Many EdTech startups in India are failing – Lack of quality teachers, content or marketing failure? 2

In the past few years, the number of EdTech startups in India has gone up quite significantly. It’s also equally true that a large number of EdTech startups are closing down every other day within a few months of operation. The use of technology in education has become almost a necessity these days. And, the importance of technology in education cannot be denied. However, many Indian education technology companies seem to be failing in implementing the right strategies.

Opportunities in the Indian Education Industry

The Indian education industry has immense potential. It is still an unstructured market segment. On an average, the purchasing power of Indians is also improving. With changing times, the thought flow of parents has also shifted. Now they do not hesitate to pay a good amount for the education of their children. Well, these are the few opportunities that many EdTech startups in India are exploring. With opportunities come the challenges. Businesses which can deal with them emerge out as the winners.

EdTech entrepreneurs know well about the importance of technology in education in India. The country has made significant positive strides in the field of technology. Businesses related to education has therefore risen exponentially giving space for the education startups in India.

EdTech startups operating in India are based on different business models. Online classes, webinars, skill testing and online test preparations are becoming popular. Although these modes of education are gaining acceptance among the masses, still some of the startups in the education space failed to become productive. In this post, we have listed down the probable reasons for the failures.

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Reasons why many EdTech startups in India failed to become productive

Inexperience of the EdTech startup founders in the education industry

This is perhaps one of the most important reasons that is leading to the closure of many EdTech startups in India. People venturing into this space having no knowledge about the education industry often has to taste failure. The education industry is a diversified market. Inexperienced entrepreneurs often find it difficult to assess the market size. They tend to build learning products and technologies. They burn their savings and investments of their investors to create them. And when they fail to build a productive revenue channel, they move out of the education industry. Such entrepreneurs often don’t have managerial skills and a Plan B for survival because of lack of knowledge on the functioning of the education industry. Experienced EdTech entrepreneurs always keep a strong Plan B for survival. When that fails they work on an exit plan that can help them minimize losses.

Hiring the wrong teachers

An online tutoring EdTech startup largely depends on the quality of its teachers. If that doesn’t happen, failure is inevitable. Just think of an instance – a teacher specialized in Physics teaching English! Yes, this actually happens in many education startups. The core team responsible for the hiring process often avoids performing a strict background check of the teachers that they hire.

Also, many education businesses cannot afford to pay well to hire knowledgeable teachers. This actually is a reason which forces many EdTech entrepreneurs shut shops. In the long term, the founders of these online tutoring startups fail to understand and realize the importance of good teachers in their system.

Lack of quality content

There are a couple of educations startups whose business model is solely dependent on webinars and online test preparations. For them, their learning resources are most important. However, many EdTech startups in India fail to develop high-quality content which can attract and retain users. Because of this reason, such businesses fail to grow their user base which eventually entirely dries up their revenue channel in the long term.

Unable to identify the right revenue model

To increase market share, many education startups in India give away free resources, services and contents. Such businesses, usually backed by strong and wealthy investors, often can afford to take this measure. In the process, many small startups have to suffer. They fail to build a strong and loyal user base which can give them consistent income. Under such circumstances, it has been observed by tweaking the revenue model many businesses became profitable. However, many small EdTech startups cannot sustain this competition and adopt wrong revenue models which lead to their early closure.

Attracting users with offers and sometimes free offers

A large number of education technology companies give huge discounts on their offers to increase their user base. This works well during the early days of a business. But, an entrepreneur needs to know when to stop. Many a time, it happens that an EdTech startup after hitting a particular user base count cannot grow more. They become even more aggressive and start burning cash by giving more discounts to attract users. In the process, they don’t strategize to develop a business model with a value proposition that can sustain in the long term. Hence, they fail.

Lack of funding

Quite often EdTech startup founders fail to convince investors to invest in their businesses. They may have a good idea about the usefulness of their education technology and education tools but many investors cannot understand the underlying concept that can give them returns in the long term. Failing to attract investments at the later stages of operation, prospective EdTech businesses die a premature death.

Marketing Failure

Marketing plays an important role for any business. And, if the business is new, then right marketing channels can scale up its growth significantly. The success of an EdTech startup, therefore, depends much on marketing. During the initial days, traditional marketing is necessary to let people know about the offerings. Later on more than the traditional marketing channels, EdTech startups in India rely mostly on referrals and word of mouth marketing. If the services and quality are maintained, such businesses are bound to get decent users from referrals. Thus, when marketing fails it breaks down the backbone of an education startup.

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