Why EdTech Startups Fail

Educational landscape in India has seen many disruptive changes in the last decade. Educomp was certainly a pioneer in the field and it dominated the market. Though, the company ultimately faltered, but it certainly inspired many entrepreneurs to try out their luck.

Image Credit: Getty Images
Image Credit: Getty Images

Some of these startups have also come up with innovative products and have offered innovative solutions. Despite that most of them are struggling financially and this is not because schools and universities don’t have money to spend, but the problem lies somewhere else.

Difficult to reach

The market is flooded with many players and everybody is trying to sell something to school managements; and it’s practically not possible for them to consider every proposal so they filter out strictly before finalizing the meeting. Therefore, often it happens that startups don’t get approval for face-to-face meeting. So reaching out to customers in itself is a big challenge.

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This also limits their ability to reach the relevant persons having the decision making power. For a startup to succeed it’s important to get few initial customers who keeps them afloat.

Resistant to change

Teachers and school staffs are usually comfortable working in a traditional manner as they find it difficult to adapt to change.

Another thing is that technology awareness and competency is quite low in most of the schools, and it’s quite difficult to change that attitude. Teachers and school staff are usually comfortable following traditional working and teaching methods. Like anyone else, they too are skeptical of change since they feel uncertain about being able to adapt to the change and keep up with it.

Multiple stakeholders

Schools have multiple stakeholders such as admin staff, principal, teachers, parents and students. So those who are take the decision, those who evaluate, it and those who actually use it are all different.

For schools it’s not always possible to pass the entire cost to students and parents as they won’t be very much willing to share the burden.

Saturated market

The total size of education sector in India is $100 billion and schools share is 38 percent. The size of the market is so lucrative that many players have jumped in the sector with different solutions to address the pain points of schools.
The entry barrier is also low making it a highly competitive sector. Educomp is a big example, Extramarks and other companies have beat Educomp offering lower price levels and better service offerings.

According to Inc42, a well-known magazine, “However, though the startups are clear about the ‘differentiation’ they offer, schools are no longer impressed with the differentiation alone. School managements review solutions holistically, including the ability of the team to service their account well. Schools need a comprehensive solution. Not just a great product. Most startups do not recognize this critical difference.”

No validation

This is not an edtech specific issue, but common to all startups. Customers want a validation of their claims, but they don’t have anything to substantiate their claims.

Low propensity to spend money

[Tweet “Unless the startup has extraordinarily strong value proposition, getting schools signing on the dotted line is not easy.They are also by nature thrifty organizations.”]

Solution is not easy

Startups should work hard to get the validation from customers from start. It will help convince their customers that the promised value can actually be delivered. Contact those partners who have already relationships with schools. For example, you can contact some publisher whose books are sold in schools. Also keep them engaged about your offerings through regular updates

Once you gain a certain level of clientele in the market, schools are more open to meetings. You can present them a case study about how your solution improved the schools pain point. Sharing testimonials can also be a good way to earn early trust.

Just being pushy salesman approach won’t help; try to forge a lasting relationship. Schools should think that you are there to provide them lasting solution. You are there as a success partner. Focus on improving services and sales support.

Additionally, education sector is fast evolving, but the resistance level is also very high. So you will need to convince every stakeholder in the process.

What will happen?

According to Avichal, a PrepMe founder, says:

“Those Educational companies that focus on delivering higher quality solutions to consumers will not scale to the mainstream. Educational companies built around driving down costs to the end consumer will scale.”

Education is not like an e-commerce or any other type of hyper-local business, it’s a long term business. So going fast growth or hyper growth phase is something not advisable.

The behaviour of every stakeholder is different and is driven by their own circumstances. Parents prefer quality but cheap education, educational institutions like to sell products that helps them make 5x-10x earning on investment. Therefore, startups should work out on their revenue models properly taking in account of the requirements and psychology of different startups.

VIKASH KUMAR

Chief Content Strategist

An active journalist and blogger with more than a decade of experience. He has worked with various national and international publications. Sharing behind the curtain news is his passion.

1 Comment
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