“Tribe, based in Amsterdam, raised €3 Mn with the goal of improving digital skills.”
BYJU’s and Unacademy, two of India’s leading ed-tech businesses, respectively secured $400 million and $100 million in a round backed by Facebook, one of the world’s major edTech venture investors.
These shocking developments have captivated the entire world and prompted a chorus of people everywhere to wonder the same thing:
When did venture capital firms start showing an interest in the ed-tech startup scene?
Is this a clear indication that one should put money into EdTech ventures?
If you have questions about the EdTech market and want answers, read the article below.
- The Increasing Appeal of the Education Technology Venture Capital Market
- Essential Factors EdTech VCs Consider Before Investing
- Type of Ed-Tech ideas to invest in 2023
- Challenges Your Startup Might Face in the Ed-Tech Domain
The Increasing Appeal of the Education Technology Venture Capital Market
Unfortunately, there are still areas and people who lack access to educational opportunities. Not even the most fundamental educational opportunities are available to them. Similarly, many individuals want to expand their horizons and acquire new talents, but they are unable to do so within the constraints of the current educational system.
Investors in edTech know they can make money off of ideas for new education businesses because of all the above examples, which show that there are many untapped market potentials.
EdTech platforms bring together in one place individuals with a desire to learn and those with the means to facilitate that learning. They make it possible for them to study at their own speed, in their own time, and on their own timetable. In addition, cutting-edge technology like AI and the Internet of Things power these platforms.
Because of these factors, there was interest from both customers and financial backers.
Need for a lifelong learning experience
By the time one acquires one set of skills for a certain occupation, one often realizes that a second set of skills is also necessary. This situation calls for a commitment to the concept of lifelong education. And perhaps inspire financiers and builders to put resources into creating the mobile apps that are the future of the education sector.
One reason why investors could be interested in a lucrative education investment fund is that the market for such a fund is large and there is little competition in it.
The profit over investment, or ROI, is significantly higher in the online education space due to a number of factors, including the Edtech industry’s exponential growth, low levels of competition, and widely accepted solutions. As a result, it can be unfortunate for EdTech venture capitalists to pass up this opportunity.
Essential Factors EdTech VCs Consider Before Investing
Core Problem & Its Impact
Many ed-tech businesses are now planning their entry into the education market. On the other hand, the issues they are concentrating on are either too little to matter or have already been resolved. As a result, Edtech venture capital firms are becoming overly picky about the ideas they choose to support. They’ve started posing several questions to the business owners to find out if their problems are “must-solve” or “nice-to-solve.”
Put otherwise, the venture funders only approve Edtech startup concepts that
- Satisfy consumer and market expectations
- Draw in and keep talent
- Leads both small teams involved in innovation to significant multinational corporations
- Achieve objectives in challenging circumstances
Robust Cash Flow
Many ed-tech businesses run on the business model of temporarily depositing millions of dollars into their bank account, only to have it abruptly come dangerously close to going out of business. Educational investors consider this aspect while making an investment in any educational startup concept in order to mitigate the loss of educational investment funds for any organization.
Before making an investment in any kind of educational firm, edTech venture capitalists (VCs) also consider the competitive environment. They closely monitor whether or not the ed-tech firms are successfully solving the issue they set out to address and whether or not they are having trouble outpacing their rivals. The technique aids in predicting a startup’s future so that additional investment decisions may be made.
When investing in a firm, ed-tech venture capitalists also consider scalability. That suggests that the Edtech concept may develop over the course of the following two to three years while continuing to get attention and regular funding.
The necessities of the market and consumer expectations are evolving throughout time. It piques the interest of educational investors in firms that develop distinctive and cutting-edge business concepts that guarantee higher profits. This implies that choosing a particular business model is just one more way to attract investors to your Edtech startup concept.
Alignment To VC Mission
When it comes to investing, edTech venture capitalists are drawn to companies that not only increase their earnings but also provide them with a wide range of business options. This is just one more factor contributing to venture funders’ selective selection of Edtech businesses.
Finally, certain Edtech VCs choose companies whose founders have deep industry experience, are aware of the unspoken difficulties facing the education sector, and can apply their skills and knowledge to develop superior concepts.
We’ve observed the driving forces behind investors’ interest in the education sector as well as the criteria they look for when considering an Edtech venture.
Type of Ed-Tech ideas to invest in 2023
K12 Education Apps
The K12 education app is the main category of EdTech applications that you may develop. These web and mobile solutions offer top-notch films that are largely focused on the academic curriculum to instruct children and school pupils.
While entering this area, the best Edtech startups to consider are BYJU’S, PlanetSpark, and Blackboard Radio. They are loaded with all the capabilities considered essential for the next generation of on-demand tutoring applications.
Test Preparation Platform
These Edtech platforms help students get ready for admission tests such as LNAT, USPC, Mensa, IELTS, Gaokao, and CFA, and they may also attract the attention of edTech venture investors. They may stay up to speed on the most recent material, monitor their progress, build confidence, and study for the examinations at their own convenience and pace thanks to these software and mobile apps.
Top Rankers, NeoStencil, Classplus, Examify, and Examify are the best companies to look up to while discussing subdomains within the education market.
Top institutions throughout the world provide distance learning courses online through MOOC (Massive Open Online Course) websites. They enable students to enroll in and complete any course at any institution in the globe as well as interact with other students enrolled in similar courses. Stated differently, these platforms allow students to increase their knowledge and prepare them for a smarter transition into the real world.
Tech Learning Solution
These resources give students the tools they need to succeed in coding and programming, as well as online learning portals that assist them in studying any topic or subject. In this app category, Coding Labs, Aeon Learning, and Edureka are the top three Edtech startups.
Gamified Learning Apps
With the help of these apps, students may study and assess their understanding while taking an exam or engaging in other activities. Moose Math, Masha, and the Bear, Shifu, and Vismory are among the greatest instances of these EdTech applications.
Language Learning Platform
Through highly gamified and engaging methods, these platforms assist users in learning a new language or practicing any language they currently know.
Career Development Apps
Despite having a similar appearance to MOOC platforms, they have a distinct function and have the potential to attract the attention of significant edTech venture investors. With the help of career development apps, professionals and recent graduates may better prepare for their ideal jobs by understanding the fundamentals of such positions sooner rather than later.
Learning Management System
This year, you should also think about sponsoring a business for an online learning management system (LMS). It alludes to a platform or piece of software that functions much like a business and offers the ability to manage, monitor, report on, and distribute educational materials in addition to other goods like discussion forums.
The global market for learning management systems (LMS) was estimated by Fortune Business Insights to be worth USD 14.43 billion in 2021. At a compound annual growth rate (CAGR) of 14.2%, the market is expected to reach $40.95 billion by 2029 from $16.19 billion in 2022.
Finally, but just as importantly, instructors and school administrators rely heavily on school administration apps to handle scheduling, plan special events, compute payroll, create invoices, and other educational tasks. Asana, Gibbon, Fedena, and Evernote are a few examples.
Even if you may earn a significant return on your investment with these Edtech app concepts, the process is not simple. There are several obstacles to overcome before one may enter the market and take advantage of the spotlight.
Thus, in order to get you ready for the Edtech industry, we’ll be shedding light on potential roadblocks.
Challenges Your Startup Might Face in the Ed-Tech Domain
The Fragility of the Outer Ecosystem
Although it may appear that the educational ecosystem is the ideal setting for implementing a “one-size-fits-all” strategy, this is untrue.
You must go further into the education and learning space if you hope to secure investment from an edTech venture investor. This will help you comprehend how important social and cultural variables are to the existence and success of any learning solution.
Therefore, the most important issue to deal with is comprehending the delicate nature of the educational environment and developing your EdTech business while taking into account all linguistic and cultural limitations.
Need for technological infrastructure
Some areas still lack access to essential resources and infrastructure, such as the internet and power. The app pages take hours to load because of the far higher-than-anticipated network latency. Additionally, buffering for video lessons lasts for years.
It is almost hard for the students to gain from employing the best Edtech solutions and help the marketplace succeed because of the circumstances. It suggests that one of the issues that makes Edtech firms fail is a lack of adequate technology infrastructure.
The attitude of the targeted audience
Edtech solutions provide customized and real-time services that enhance the environment’s ease. Some students, nevertheless, view this as a means of avoiding a structured learning environment. It also makes managing uninspired kids more difficult for educators and other professionals.
Another problem you must concentrate on is striking a balance between consumer involvement and convenience.
The freemium model is adopted by the majority of online education firms in order to scale their business, as individuals are more interested in free courses and study materials. Even while it increases downloads for the brand, it doesn’t increase customer retention.
One of the main reasons why individuals are only willing to pay for goods that would help them succeed in the long run. Or perhaps more accurately said, items that help people acquire and hone the talents that are in great demand in the business sector.
Again, the lack of business models that profit from educating and readying users for the best job possibilities is the reason why ed-tech venture capitalists’ investment in the education sector is not expanding.
Even if these are the difficulties faced by the education sector, it is not advisable to try to solve them on your own. It is important to enlist the aid of top-tier suppliers of education app development services, such as our group of Edtech software developers.
Looking ahead to the edTech industry, it is projected that the online learning market will reach enormous growth rates. Reputable suppliers of education app development services are helping a growing number of businesses join the market with the goal of connecting administrators, instructors, and students wherever, at any time, and on any device. You can consult Appic Softwares for a top-notch Ed Tech Solution. Appic Softwares has a dedicated team of experienced Ed-Tech App developers who can help you in building a future-proof Ed-Tech App.
So, what are you waiting for?