The education industry has benefited immensely from the development of technology. Most would-be company owners recognize this, so they set their sights on launching an edtech startup to expand their enterprises by revolutionizing the educational system via cutting-edge technology. Nevertheless, a number of issues, challenges and a lack of proper research cause the edtech setup to fail. If you’re considering starting your own edtech company, learning from others’ failures in the industry is essential.
In this article, we will discuss why an edtech startup fails, the factors that contribute to its downfall, and the top failed edtech startups.
Why Does An Edtech Startup Fail?
1. Inadequate Market Research
Market research is vital before starting any business. If you launch your tech startup without knowing the trend of the market, then you have to bear the brunt of it. Every parent is serious about their child’s education. In such a situation, especially in the edtech business, you must touch every aspect that affects children directly and indirectly. Along with this, it is imperative to do competitor analysis. You need to know what your competitor is doing in the market and what news he has brought.
2. Unnecessary Technological Innovation and Integration
Several startups in the education technology (EdTech) space have begun including cutting-edge technological innovations like artificial intelligence (AI), augmented reality (AR), internet of things (IoT), machine learning (ML), and blockchain (Blockchain) in their offerings.
Many businesses, though, need to consider the customer value they provide or the problems they solve. Said they need to show how they’ll help the app’s creators reach their target demographic, boost revenue, etc. As a result, this is another of the numerous factors contributing to edtech startups’ failure.
3. Absence of Open Communication and Teamwork Among Teachers
Many edtech startups work with the idea that after a while, they will automate everything by removing the teachers they have hired. In such a situation, the organizational environment cannot remain of two-way communication, and transparency ends. Teachers hesitate to give their ideas. And in the end, teachers need to use those apps to their full strength, so the credibility of the education startup starts falling in the market, and it fails.
4. No user Manual and Insufficient User Training
It has been seen many times that edtech startups are in a hurry to launch new edtech products in the market keeping in view the demand. To move ahead in the competition and launch something new in the market, they need to remember what value the user will get from it. Along with this, they need to focus on the user manual and the training material of the software. Due to this, no one likes to buy that software, and the company goes into loss.
Must read: Best edtech startups
Top Failed Edtech Startups
1. SchoolGennie
Founders: Amit Gupta, Pardeep Goyal
Country: India
Started in: 2013
Funding Amount: $0
Cause of failure: Lack of Experience
SchoolGennie was launched in 2013 and shut down in 2014. The primary factor behind their failure was a need for more experience in the educational sector. They need more control over their manufacturing expenses and waited for so long to deliver their product to the market.
Another on their list of mistakes was buying useless office equipment instead of investing in new, seasoned programmers. When they discovered that students and educators weren’t interested in their offering, they tried to mimic their rivals. Still, they could have done better since they needed to be more experts in the services they attempted to replicate.
Besides, the rift between the company’s two founders slowed decision-making and increased uncertainty.
2. Tutorspree
Founders: Aaron Harris, Josh Abrams, Ryan Bednar
Country: United States
Started in: 2010
Funding Amount: $1M-$10M
Cause of failure: The Lack of Marketing Strategies
There were many reasons for the failure of Tutorspree, out of which the most significant reason was the lack of experience. The company’s founders needed to gain more experience in the education sector. With this, their business model, that tutors and students can create a genuine connection with each other, could have been more realistic.
Apart from this, for the admission of new students, they were only dependent on Google’s search traffic. Due to slight changes in Google’s algorithm, their search traffic used to fall, and the flow of students used to decrease. With decreasing funds and resource scarcity, Tutorspree had to close its doors.
3. Kno
Founders: Babur Habib, Osman Rashid
Country: United States
Started in: 2009
Funding Amount: > $50M
Cause of failure: Cut Throat Competition and Lack of Strategies
Kno was one of the well-known firms that introduced tablets in 2010 without any problems. Apple’s entry into the market caused a drop in the business’s market share, even though the company was able to secure $80 million in venture money. When Apple introduced its textbooks, it greatly affected Kno’s success in the edtech business.
Affected by these factors, Kno’s income was declining, and the company needed more cash, so it attempted a few different strategies, but none worked. In the end, Intel bought the edtech startup in 2013 for a deal of a price: $15 million.
4. Community Coders
Founder: Kaito Cunningham
Country: Canada
Started in: 2018
Funding Amount: $0
Cause of failure: Incompetent Leadership and Poor Management
Many factors contributed to the failure of this edtech startup. Because they didn’t have a good enough product-market fit was the primary cause. There was nothing unique or unusual that they did for the local companies that they get profited from.
High school students needed their services, but there needed to be more supply to meet their demands. So, in the long run, students switch to better services. Besides, as they accepted, the top management needed to gain the knowledge to operate projects effectively. Therefore, despite their best efforts to learn agile as they went along, numerous mistakes were made, and workflows were interrupted.
5. Rafter
Founders: Sara Leoni
Country: United States
Started in: 2006
Funding Amount: > $50M
Cause of failure: High Competition and Low Performance
Rafter faces intense challenges from the inception of the startup. They face numerous logistical, financial, and commercial hurdles in the beginning phase. It took a lot of work when the organization started to get significant institutions to buy from them since they were a fragmented, multi-vendor network. Nevertheless, not all students were satisfied with Rafter’s concept since they believed they could purchase textbooks elsewhere at lower costs. Besides, their returning (books, notes) policy did not favour students.
The biggest challenge they faced was to integrate their technology into the colleges. Colleges used to contact publishers directly instead of buying technology from middlemen like Rater. Eventually, their work decreased, and it had to be closed and declared a failed startup.
Thoughts
Hence, these were the top failed edtech startups that eventually went under. You’ve witnessed firsthand why these edtech startups failed: poor management, inadequate market research, and a failure to adequately assess the competition. Owing to these issues or missteps, many businesses failed to take off.
But don’t worry; if you are launching your edtech startup, we have launched a series of best edtech startup guides you can access for free.
You can ask us any edtech startup-related doubts or questions by commenting below. We would love to solve your problem.
