Startup companies in the digital education services, or EdTech, sector are slowly beginning to saturate the market. A recent article offers some recommendations to help startups avoid going out of business while they are trying to get their product to sell.
The education technologies market is booming and its total value is expected to pass the $1.2 trillion mark by 2015. This market has attracted the attention of a number of players and some startup companies have enjoyed spectacular success, notably Coursera with its 2.8 million registered students and Udacity, which has attracted copious funding, raising around $20 million to date. Nevertheless, the path to success for a tech startup is not necessarily smooth. An analysis published by Allmand Law, a Texas law firm specialising in company bankruptcy counselling, in February this year reveals that over 90% of ICT startups are doomed to fail. Samantha Faire, a researcher at MBAOnline, a website designed to provide career guidance to MBA graduates, has carried out an analysis of the current state of play in the EdTech sector and drawn up a list of recommendations for any startup founder looking to launch a product on this market.
Focusing on the user
Given that numerous players are beginning to saturate the digital education market and that the time and money available to students and the parents of school pupils are limited, Samantha Faire reckons that the freemium business model could well pay off. The freemium approach is to offer a newly-launched product initially free of charge, bringing out paid-for additional functionality once the basic product has caught on. This is a good way to test out your product with the end-users and prove to investors that you have a potentially valuable product. In order to succeed here of course the startup needs to know precisely who its customer is and ensure that the product or service is meeting a real need. One solution, adopted by the founders of adaptive educational testing products specialist The Testive, is to go out and interview your putative customers. Classroom management platform provider Youtopia uses gamification as a way of keeping in touch with its audience and staying aware of the student-users’ needs through the feedback it receives.
Targeting investors and decision-makers
Samantha Faire points to other more general factors that will determine the success or failure of a startup. While it might be possible to find partners, and even investors, on one’s own university campus, it is important not simply to count on the end-users getting hold of and appreciating your product, but to actively build a base of contacts, she underlines. Networking – including taking part in incubators and attending conferences – also helps a startup to adjust its assumptions about its product, the people who will buy it and those who will use it. A growing marketing trend in this sector is the ‘grassroots’ or ‘bottom-up’ approach, used by among others StatFuse, whose app helps high school students find the right college. This startup pitches its product to high school guidance counsellors and parents of senior-year students in the hope that they will then recommend it to the high school principal who is the key decision-maker.