Raising funds for any startup has always been the most challenging part of the entire setting-up process. With EdTech startups joining the league of new-age businesses, their job of raising funds is no easier. The rate at which the education industry is progressing, it has become even more critical for EdTech startup to buck up and seek out quick steps which will help them grow and stabilise their business. With severe competition in the market, there is a need for more intelligent moves as even one well-executed step can be an accelerator to success. Therefore, we have brought you some fundamentals of fundraising that you can use to raise funds for your EdTech startup:
Being education-centred, EdTech startups can act smart by taking advantage of the back-to-school season. For instance, sales in the EdTech business peak when the new school term starts. So, entrepreneurs can use this time to sell their services/products instead of wasting time in fundraising. The best time to start conversations about fundraising would be in February, and then to build it up slowly and consistently in the following months as investors are more likely to see great potential in that time frame. Similarly, when the high sales season starts to slow down around September, it is also a good time for entrepreneurs to start fundraising drives and collect positive response from the investors.
Spread your Worth
Startup owners would be surprised to find out how many times potential investors check their company’s Twitter and LinkedIn feed. Spread the word about your company’s role in the EdTech industry and regularly post updates about the company’s highlights and achievements. This could be anything that shows that your company provides potential value adds to the industry. For instance, you can write about how your company’s educational model is bringing an innovative change in the EdTech sphere. When your investors see that your startup is actively involved in working on its processes, they get more assured of your success and are, therefore, more willing to invest in your project.
Grow your Network
One of the reasons entrepreneurs become successful in raising funds for their firms is because they have powerful networking skills. One can significantly benefit from taking up meetings with people in venture capitalist (VC) firms, even a junior analyst or a summer associate can provide you with the meaningful insights that can help you shape an excellent pitch for your investors. All VC associates have influence and access to valuable information, therefore, maintaining good terms with them is beneficial for any EdTech startup owner who is looking for fundraising. If your startup gets recognised by a VC firm, then not only will you find it easier to raise funds, but you will also receive useful advice about how to effectively present your product to customers.
Pitch with Relevant Data
One thing that EdTech startup owners would benefit from would be by showing their investors how well they run their business. This would not only generate interest in your firm but would also get VC firms more curious about your business metrics. For example, an innovative way to show that your product is doing well is by creating a chart which shows sales and transactions in bulk. Showing your potential investors the right data assures them that their money would get invested in the right place.
Invest in Marketing
Most EdTech startups make the mistake of saying they have spent no amount on marketing, and that the traction and popularity of their product are because of 100% organic activity. Saying this would send the notion that the owners are not serious about their product as ‘word-of-mouth’ reference does become stagnant at one point for every business. Showing your potential investors that you’re marketing your product gives your product credibility, and thus raises the likelihood of receiving funding.
EdTech startups have a superior benefit over other ventures in the form of EdTech Grants. EdTech Grants are individual grants reserved for funding innovative e-learning programs that make a meaningful impact in the education industry. As a matter of fact, some EdTech startups have raised as much as $6.5 in funding. There are countless local organisations like investment firms and technology-focused industries which offer grants of a considerable sum to educational startups, and can often provide the necessary kick-start to the fundraising process.
Venture Capitalist Firms
Venture capitalist firms are more than willing to invest in your EdTech start-ups if your business model and plan appeals to them, and if they find it interesting, the possibilities are endless. For instance, many Indian Edtech startups have raised a capital of as high as Rs 100 crore from a series of VC firms like SAIF Partners, Helion Ventures, and FIL Capital Management. Some of these EdTech firms not only offer classroom training, but also offer online coaching for competitive examinations like CAT, GMAT, GATE, and UPSC.
With the amount of competition in the EdTech market, it is important for startup founders to gear up and set some achievable targets which would help them grow their business at a steady pace. This would allow them to project their growth to investors and venture capitalists for funding to come without many hurdles. The tips mentioned above will not only help you in fundraising efforts but will also help you approach investors with confidence.