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How to Get Funding for Your EdTech Startup

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e-Learning

E-learning has been in use as an alternative to the traditional mode of schooling. However, when the Covid-19 pandemic hit the world, learning institutions were among the first organization to close to prevent the spread of the virus.

As a result, homeschooling and remote work became the new normal. So schools began providing education online as well as organizations began offering training through digital methods.

These changes led to the rapid increase in investments in e-Learning startups to boost the education sector. For that reason, this is the best time for founders to launch EdTech startups offering e-Learning and mLearning tools enhanced with AR/VR.

The post will review the current EdTech trends and how you can get funding for your startup.

The Overview of the EdTech Industry Trend

As we all know, Covid-19 changed the way people learn, work, and interact. This outcome gives a promising picture in the global EdTech sector, and it’s expected that new EdTech products will be released in the market as e-Learning consumption increases across the world.

Between 2010 and 2019, the EdTech industry was not pronounced as it is today, and therefore it received approximately $32B in funding. However, it is forecasted that the funding will grow to $87B by 2030 due to the expected advanced functionalities and rich features in the upgraded EdTech products.

As of 2020, the US had nearly 1,385 EdTech businesses, 327 in India, 275 in Brazil, 245 in the UK, and 101 in China. But, with the rapid rise in digital education and the use of the new generation technology such as AR/VR, the global investment in e-Learning is forecasted to grow to $342B by the end of 2025 from $142B in 2018.

Therefore EdTech startup founders have a higher chance of revolutionizing the education sector and must explore ways of getting a piece of these investments to grow their business.

How to Fund Your E-Learning Startup

Since it’s evident that the competition in the education industry is expected to be strong, an EdTech startup founder should create a unique product to help them stand out.

Investors are looking to invest their money in new companies with a promising future because they want to get an outsized return on their investment. Hence you have to give them enough reasons to choose your idea over a million others. For instance, you can find a solution on how to upgrade the underserved part of the e-learning space.

There are many popular EdTech trends that you can consider and look for ways of outpacing them. Choose a niche or future field of growth, develop your business model around it, select your unique selling points (USPs) and differentiators and then get funding for your startup business. These trends include:

  • Learning Management System (LMS)
  • Language learning platform
  • Gamified learning Apps
  • Career development Apps
  • MOOC portals
  • School administration
  • K12 education Apps
  • Test preparation platform

The following are ways of getting funds for your Edtech startup:

Angel Investors

You can pitch investors in investment portals such as AngelList or reach out directly to investors focusing on the education industry. Still, investors in this industry can refer you to other investors in other sectors that are looking to diversify their investment portfolio.

Some of the investors interested in the EdTech field perceive that the pandemic is an accelerator to digital learning, and they would be willing to invest in startups creating new e-Learning products.

Venture Capitalists (VCs)

Although VC investors and firms can be picky at times, they have the power to invest in an EdTech business singlehandedly or bring in other investors. They want to create unicorns because it is here where they make huge returns on their investments.

So a startup that has identified an unaddressed issue in the digital learning space and has a unique solution or approach can attract a VC’s attention and receive a substantial amount of funding and support.

However, with VC’s funding, a founder must be willing to part with a large portion of their equity, and they will influence key decisions in the company. Still, they prefer to work with experienced or successful startup founders or those that have engaged a technology partner.

Crowdfunding

Getting a single investor or firm that can give you a big pile of cash might be a daunting challenge because they are concerned about the underwater reefs of EdTech development.

However, an EdTech startup founder can get funding in different ways, such as state funding programs, donations from educational institutions, or other institutions that are interested in funding your unique e-Learning product.

Still, you can register with platforms that can help you secure investments, such as Indiegogo and Kickstarter. Through these forums, many enthusiasts can donate funds in exchange for a share of the profits when you sell the products or some equity.

Institutional Investors

There are certain global corporations, universities, or educational systems that are willing to finance innovative concepts. So they may try to breed a new business venture in their internal startup incubators or purchase a business with this unique idea.

The business will have access to financial resources as well as the brand recognition necessary for developing and promoting a new product.

However, the founder must be careful not to partner with institutions with a lot of internal bureaucracy because this will affect the decision-making process, pay attention to exclusivity, and avoid partners with little successful experience working with new business ventures.

Conclusion

Since the start of the Covid-19 pandemic, the education industry has witnessed a lot of changes in the way students learn. Instead of the physical contact between a student and a teacher, institutions of learning have switched to online learning.

Further, EdTech startups are identifying gaps in the e-Learning landscape and looking for unique ways of improving this space. Thus this sector has a promising future.

As a founder of a new business, you can get funding to help you create new generation e-Learning products through crowdfunding, venture capitalists, angel investors, or institutional investors. So select your niche market, determine your unique selling points, and get started.

I'm a passionate and full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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