The average age of bestselling EdTech startups
December 2, 2020
The GSV Global EdTech 50 is comprised of the leading companies in the Digital Learning
Over the years EAF has worked with hundreds of EdTech startups from around the world and we frequently discuss with founders about their business development challenges. Quite often the entrepreneurs seem frustrated that they haven’t achieved more during the years they’ve existed. These conversations spark us to continuously reflect upon what are the right business development moves when aiming for success in the education business.
Generally, the EdTech sector is growing fast and there are many highly successful startups. It’s eye-opening to analyze the common nominators of these best-selling EdTech startups.
When looking at the similarities between companies, it’s surprising to see how old successful EdTech companies are. From the media, you get the picture that startups make it or break it in five years. This can be true in other industries, but in education, successful startups seem to find success older. Half of these GSV listed super successful companies are more than 10 years old, and some are turning now to a respectable age of 20 (links to GSV Top 50 listing and founding years at the end of the post). This raises a question, why late bloomers are so typical in education business?
Building a successful EdTech business is like running a marathon
It’s good to remember that B2B model in education means mainly selling to the public sector and governments. Negotiating a deal with a school district does take more time than if selling to a private company. Sometimes it means participating in a public tender and almost always you have to do free piloting, tweak the pricing model for different clients, and be prepared to schedule your deal closure and user onboarding accordingly with the school year.
Just to learn these special rules of Edu-sector takes time and when sales cycles are slow it means more moderate revenue growth and makes it harder to raise funding to speed up growth.
Building trust takes time
Another slow-built element of a successful EdTech company is trustworthiness. This aspect cannot be underlined too heavily. Schools only buy if they trust the company 100%. That’s why many successful EdTech companies have first become popular in their hometown schools and many times the founders are teachers who used to work in the area.
Teachers get the vast majority of their learning materials from educational publishers, which are typically 100-year-old, local companies that have served generations after generations. Educational publishers have a down-to-earth brand – and their books are written by teachers. In this context, it’s easy to see that schools are not used to hearing a sales pitch from an innovation company that promises that their team of 10 people working in a startup garage is ready to change the lives of their students with their new AI-based STEM platform. Understandably, the teachers can be skeptical. To overcome it the startup needs to be patient.
Avoid Hard Selling in Education Sector
Instead of trying to force the sales fast before losing the runway, it’s better to be prepared for slower growth, keep the budget tight, and focus on fewer markets where the accumulated trust brings benefits over time. Nobody likes hard selling and schools just absolutely hate it.
EdTech company can only find big success through becoming a recognized and respected operator in their target markets. This is easier to achieve when the market focus is sharp and you spend a lot of time making sure your clients benefit the most from your solution. This can mean smaller growth figures during the first years, but the approach pays off in the long run.
Common wisdom in the EdTech scene is that the first deal doesn’t mean anything. Only the second and third deal with the same client work as proof that the product provides real value for the users.
Too many times we have seen an EdTech startup getting a good deal with one school district and then try to search for fast growth from other markets, which leads to not giving the best possible support to their existing clients. There’s a high risk that the clients won’t renew their license the next year.
The Best EdTech Startups Are Like Camels
One of the best analogies to describe the slowly but surely built EdTech success is presented by Quizlet’s CEO Matt Glotzbach on EdSurge interview. Glotzbach doesn’t want their EdTech company to be called a unicorn. He prefers the analogy of a camel.
“They can survive in the harshest environments,” Glotzback told EdSurge. “They can go for long periods without food and water.” And: “When camels do get to a watering spot, they can guzzle water faster than any other animal on the planet. But they make it last.”
These thoughts come from a credible source. Quizlet is turning 16 years old in 2021 and the company is valued at 1 billion USD in their last funding round.
Links
Founding years of GSV EdTech 50 Startups