7 reasons why education startups fail & ways to avoid them

Dileep Gupta August 19, 2022
why education startups fail

The growing interest of VCs in education tech startups and the given rise in the use of education apps have made entrepreneurs excited about starting their businesses. They have become more hopeful about launching the next BYJU’s, Duolingo, or Udemy and getting a bigger slice of the global edtech industry. 

However, they are overlooking an important fact.

KNO, SharpScholar, Knack for Teachers, Tutorspree – Many startups add to the list of failed startups in the education sector every year. Thus many of these companies try to enter the market and be in the leading list of edtech companies but couldn’t last while others fail to even step into the market due to a variety of reasons. 

Assuming that you are one of those entrepreneurs who have been thinking about entering the edtech industry but are confused upon realising this fact, we will discuss the reasons why edtech startups fail. Also, we will be sharing the best of our knowledge and experience to help you with the prevention of startup failure in the edtech industry.

So, here we start by focusing on the top reasons of edtech startups failure.

7 common pitfalls faced by education startups

There are various reasons that lead to the failure of edtech startups, but in this section, we will cover about the 7 most prominent of them. So let’s understand each of them one by one.

7 Common Pitfalls Faced by Education Startups

1.  Poor market research

There’s no denying that there are various innovative possibilities in the education sector. However, not all of them are ‘must-required’. Some of those ideas are too fancy to adopt in the present time.

In such a scenario, those startups that jump into the educational industry without doing proper homework, market research and competitive analysis, find it difficult to distinguish between ‘must-required’ and ‘fancy’ app ideas and eventually fail to pick the latter. This forms one of the significant reasons startups fail to even take off.

2.  Lack of patience 

Unlike other business domains, the edtech industry growth is utterly slow. In fact, most companies see significant growth only after 5-10 years of establishment, which is quite uninspiring.

This makes it disturbing for both entrepreneurs and investors who wish to get a bigger slice of the learning app development marketplace at a tremendous pace. More importantly, investors and venture capitalists  are notorious for being impatient, and tend to bow out of their venture of choice even before the e-learning startups display any growth.

3. Unclear distinction between consumers and customers

It is often seen that a lot of users download the applications to test out the features and understand the proof of concept (due credit to mobile app promotion teams for this). However, only a small tiny fraction of these ‘trial’ users actually purchase or sign-up for the services offered by the said application.

Because of this, even after having 10,000 or more users onboard, fast-growing e-learning startups fail to get enough revenue, which becomes unsustainable in the dynamic edtech market.

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4. Introduction of unnecessary technologies

Seeing the impact of technologies on the EdTech sector, many entrepreneurs have introduced AI, AR, IoT, ML, Blockchain, and other such technologies into their education apps

However, many of them are not looking at the benefits they bring or the pain points they address for the consumer. In other words, how they can engage the target audience, bring more sales, or contribute to the core app idea.

This has added to the ever-increasing app development cost, and also instilled confusion among the app users, and eventually, turning out to be another of the many reasons startups fail.

Let’s understand this point in detail with the help of a case study of Nova. It is a blockchain-powered digital learning system that is bringing a positive technical revolution in the education sector. 

Appinventiv has designed it as an easy-to-use and intuitive platform to make learning easy for learners and teachers. Along with that, it solves a distinct issue that LMS agencies face – fraudulent course certification. 

Thus we can say that Nova uses technology in the right manner to address the pain points and also ensures that the users don’t find it complex to use.

5. Lack of transparency and instructor collaboration

Another reason why many startups in the education sector fails in the marketplace is the lack of transparency and collaboration with teachers.

These startups work with the intent to replace teachers and other elements of the existing educational system. Hence, neither can they open up about their working module nor can they take input from teachers and others. As a result, the educational institutions and teachers show the slightest interest in adopting and employing these education apps (or software), which eventually leads to failure.

6. Too many app features

Many educational business leaders introduce so many features into their education software development plan that they end up making a highly complex application. This often leads to distraction from the core application purpose, lower user experience, and eventually, lesser chances of success.

7.  Insufficient user training

Since mobile apps are the future of the education industry, the competition in the edtech market is hitting newer heights with time. An effect of which is that some entrepreneurs are in such a hurry to invest in educational software development and launch new products (or functionalities) that they overlook entirely if the users find them useful or not. 

They do not take the initiative to introduce user manuals or other training elements that could help them use the mobile application. Therefore, they fail to retain the target audience and lose the market.

Now that you have understood the reasons that can make innovative ideas go flop, making the edtech startup not enter the list of leading companies. We are sure that you are now rethinking your education startup ideas.

Well, not exactly.

To ensure that you mark a different history for your edtech business, it is vital to learn how to prevent such failures rather than abandoning the education startups ideas.

So, here we go.

Ways to overcome edtech failure causes & grow your venture

In order to ensure that your edtech startup makes it to the market and also enters the list of leading edtech companies, you will need to follow some of the ways discussed below through which not only your edtech will achieve growth but also overcome the causes of failure.

Ways to Overcome edtech Failure

1.  Perform market and competitor analysis

As discussed earlier, many education startups fail because business leaders are unfamiliar with market needs and competitors’ offerings. So, the foremost step towards lowering the risk of app failure is to invest your time into the app discovery process and understand the needs and desires of your target user base. 

In other words, it is essential to see what challenges your target audience is facing, what the existing edtech apps are offering, and where they are lagging. And this way, determine when and how you can make your way to success in the educational and learning environment.

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2.  Focus on KPIs

As highlighted earlier, many applications win the race to get higher downloads but fail to turn them into subscribers. In such a scenario, considering download as the main parameter for determining the success level of your e-learning application is not a wise decision.

One should look forward to evaluating different mobile app KPIs to maximize the app revenue and consequently, the success ratio of their edtech startup.

3.  Collaborate with teachers/educational organizations

There’s no denying that teachers and educational organizations are a part of the traditional learning system much before you even thought of hiring an education app development company and launching your own startup. 

They are well-versed with the evolution of the market since its inception, the challenges and opportunities that changed the direction of the innovation, and more.

In such a scenario, treating them as a companion and seeking their advice on how to make your educational mobile app more useful, secure, and successful is nonetheless a great decision. 

To develop an on-demand tutor app that stands out from the competition, you must integrate unique features into your on-demand tutor app.

So, look forward to it. 

Connect with the top teachers and educational institutions to understand pedagogy, how classroom technology changes the outcomes, how students actually learn, and know what they expect. 

Likewise, you can consult with a top learning app development company or investor who has been involved in different types of learning app projects.

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4. Add value to existing learning system

Considering your edtech idea as an integral part of the existing environment rather than as a replacement is yet another way to prevent edtech startup failure. So, be clear about it. 

Focus on the challenges associated with the existing learning management system and look ahead to solve them. This will encourage the people involved in the traditional ecosystem to embrace your technological innovation solution and refer to others. Something that will aid in targeting a wider audience without putting much effort into marketing.

5.  Build a concurrent business model

As stated earlier, the revenue generation process is quite slow in the case of the elearning app development market. So, it is advisable to prefer a business model that helps you to remain in the competition till you earn some money through the app.

Now, when talking about the same, there are primarily four different monetization strategies that can make your business a real success –

  • Freemium – Though many people still wonder how free apps make money, this monetization strategy is the most lovable one. Under this model, the mobile application is free to use. However, one has to pay some amount of money to get a better experience and unlock some new features.
  • Only Pay as You Go – As the name says, this business model works in such a way that users have to pay only for the time and services they use the edtech app.
  • Subscription – This business strategy that even the top edtech startups like Coursera follows, demands a price for accessing the product/services at weekly, monthly, and yearly periods.
  • Enterprise Sales – Enterprise sales is considered by education startups when the product requires more training, integration, and customer support services.

6.  Start with an MVP version

If an education application is too big and complex, it will not just add to the app development timeline but also affect the user acquisition and retention rate. It will be a bit difficult to rule the hearts of the audience, especially when there are many more competitors arising in the market every minute. 

In such a situation, the best way to relish higher benefits and cut down losses is by investing in the concept of Minimum Viable Product (MVP). That is, introducing the least functional features and technologies into your edtech mobile app such that they aid in entering the market at the earliest, save development time and cost, validate your MVP idea, and so on.

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7.  Integrate the right technology

While integrating multiple technologies aimlessly into your edtech application can be the wrong act, it does not mean that you should not introduce any cutting-edge technology into your app plan. 

The right way to get the advantage of state-of-the-art technologies and tools into your edtech startups, in this case, is to contact the best educational app developers and see which technology is a perfect addition to your education app project.

How can Appinventiv help you with education app development?

We at Appinventiv have vast experience delivering education app features using the latest learning techniques like gamification, social learning, blended learning, and interactivities. We can also create tailored apps for your unique L&D needs.

Some of our most prominent solutions include:

  • Flexibility of usage
  • Greater push notification reach
  • Higher course completion rate
  • Adaptability to the latest teaching methodology
  • Greater engagement & interactiveness
  • Better adaptation to training needs
  • Support of performance analysis tools
  • Real-time interaction
  • Increased cost-effectiveness

So in case you are also planning to develop an edtech platform, you can hire a trusted education software company like Appinventiv. Our experts will guide you through the entire process and make your app development journey easier. Get in touch!

Dileep Gupta
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