Starting an edtech company can be an exciting and challenging endeavour. Still, one of the most significant challenges you will face is getting funding for edtech startups which will turn your vision into reality.
The total addressable market for edtech companies in pre-pandemic was considered niche premium.
But in the last 5 years, demands have been higher, and the Indian edtech startups expanded and acquired paying customers in North America and middle east countries, which signals two things for edtech startups now;
- Indian edtech attracts capital from global investors, which increases the pool of capital and increasing valuation
- There’s higher competition in the market, and attracting investors and getting funds is quite a tough task.
This article will cover resourceful tips and strategies to help you get edtech funds to pursue your startup dreams.
Why Do You Need Funds?
A solid foundation of your complete edtech plan will let you land at the right place.
Before seeking funding, be prepared with details about your business plan.
Remember, anybody who is investing in any business wants better results.
At the presentation time, nobody would be bothered enough to drown their money if you cannot answer with conviction and correct data and information.
For the basis, you need to determine how much money you need and what you need it for. This will help narrow your search for the right investor or funding source. Be specific about the amount you need, and provide a detailed breakdown of your costs.
At this stage, you may want to seek professional help to map out the company’s future and some projected numbers. Prepare an intriguing pitch deck, and now consider yourself an investor who wants to invest in a company.
You’ll end up asking many questions which help you answer better.
Various Ways to Get funding for Edtech Startups
Crowdfunding
Someone unfamiliar with the startup finance landscape may become confused by the vast number of options available. First, you should look at your edtech startup’s goals, make an estimate, and then plan to get funding.
When it comes to raising funding for edtech startups, crowdfunding has shown to be both a popular and successful strategy. It works with the basic idea of the business that many individuals will contribute a small amount in the prospect of a reward upon the product’s release.
In 2020, London-based edtech, Mindstone nabs € 1.7 million through crowdfunding which is one of the most remarkable funding through the internet.
It seems like a win-win situation for the people who want to invest through an online community. But before the first step, ensure you maintain transparency and offer them the concrete benefits of it.
Bootstrapping
The term “bootstrapping,” aka “self-funding,” is chosen by many founders. You have a certain amount of money and invest it at the initial stage; once the business grows, you can use those funds for expansion.
It is quite suitable for all those edtech founders who do not want to lose control of their decision-making.
Since no other parties are involved, you can keep your business’ profits.
Physicswallah was initially a bootstrapped Youtube channel that turned into a unicorn, and at a later stage, it picked up funding.
Similarly, Easy my trip was bootstrapped but turned into a unicorn.
If you think you have the proper resources and funds, you should consider launching your edtech startup using bootstrapping so that you can maintain proper control over your startup from day one.
Investors
Many investors with a large pool of capital are seeking profitable investment options. In return for equity in your EdTech business, they will offer you the seed money you need to get started.
If investors find your edtech startup a potential one, they will fund it. Besides investment, you can get guidance from established and experienced business people. You may negotiate more lenient repayment terms with an investor, and if your firm fails, you won’t have to pay them back.
But guess what? Nobody wants to fail. So, make sure you read our guide on ‘How to launch your edtech startup?’
Loans
Startups may get loans from any major bank in the world. You can easily get a loan from a traditional lending institution like a bank. Along with that, there are several government schemes designed to make access to credit for businesses. If you borrow money to launch your EdTech startup, you’ll have to pay it back with interest, whether or not your firm succeeds.
However, loan repayment management is simple (with regular monthly instalments), the lender does not have any influence over your company, and interest payments can be written off as business costs.
Participate in accelerator programs.
Accelerator programs are designed to help startups grow and develop their businesses. Earlier, the companies helping or providing accelerator programs were almost nonexistent or limited, but nowadays, many startups are dedicated to working on these programs.
These programs provide mentorship, funding, and networking opportunities. LinkedIn seems to be a go-to option for many founders to connect with the right people.
Apply for grants
Any government would want a good cash flow, job generation, and upskilling of youth. And grants are the best ways to support the ecosystem of edtech companies.
There are many grants available for edtech companies. Government agencies, foundations, or corporations typically offer these grants. Look for grants that align with your company’s mission and values.
In the recent education budget of India, 2023 government has launched many programs to support the edtech sector.
Seek out strategic partnerships.
“The beauty lies in the eyes of the beholder.” Similarly, strategic partnerships can look like an opportunity to someone and provide more than just funding.
This partnership can also provide access to new markets, expertise, and resources. Look for companies or organizations that share your values and mission and explore opportunities for collaboration.
Should you seek seed funding for edtech startups?
Your edtech business idea is solving a real issue; your edtech business model canvas is ready. Your budget plan is prepared. You have a team in place, have a development plan, and need funding to reach the next stage of your company’s growth, and all you need is the funding to get started.
But still, there are a few things that you must recheck before you present your first pitch. Following is a checklist from us to use before going ahead.
The Companies Providing Platforms to Meet Investors
Several Indian companies provide platforms to connect startups and entrepreneurs with investors. These platforms aim to make it easier for startups to raise funding by connecting them with a network of investors and providing them with tools to manage their fundraising efforts. Here are some of the top Indian companies providing platforms to meet investors:
- LetsVenture: LetsVenture is a leading platform for startups to connect with angel investors and venture capitalists. The platform offers various services, including deal discovery, due diligence, and transaction management.
- AngelList India: AngelList India is a platform that connects startups with a network of investors, including angel investors and venture capitalists. The platform offers a range of tools to help startups manage their fundraising efforts, including a database of investors, fundraising templates, and legal documents.
- Venture Catalysts: One of India’s largest integrated incubator and accelerator platforms. The platform provides funding, mentorship, and network support to startups, focusing on helping them scale and grow their businesses.
- SeedInvest India: SeedInvest India is a platform that connects startups with a network of investors, including angel investors and venture capitalists. The platform offers various services, including deal screening, due diligence, and transaction management.
- Mumbai Angels: Mumbai Angels is one of India’s leading angel investor networks. The platform connects startups with a network of angel investors, providing them with access to funding, mentorship, and industry expertise.
- Indian Angel Network: The Indian Angel Network is a platform that connects startups with a network of angel investors and venture capitalists. The platform provides funding, mentorship, and network support to startups, focusing on helping them scale and grow their businesses.
Government schemes to support your startup in India
The Indian government has launched several schemes and programs to support funding for edtech startups in the country. These schemes aim to provide financial support, mentorship, and infrastructure to these education startups to foster innovation and promote entrepreneurship. Here are some of the major government schemes that can support startups in India:
- Startup India
- Atal Innovation Mission
- Stand-Up India
- Pradhan Mantri Mudra Yojana
- National Initiative for Developing and Harnessing Innovations
Wrapping up
Getting funding for edtech startups is the first step to turning your vision; nothing happens overnight, so the biggest thing you’ll need is persistence. Every business has a chance of failure, but there’s always a bigger chance of success. Therefore, explore your way out and
Remember, the key to success is to stay focused on your mission, be adaptable, and never give up.
