What are the key resources for early-stage edtech entrepreneurs?

As an early-stage entrepreneur, time is your most scarce resource, so I am happy to provide a summary of the main resources I’ve found helpful to navigate the early stages of edtech company formation. Needless to say, don’t worry about going deep through all the resources you come across. Instead, focus on your key priorities and find the resources that are best suited for addressing those needs.

Here’s a quick framework to get you started thinking systematically about resources.

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How do I know if my total addressable market is big enough?

Your TAM, or “Total Addressable Market,” is a dollar figure representing the total amount of money spent on the problem your product or service addresses. The term is often a proxy for how big the revenue opportunity is for your company. The bigger the TAM, the bigger the opportunity. VCs, of course, tend to like big TAMs.

At the same time, it’s common for early-stage entrepreneurs to hear VCs encourage them to stay laser-focused on solving a narrow problem. As a resource-limited startup, you need to scope and focus on successfully solving one pain-point for your customers in order to overdeliver in customer satisfaction. The thinking goes: start by doing one thing really well with your limited time and capital, and then expand.

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Should my edtech company sell to teachers, schools, or districts?

When starting a new company, entrepreneurs like you typically aren’t picky about their very first customers. Beggars can’t be choosers, after all. In education your first customer could be a teacher, a school, or (more rarely) a district. In my work at Reach, I’ve found that it’s usually an assortment — you might have a few dozen scattered teachers, a school or two, and maybe even a small district.

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What’s the edtech fundraising environment in 2017?

As forecasted, 2016 saw a softening of venture activity, especially at the seed stage, and a return to historical means after a frenetic 2015. In this letter we share what we’re seeing in the edtech investment environment and offer our thoughts on what that might mean for you.

Edtech investment generally follows the same trends as the overall tech investment landscape, and 2016 was no different. Overall, tech investment declined for 6 straight quarters, with seed rounds seeing the sharpest drop. Similarly, education saw a ~30% decline in investing activity last year. 2016 was off from the year prior by about 60 fewer deals and $370M dollars. Keep in mind that education remains a very small slice of overall venture capital activity: in 2016 education investments represented about 1.5% of total VC investment.

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What business models are possible in edtech?

I get this question a lot, particularly from entrepreneurs who have not worked in edtech before. There is a general perception that education is full of regulations and red tape that make it impossible to innovate. But I have found that there is a lot of interest from teachers and admins in new digital solutions that “superpower” their work, and edtech companies are finding creative ways to monetize use of their products.

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