As a budding edtech entrepreneur, I get overwhelmed by the many resources I’m constantly exposed to: new investors I should connect with, conferences I need to attend, blogs I should read, etc. As I maneuver this space, how can I make sense of all this information and what are some key resources that you’ve found to be helpful for early-stage edtech entrepreneurs?
Dear Edtech Padowan,
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.
If you need to raise funds…
You’re in luck. Edtech investments are on an upswing this year and have generally been rising since 2010. If you’re unsure where to start on the fundraising process, Y Combinator’s A Guide to Seed Fundraising provides an excellent overview of different financing options, when to raise, how much to raise, and more. It’s also applicable to more than just seed fundraising.
Accelerators / Incubators…
Accelerators and incubators prime startups for growth by providing services such as mentorship and access to investors (generally in the form of a Demo Day), on top of some capital (generally around $100k) in return for equity. They tend to cater to entrepreneurs who are just starting out and still working on their products or go-to-market strategies. They are also great for building connections with mentors, like-minded entrepreneurs and the investor community. Here is where to find them:
- EdSurge’s Your Guide to a Nation of Edtech Accelerators – Although published in 2015, the article does a great job explaining accelerators and incubators and showcasing examples of companies that have found accelerators to be helpful.
- Sector-Agnostic Accelerators – Accelerators that have a history of supporting edtech companies include Y Combinator (now includes the former ImagineK12 as a vertical), Techstars (which also runs shorter alternatives such as Startup Weekends with education themes), and Alchemist.
- International Accelerators – Good examples include Israel’s MindCET edtech innovation center, London’s Emerge Education (supported 40+ education startups since 2013), and Santiago’s Start-Up Chile (supported 12 education startups so far). In many other geographies, Start-Up Chile has spawned comparables including StartUp Peru, Puerto Rico’s Parallel18, Malaysia’s MaGIC, and South Korea’s K-Startup Grand Challenge.
If you’re just starting out and don’t have much of a product, your investors are likely going to be friends and family, angels from your personal network or from platforms such as AngelList, or crowdfunding sites such as Kickstarter.
Once you’re ready to see institutional investors, a good way to start developing a target list is to see who has been most active in the space. You will find there are some edtech-specific funds but also funds that invest in edtech but are sector-agnostic, you should consider both. Look at the types of companies they’ve traditionally invested in, and avoid investors that you know have portfolio companies that are direct competitors of yours. Other considerations include investors’ focus on specific investment stages, geographies, and business models. (Be on the lookout for an upcoming post by Guido on non-obvious fundraising tactics! Subscribe if you haven’t already.)
- Hack Education’s Who’s Investing in Edtech – Includes the larger traditional VCs without an edtech-focused mission, links to the author’s raw data files (in case you’d like to do your own analysis), and discussion on some of the nuances in building your own list of relevant investors.
- CB Insight’s Infographic – A bit outdated as of this post (summer of 2017), but provides a good frame of reference for some of the big players in the edtech sector and their investments.
- EdSurge’s Following Edtech Money – Extensive analysis on the flow of money in edtech and key funders / investments / buyers between 2010-2015. An update on the 2016 funding environment is included here.
- Corporations – Corporations can provide financial support and can also play a strategic role for your company. Examples include Mattel, Intel, Google, and Microsoft, which all invest in startups. However, know that corporations tend to invest at later stage, do not typically lead, and look for strategic synergies when analyzing investments.
If you’re looking into grants and other sources for edtech funding…
Although edtech investments are on the upswing, raising money from institutional investors definitely isn’t easy or it just may not the best fit for your company. If that’s the case, you may have access to grants and other alternative sources for funding. Stanford Social Innovation Review’s New Approaches to Ed-Tech Funding (co-authored by Reach Capital’s own Shauntel Poulson) provides a good overview of “blended” capital and new funding models arising in the field.
Keep in mind that grants come with certain restrictions. For example, the SBIR grant program (more on this below) provides funds only for R&D initiatives and requires companies to have >51% American ownership. Be sure to check in your local region / country to see what other grants you can tap into.
- Grants such as the US government’s SBIR – Small Business Innovation Research program grants are a great way for small businesses to fund development without having to give up equity. Two of the most relevant sources for financing are the NSF’s Education Technology and Applications (EA) or the US Department of Education’s SBIR grant.
- NewSchools Venture Fund’s Ignite – NSVF operates a virtual accelerator program that provides edtech companies with grants of $50k – $150k, without equity strings attached.
- Inside Philanthropy’s K-12 Education Funders List – Although it largely targets educators and non-profits in the US market, an extensive list of the major foundations backing K-12 initiatives. Some such as the Gates Foundation aren’t hesitant to back for-profit entities.
If you need to connect with initial users…
You can start with the resources below to get help in finding pilot users. If you’re targeting teachers, some of the strongest communities are formed on Facebook groups, Twitter, and Edcamps.
- Leap Innovations, LearnPlatform, and Silicon Valley Education Foundation’s Learning Innovation Hub (iHub) allow edtech companies direct access to large networks of educators via online portals and in-person convenings. These can be a good way to test your MVP even before (or in conjunction with) an official launch.
Public lists on schools, districts, colleges…
- K-12 – If you’re approaching US public schools and school districts, the Common Core of Data (CCD) is a great place to get information on student population characteristics, graduation rates, per-pupil expenditures, and more. For even more granular information such as email addresses of principals, states like California maintain their own data portals.
- Higher Ed – The Integrated Postsecondary Data System (IPEDS) has data on more than 7400 higher ed institutions, including enrollment numbers, student financial aid, and core revenues and expenses.
If you don’t know what you don’t know…
Conferences are a good start. Many people tend to think of conferences as primarily a sales or networking opportunity, but these events can also allow you to get a fresh perspective on what’s happening in the edtech space, get inspired by other entrepreneurs who may be farther down the line, and meet experts face-to-face.
Conferences and events…
- EdSurge’s Education Technology Events – This calendar does a wonderful job of capturing upcoming events. EdSurge also published a great visual on key K12 edtech conferences and Higher Ed edtech conferences happening in 2017-2018.
Finally, we found these following edtech primers to be super valuable for entrepreneurs seeking to understand everything from key market trends to how to run a financially sustainable business.
- US Office of Education Technology – Provides resources for entrepreneurs, including the highly-recommended Edtech Developer’s Guide.
- Edtech Handbook – Curated by edtech founders and educators, the handbook covers marketing, fundraising, and other relevant topics to launching education startups.
I hope these links are helpful as you start your edtech company. Again, the key is to focus on your priorities and find the resources that best help meet your needs. If there are other resources you’d like to share with the BlendED community, please feel free to leave a comment on this post and drop us a note.
Partner, Reach Capital