By Callais Capital
EdTech Excitement in VC
The rise in double-bottom-line investments is bound to shake up the EdTech space. With many educational tasks and classrooms going virtual, it’s expected that the money will follow. But how do we make this new hybrid educational environment robust, secure, and innovative? It’s a predicament that many startups are trying to answer right now.
Truth be told, venture capitalists tend to carry a negative association with EdTech investments, as if education-based startups are second-rate deals. Since many companies in the EdTech space are founded by full-time educators, it’s easy to disregard those founders by believing that they haven’t built the “proper” business skills yet. From an investor’s standpoint, that path doesn’t perfectly align with their perceptions of what an entrepreneur looks like. But those founders have spent their careers as educators, recognized an opportunity for disruption, and took the scary plunge into an unforseen future. That is the true embodiment of a trailblazer.
EdTech businesses can be equally innovative and profitable as any other business out there. This disconnect is further muddled by the way that education-based investments are framed—or pitched—to investors. So, if you’re an EdTech founder, re-frame your elevator pitch, update your deck, and realign your goals. It’s that simple!
EdTech’s “False Profit”
Ok, it’s not that simple. As a venture capital firm will do their own due diligence on your company, you need to do the same. Be humble with yourself. Truly vet your ideas on their merit. Measure them by revenue, community growth, traction/adoption, downloads, and future opportunity.
Many first-time entrepereneurs fall victim to the “false profit” by thinking that a really great idea will make them millions. Just because something hasn’t been done before doesn’t make it worth pursuing. Not all great ideas are great businesses. And not every great idea works as a business. Great companies are founded on simple fundamentals that position them for future success. It’s okay to decide an idea works better as a feature, app, or weekend project. Not every idea has to grow into a Fortune 500 business.
If your company’s idea has room to grow, make sure you’re speaking the VC language. Don’t measure your successes by the amount of minds you’re impacting. Reframe your business model on revenue-generating initiatives that’ll take you one step closer to self reliance.
To become a great entrepreneur, you need to be honest with your skillsets. Yes, there are exceptions to the rule. But overall, don’t build something you know nothing about. Years ago, I pitched an augmented reality app to a venture capitalist. Guess what he said? Why would I invest in you to build that? He had a great point. I didn’t have a co-founder with the expertise I needed. I also had no deep understanding of the VR/AR space. Sure, I could have learned it. But I was years away from that.
I’m not trying to dissuade you from building a company outside of your background, but make sure you have advisors (or a co-founder!) with the expertise you lack. Build an arsenal of industry insiders around you. Because if you want to change an industry, usher in your vision for the future, you’re going to need to persuade industry insiders and people alike that you are the one to build it.
So, how do you break the EdTech stigma? Stand out from other education-based founders by clearly mapping out your path to revenue. Ditch the conversations about how much your company is going to help mold the youth, support new educational programs, and impact underfunded communities. Although those are great things to support, those angles aren’t going to win over millions in VC funding. If you find those elements are the core of your business, don’t fret. Go the nonprofit route, hire a grantwriter, and score funding that way. There’s no shame in that. But for VC pitches, talk numbers, team experience, growth trajectory, past successes, revenue streams, and “disruptions.” If there’s a double-bottom-line, it’s the sweet cherry on top.
7 Exciting EdTech Trends
At Callais Capital, we’re always discussing new breakthroughs, cutting-edge tech, and how the world will operate in the future. It’s not an easy thing to predict. But below are a few educational trends we find ripe for disruption.
- Student/Teacher Wellness – Focus on mental health, avoid teacher burnout, and manage student anxiety.
- AI/ML – Personalized learning, boost engagement, and analyzing big data.
- Video-Based Education – Privacy standards, virtual and remote learning focused on Millennial parents and Gen Z kids.
- Data Privacy – Regulatory privacy standards and security
- Collaborative Technology – Peer-to-peer engagement, learning management systems, and IoT in the classroom.
- Mixed Reality – Use of AR/VR in the classroom to create immersive experiences.
- Hybrid Learning – Blending PT on-site learning and remote learning.
EdTech Startup Ideas
- Immersive discussion tools to foster in and out of classroom conversations.
- Collaborative communication platforms.
- Blogging, Wikispaces, or virtual walls to augment how students, teachers, and parents communicate.
- Reimaging presentations and incorporating storytelling into the classroom.
- Compliance support services for educational institutions.
- Tracking and managing federeal curriculum goals and guidelines across districts and states.
- Reimaging what a field trip is.
- Incorporating AR/VR learning. STEM-based and beyond.
- Security controls to monitor, share, and limit access to particular content.
- Self-guided curriculum routes with teacher-assisted support and grading.
- Orchestrated and collaborative learning activities
- Teacher-led learning and controlled experiences that blend the virtual.
- Student-led learning experiences.
EdTech Exit: Connecting Great Schools with Great Teachers
Enriched Schools was an investment Callais Capital made back in 2015 that had the perfect balance of educational mission and revenue structure. Andre Feigler (Forbes Under 30) started her New Orleans-based staffing service in 2012 with a simple mission. She set out to reimagine substitute teaching so that students wouldn’t lose valuable learning time when teachers were out. As a Teach For America alumna with a business model backed by the rising popularity of charter schools, Andre began partnering with organizations to deliver high-quality substitute teachers for short-term, long-term, and full-time roles.
Our early investment paid off in July 2019 when Enriched Schools was acquired by ESS, a leading provider of education-based programming. ESS fills more than 15,500 school placements in more than 800 districts. To date, ESS and Enriched Schools have served more than 2.5 million students.
Are you a startup founder in the Gulf Coast? It’s never too early to reach out to us, even if it’s early in your fundraising process. We know that companies take time to turn a profit and find their product market fit. But we would love to hear from you.