Why Do Edtech Startups Fail Despite Funding Boom?

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Why Do Edtech Startups Fail Despite Funding Boom?
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What is EdTech?
EdTech is a term used to describe digital
learning technologies that enhance or supplement
education in the classroom. EdTech can include
hardware like computers, as well as software
designed to improve teaching and learning.
Today's educators use EdTech tools to increase
student engagement, improve educational outcomes,
and encourage lifelong learning.
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What is EdTech?
It is one of the new types of educational
technology that has grown very fast during the
pandemic time. Some of the biggest EdTech
companies are Coursera, Byjus, and Unacademy
providing digital education to thousands of
students across the globe. As the world is moving
online some customers also prefer to shop for
stationery and school supplies online along with
studying online.
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Why do Education Tech Startups Fail?

• Edtech startups in India raisedmore than
  4.7 B in 2021, and four of them reached unicorn
  status during 2021-22. So why are the B2C Edtech
  models in India struggling despite good funding
  to back them? Lets examine some of the reasons
  why these B2C Edtech companies have not sustained
  over the years.

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Unrealistic Pricing for EdTech Customers
Edtech startups are creating unrealistic pricing
models in the Indian markets. They charge
exorbitant prices and parents don't have much to
afford them. The high customer acquisition cost
(CAC) pushes Edtech players to increase their
pricing, without realizing that the end customer
the parents have only as much.
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Unrealistic Pricing for EdTech Customers
Education is a critical factor for all Edtech
companies, who are making a difference in the
lives of children around the world. There is a
huge opportunity for them in our economy but
their current pricing models are not sustainable
and dont reflect the reality at all.
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Unrealistic Pricing for EdTech Customers
The education tech sector in India is a nascent
industry. The players have only seen success and
prosperity in the past few years, with no proper
benchmarking, as to where they stand globally or
how much they need to charge from their customers.
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Inability to Understand their Core Customer
Requirements
In India, education is one of the largest and
most critical sectors with a unique market
structure. One of the biggest challenges for
Edtech firms in the country is focusing on growth
at the expense of customer understanding.
Start-ups can't see past short-term growth and
underestimate customer dynamics. The higher
education system in India is undergoing a
transformation where student mobility and choice
are increasing.
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Inability to Understand their Core Customer
Requirements
However, most companies in the space seem to be
too obsessed with short-term growth, to focus on
building long-term durable relationships. They
also tend to underestimate the competitive
landscape and evolving customer requirements.
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High Customer Acquisition Cost

• High customer acquisition cost (CAC) has
  been the buzzword of 2019 and it is an important
  metric that every startup should monitor closely.
  At the beginning of 2020, when Edtech was in full
  bloom, the cost of customer acquisition shot up
  by 70-80 of the revenue of the Edtech platforms
  from a humble 20-25. It is a simple dynamic, the
  marketing and branding activities for all B2C
  Edtech platforms remain the same it's digital.

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Missing Contextual Integration

• The Edtech companies fail at providing a
  more contextual understanding of the subject. The
  best example to understand this would be the
  homework assignment provided by teachers. In such
  instances, students are expected to do
  homeschooling or invest more time in their
  academics outside of school.

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Missing Contextual Integration

• Some of these projects take weeks/months to
  complete, which is almost impossible for an
  average student, especially with all the
  unstructured time after school, weekends, and
  summers.

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