearnSprout:

   LearnSprout was a data analytics platform for K-12 schools that aimed to provide insights into student performance and help educators make data-driven decisions. Despite gaining traction and partnerships with several school districts, LearnSprout struggled to achieve widespread adoption and generate sufficient revenue. In 2016, the educational technology company was acquired by Apple Inc., and its technology was integrated into Apple's education offerings.

3. TutorSpree:

   TutorSpree was a platform that connected students with tutors for personalized learning experiences. Despite raising funding and gaining traction in the tutoring market, TutorSpree faced challenges in scaling its business and differentiating itself from competitors. The startup ultimately shut down in 2013, citing difficulties in achieving sustainable growth.

4. Ponder:

   Ponder was a social learning platform that allowed users to annotate and discuss educational content such as articles, videos, and documents. Despite receiving initial funding and positive feedback for its concept, Ponder struggled to attract and retain users on its platform. The startup ceased operations in 2016, citing challenges in monetization and user engagement.

5. TenMarks:

   TenMarks was an online math program for K-12 students that offered personalized learning resources, adaptive assessments, and instructional tools. Despite being acquired by Amazon in 2013, TenMarks failed to achieve significant market penetration and compete effectively with established players in the EdTech space. In 2018, Amazon announced the discontinuation of TenMarks, citing a shift in focus to other educational initiatives.

Things to Consider with EdTech Startups

What to Avoid

When launching an EdTech startup, it's crucial to steer clear of certain pitfalls to increase the likelihood of success. Here are some things to avoid:

1. Ignoring User Needs

   : Failing to understand the needs, preferences, and pain points of educators, students, and institutions can result in developing solutions that miss the mark and fail to gain traction.

2. Overpromising and Under Delivering:

   Making exaggerated claims about the capabilities or benefits of your EdTech solution without the evidence to back them up can damage credibility and trust with users.

3. Ignoring Privacy and Security:

   Neglecting to prioritize data privacy and security measures can lead to breaches, education issues, and loss of trust among users. Compliance with relevant regulations and standards is essential.

4. Lack of Scalability:

   Building a solution that lacks scalability can hinder growth and limit the ability to serve a broader user base. Consider future expansion and scalability from the outset.

5. Poor User Experience:

   Neglecting user experience design can result in a clunky, unintuitive platform that frustrates users and impedes adoption and engagement.

What to Preserve

On the flip side, there are certain elements and practices that EdTech startups should preserve and prioritize in our guide on how to start education business:

1. User-Centric Design:

   Focusing on user needs, feedback, and usability testing throughout the development process ensures that your EdTech solution meets the requirements and expectations of your target audience.

2. Quality Content

   : Providing high-quality, engaging, and relevant educational content is essential for attracting and retaining users. Invest in content creation or partner with reputable content providers to ensure excellence.

3. Continuous Innovation:

   Embrace a culture of innovation and iteration to stay ahead of the curve and adapt to evolving educational trends, technologies, and user preferences.

4. Partnerships and Collaboration:

   Collaborating with educators, schools, districts, and other stakeholders can provide valuable insights, validation, and support for your EdTech solution's development and adoption.

5. Ethical and Responsible Practices:

   Prioritize ethical considerations, transparency, and social responsibility in your business practices to build trust and credibility with users, educators, and the broader community.

Is this Business Right For You?

Starting an EdTech company requires careful consideration of various factors to determine if it aligns with your skills, interests, and goals. Do you have a genuine passion for education and a desire to make a positive impact on learning outcomes? Are you comfortable with the challenges and uncertainties of entrepreneurship, including building a business from the ground up, securing funding, and navigating the competitive landscape?

Our Expertise in E-learning Industry and Advice About Starting an EdTech Company

We offer the following insights:

• Market Research:

  Understand industry trends and audience needs.

• User Experience:

  Prioritize intuitive platform design for engagement.

• Content Quality:

  Invest in relevant, high-quality content.

• Technology Stack:

  Choose scalable, secure technology and leverage AI for enhancement.

• Partnerships:

  Collaborate with institutions, content providers, and tech partners for wider reach.

• Continuous Improvement:

  Embrace innovation to stay ahead.

Conclusion

Finally, we can conclude that by following these steps on how to start EdTech business, you may have a smooth start for your business. However, we should all keep in mind that consistency is essential for any business to improve. Any business may succeed with careful planning and strategy, and this is also true for EdTech.