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7 Reasons Why Education Startups Fail & Ways to Avoid Them

By Dileep Gupta
June 30, 2020 6. min read
Last update on: September 18, 2020

The growing interest of VCs in education tech startups and the given rise in the use of mlearning apps have made entrepreneurs excited about starting their own businesses. They have become more hopeful about launching the next BYJU’s, Duolingo, or Udemy and get a bigger slice of the global edTech market size. One which is anticipated to be around USD 1960 Mn by 2021.

However, they are overlooking an important fact.

KNO, SharpScholar, Knack for Teachers, Tutorspree – Every year, many startups add to the list of failed e learning startups. While many of these companies have made it to the market but couldn’t last much longer, others even failed to step into the market because of one or the other reason. 

Assuming that you are one of those Entrepreneurs who have been thinking about entering the mlearning domain but have gone confused on realizing this fact, I’ll be discussing the driving factors for the startups failure here. Also, I’ll be sharing the best of my knowledge and experience to help you with how to prevent failure in the eduTech market.

So, here we start with focusing on the top reasons why edTech startups fail.

7 Common Pitfalls Faced by Education Startups

causes of edtech startup failure

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 just too fancy to be focused upon in the present scenario.

In such a scenario, those startups that jump into the educational industry without doing proper homework, aka, market research and competitive analysis, find it difficult to distinguish between ‘must-required’ and ‘fancy’ app ideas and eventually, fail on picking the latter.

2.  Lack of Patience 

Unlike other business domains, the edTech industry growth is utterly slow. In fact, most of the companies see a 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 greater pace. Or better say, the entrepreneurs and investors who enter the marketplace soon lose their hope and think of the situation as a deadend; which no further plans.

3.  Unclarity of Users vs Customers

Many times, a lot many people download and install an application (a credit of which goes to the mobile app marketing strategies opted by the brand). However, not all of them end up buying the product/service they offer. 

Because of this, even after having 10,000 or more users on board, fastest growing edtech companies fail to get enough revenue and fail to sustain in the market for a long period of time.

user experience vs customer experience

4.  Introduction of Unnecessary Technologies

Seeing the impact of technologies on the EdTech sector, many entrepreneurs have been introducing AI, AR, IoT, ML, Blockchain, and other such technologies into their business. However, some of them are not looking into the purpose of these technologies into their business. Or better say, how they can engage the target audience, bring more sales, or contribute to the core app idea.

This has not been solely adding to the increasing app development cost, but also instilling confusion among the app users. And eventually, turning out to be another reason why most startups fail.

5.  Lack of Transparency and Teacher’s Collaboration

Another reason why many startups in the education sector do not survive for longer in the marketplace is lack of transparency and collaboration with teachers.

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

6.  Too Many App Features

Many educational business leaders introduce so many features into their mobile learning app development plan that they end up making a complex application. This often leads to distraction from the core application purpose, lower user experience, and later, less 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 completely overlook if the users are finding them useful or not. They do not take an initiative to introduce user manuals or other training elements that could help them with using the mobile application. Therefore, they fail to retain the target audience and lose the market.

Now as you know the reasons which make edTech ‘innovative’ ideas go flop and not enter into the list of leading edtech companies, it is possible that you would be wondering if you should give up on education startup ideas.

Well, not exactly.

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

So, here we go.

Ways to Overcome edTech Failure Causes & Grow Your Venture

steps to avoid edtech startup failure

1.  Perform Market and Competitor Analysis

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

In other words, it is important 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.

perform competitor analysis

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 mlearning application is not a wise decision.

One should look forth to considering 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 mobile 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 userful, secure, and successful is nonetheless a great decision. 

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.

quote by michael dell

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 educational startups 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 too. Something that will aid in targeting a wider audience without putting much efforts into marketing.

5.  Build an Ongoing 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 an 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 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 – The Enterprise sales is considered by education startups when the product requires more training, integration, and customer support services.

duolingo business model

6.  Start with 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 cutting down losses is 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.

mvp development

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.

Conclusion

The expansion of the edTech ecosystem and the rise in the number of education startups failure is bringing the entrepreneurs at the deadend. They are neither sure of entering the market nor overlooking the associated opportunities. To pave their way towards a successful future, we have listed down some common reasons behind the failure of edTech business and successful ways to prevent them. 

To know further, connect us today itself!

Dileep Gupta
Dileep Gupta
Chief Delivery Officer
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