EdTech February 9, 2023

Uncovering the Reasons Why EdTech Startups Fail

Writen by EditorialTeam

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Why EdTech Startups Fail

The growing interest of investors in ed-tech startups and the rise in the use of such apps have excited entrepreneurs about starting a business. They are full of hopes to launch the next Udemy, Duolingo, or Byju’s and get a slice of the global education industry. But they are overlooking a crucial fact.

Tutorspree, Knack for Teachers, KNO, etc. – many add to the list of failed ed-tech startups every year. This raises an essential question of why edtech startups fail? Many companies enter the market to excel and be the leading ed-tech business, but they cannot last; some even forget to enter the market for various reasons. 

Assuming that you are one of the entrepreneurs contemplating entering the edtech market but are confused about realizing this, we will etch out why edtech startups fail? We will also share how to overcome these pitfalls to avoid failure. 

So, here are the top reasons for edtech startup failures. 

Why Do EdTech Startups Fail?

Various reasons lead to the failure of EdTech startups; however, this section will focus on seven prominent reasons. So, let’s dig into each one of them.

Why Do EdTech Startups Fail

Insufficient Market Research

Undoubtedly, there are unlimited innovative possibilities in the education sector. But not all of them should necessarily be part of your ed-tech startup. Some of these ideas are too fancy to be adopted at this time. 

Startups skip the most important process of proper market research and jump into the educational industry without doing sufficient homework and competitive analysis. Additionally, they find it challenging to distinguish between fancy app ideas and must-required features of EdTech, thus eventually ending up picking the former. Hence, this is one of the significant reasons startups fail to take off.

Technology Overload

Noticing the impact of technologies on the education sector, many entrepreneurs are introducing AR, AI, IoT, Blockchain, ML, and other technologies into the ed-tech apps without a thought.

Technology Overload

Many of them are ignoring the benefits they bring or the pain points such technologies address for the users. Alternatively speaking, they overlook how they can engage the target audience, contribute to the core app idea, or drive sales for them.

Eventually, it only adds to the ever-increasing application development costs. Moreover, it instills confusion among the app consumers, leading to the failure of an edtech startup.

Deploying Too Many Features

As mentioned in the section above, educational entrepreneurs introduce too many features in their EdTech software app development plan, which results in a highly complex application. In addition, it usually leads to distraction from the application’s core purpose, lower user experience, and increases chances of failure.

Not Offering Sufficient End-User Training

Since mobile apps are the future of the ed-tech industry, the competition in the education market is hitting newer heights. Such is the effect that some education business leaders are hurriedly investing in educational software development to launch new functionalities and products that they overlook entirely whether users find them useful or not. 

A lack of initiative to introduce user manuals and other training materials to help users how to use the mobile application is the leading cause of a startup failure. As a result, they fail to retain users and lose their market.

Lack of Differentiation Between Customers & Users

Often, many users download the app to test the features and comprehend the proof of the concept. Yet, only a fraction of these users signs up or purchase the services the ed-tech software provides.

Hence, even after gaining 10,000 more subscribers onboard, fast-growing online learning startups fail to generate revenue and become unsustainable in the dynamic educational technology market.

A Lack of Patience

Contrary to other business domains, the growth of the EdTech industry is extremely slow. As a matter of fact, many businesses start seeing significant growth after five to ten years of establishment, which is uninspiring. 

Therefore, it is disturbing for investors and entrepreneurs who want to get a bigger slice of the ed-tech app development marketplace at an incredible pace. Also, venture capitalists and investors are known to be impatient and tend to walk out of the venture of their choice even before the startup shows any growth.

Insufficient Transparency & Collaboration Between Educators

Another significant reason why EdTech startups fail is the lack of transparency and collaboration with instructors.

These businesses start with the intent to replace educators and other existing elements of the educational system. Thus, neither they open up about their working module nor take input from instructors and others. Consequently, when educational institutions and instructors show interest in adopting and employing these apps and software, it leads to failure.

Now that you know why EdTech startups fail, you must rethink your ai in education startup idea. 

Well, we have got you covered!

Learning to prevent such pitfalls rather than abandoning your EdTech startup idea is essential to ensure that you don’t repeat the history of failures.

How To Overcome EdTech Failure

To make your ed-tech startup a success and a name to reckon with in the market, you’ll need to follow some of the ways discussed below. Not only will you achieve growth, but you will also overcome the causes of failure.

Conduct Adequate Market Research

Many education startups fail because entrepreneurs are unaware of the market needs and competitors’ offerings. Therefore, the crucial step towards lowering the risk of failure is to invest your time into the ed-tech software discovery process and understand the desires and needs of your target audience. 

In other words, it is critical to see your target user base’s challenges, what the existing online learning apps offer, and where they are lacking. Hence, you can determine when and how to make your way to the top in the learning and education market.

Ensure Flawless Collaboration

There is no denying that instructors and educational institutions are an integral part of the traditional learning system, much before your thought of having an education app development team and launching your own startup. 

Educators and organizations are well-versed in the market’s evolution since its inception. They know the challenges and opportunities that altered the direction of innovation and much more. 

So, treat them as companions and seek their advice on how to make your ed-tech application more secure, successful, and valuable for the customers.

Concentrate on The Monetization Model

The revenue generation process is slow in the case of the ed-tech app development market. So, it is recommended to consider a model that will help you sustain yourself until you earn money through the app.

For this purpose, four monetization strategies can make your business successful.

Only Pay as You Go – As the name suggests, this business model operates so that customers have to pay for only the services and time they use the e-learning platform

Freemium – Many people still wonder how free apps generate money, but this monetization technique is the most admired. The mobile app is free to use. Yet, you can charge some amount of money to offer a better experience to users and allow them to unlock some new features. 

Enterprise Sales – EdTech startups consider enterprise sales when the products require more integration, training, and customer support services.

Subscription – Top ed-tech startups like Coursera follow this monetization strategy. It demands a price to let users access services/products weekly, monthly, or yearly.

Launch MVP First

If your e-learning app is too big and complex, it will add to the app development timeline and affect the user experience, acquisition, and retention rate. In addition, winning over your audience will become a challenge, as many competitors are rising in the ed-tech market every minute. 

In such scenarios, the best method to reap higher benefits and minimize losses is by investing in the idea of a Minimum Viable Product (MVP). Introduce the least functional features and technologies into your online learning app in a way that helps you to enter the market at the earliest. Eventually, you will save cost and time, validate your MVP concept, and so on.

Utilize Right Technology

While you would want to integrate multiple technologies into your ed-tech application, it can be a wrong act. However, it doesn’t imply that you shouldn’t introduce cutting-edge technology into your application plan. 

Contact the best educational app developers to take advantage of the state-of-the-art technologies and tools in your e-learning application and determine which technology would be the perfect addition to your ed-tech app project.

Final Thoughts!

So, although some inherent challenges exist in the education technology businesses, certain areas lead to failure. Therefore, ed-tech startups must address a real educational need, be unique, and understand what business model would best fit their company. Moreover, educational entrepreneurs must realize that growth will be small initially, which should not discourage them from working hard. Technology in education is the future of teaching and learning, and the education sector needs more exciting products to transform how we learn.

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