Why EdTech Startups Fail In India? Full Case Study

Why EdTech Startups Fail? Full Case Study
Why many startups in the education sector do not survive for long in the marketplace is a lack of transparency and collaboration with teachers.

The educational landscape in India has seen many disruptive changes in the last decade. Educomp was certainly a pioneer in the field and it dominated the market. Though the company ultimately faltered, it certainly inspired many entrepreneurs to try out their luck.

Two sectors which have rapidly grown as a byproduct of e-commerce in India are EdTech and logistics tech. While the latter is rising almost in parallel to eCommerce and crowns 3 unicorns today, EdTech is yet to find its apex.

Some of these startups have also come up with innovative products and have offered innovative solutions. Despite that, most of them are struggling financially and this is not because schools and universities don’t have money to spend, but because the problem lies somewhere else.

Difficult to reach

The market is flooded with many players and everybody is trying to sell something to school management, and it’s practically not possible for them to consider every proposal so they filter out strictly before finalizing the meeting. Therefore, often it happens that startups don’t get approval for face-to-face meetings. So reaching out to customers in itself is a big challenge.

This also limits their ability to reach the relevant persons having the decision-making power. For a startup to succeed it’s important to get a few initial customers who keep them afloat.

Resistant to change

Teachers and school staffs are usually comfortable working traditionally as they find it difficult to adapt to change.

Another thing is that technology awareness and competency are quite low in most schools, and it’s quite difficult to change that attitude. Teachers and school staff are usually comfortable following traditional working and teaching methods. Like anyone else, they too are sceptical of change since they feel uncertain about being able to adapt to the change and keep up with it.

Multiple stakeholders

Schools have multiple stakeholders such as admin staff, principals, teachers, parents and students. So those who are taking the decision, those who evaluate, it and those who use it are all different.

For schools, it’s not always possible to pass the entire cost to students and parents as they won’t be very much willing to share the burden.

Saturated market

The total size of the education sector in India is $100 billion and the schools share is 38 per cent. The size of the market is so lucrative that many players have jumped into the sector with different solutions to address the pain points of schools.
The entry barrier is also low making it a highly competitive sector. Educomp is a big example, Extramarks and other companies have beaten Educomp by offering lower price levels and better service offerings.

According to Inc42, a well-known magazine, “However, though the startups are clear about the ‘differentiation’ they offer, schools are no longer impressed with the differentiation alone. School managements review solutions holistically, including the ability of the team to service their account well. Schools need a comprehensive solution. Not just a great product. Most startups do not recognize this critical difference.”

No validation

This is not an edtech-specific issue, but common to all startups. Customers want validation of their claims, but they don’t have anything to substantiate their claims.

Low propensity to spend money Unless the startup has an extraordinarily strong value proposition, getting schools signing on.

The solution is not easy

Startups should work hard to get validation from customers from start. It will help convince their customers that the promised value can be delivered. Contact those partners who have already relationships with schools. For example, you can contact some publishers whose books are sold in schools. Also, keep them engaged about your offerings through regular updates

Once you gain a certain level of clientele in the market, schools are more open to meetings. You can present them with a case study about how your solution improved the school’s pain point. Sharing testimonials can also be a good way to earn early trust.

Just being pushy salesman approach won’t help; try to forge a lasting relationship. Schools should think that you are there to provide them with lasting solutions. You are there as a successful partner. Focus on improving services and sales support.

Additionally, the education sector is fast evolving, but the resistance level is also very high. So you will need to convince every stakeholder in the process.

What will happen?

Why EdTech Startups Fail? Full Case Study
Educational companies built around driving down costs to the end consumer will scale.

According to Avichal, a PrepMe founder, says:

“Those Educational companies that focus on delivering higher quality solutions to consumers will not scale to the mainstream. Educational companies built around driving down costs to the end consumer will scale.”

Education is not like e-commerce or any other type of hyper-local business, it’s a long-term business. So going fast growth or hyper-growth phase is something not advisable.

The behaviour of every stakeholder is different and is driven by their circumstances. Parents prefer quality but cheap education and educational institutions like to sell products that help them make 5x-10x earnings on investment. Therefore, startups should work out their revenue models properly taking into account the requirements and psychology of different startups.