Why Edtech Companies End Up Losing Their Shirts

Before venturing into the exciting and competitive world of educational technology, startups should understand the common pitfalls which plague edtech companies. Smart men learn from their mistakes, brilliant people learn from the mistakes of others. In that spirit, here are the most common reasons edtech companies lose their shirts and how to avoid them.

Incomplete Market Understanding

Most startups only focus on one part of their expected client base, the students. However, to succeed in edtech, it’s necessary to have insight into the motivations of teachers, students, and policymakers. Employing education professionals is a good way to overcome this fatal lack of knowledge. Hiring teachers or former administrators is a great way to gain insider information on your potential clients. Employing educators can lead to more intuitive product development, better sales pitches, and overall growth.

Unrealistic Expectations

Another common mistake for edtech startups is the expectation of immediate profits. In reality, it can take upwards of five years to perfect your product offering and another 10 to 15 years to turn a profit. It’s important to understand that even though your product might be helpful and innovative, it may not immediately catch on. Many companies like Edmodo have had a widespread application without turning a profit.

Meanwhile, experienced entrepreneurs even have a hard time getting a foothold in education technology. Big Universe is a practical example of how you can turn a profit with the right approach and realistic expectations.

Incompatible Pricing

Choosing the right revenue model is imperative for success. Your startup needs to consider if you

can provide an innovative and efficient product at an attractive price point for the education sector. You have to remember that educational institutions need products which are cheap and useful which can be sold to students and parents for five to ten times what they paid.

To build a company with profitability in mind, learn from those already succeeding. Look at your potential for profit from day one and keep costs low to maximize return.

Leveraging Feedback Inappropriately

Every startup offers its first product for free to gain feedback and make adjustments. However, a common mistake is projecting future profitability from this initial test. While free product reviews can help development, those same users rarely buy into the next phase. Edtech companies need to wait to make predictions until they have released a product for cost.

The customers who buy your first real try will still be skeptical and helpful for development, but they will also be a more realistic gauge of future interest.

Even if you take heed and avoid these common edtech mistakes, you still have a lot to consider. Edtech startups are cropping up everywhere and often an excellent idea doesn’t mean long term success. There are many factors which will influence your future in educational technology. Perhaps the most important thing to remember is to learn from those who succeed and heed the warnings of those who fail.

How are you approaching edtech differently? Did your edtech startup fail? We want to hear your success stories and failures. We can learn together, as a community.


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