If You're in EdTech, Then Hoping Someone Buys You Is Better Than a Business Model

05/22/2015 02:59 pm ET | Updated May 20, 2016

For quite some time now, entrepreneurs have been looking to the EdTech market as one where money will be made. The inevitable transformation of the schools model by technology will open up vast possibilities for innovation. Vast fortunes will be created, as these technologies are laid in front of millions and millions of users.

It's a dream that Venture capital companies have certainly bought into, with half a billion pumped into EdTech start-ups in the first half of last year alone, although not always successfully.

Many of those think that, one day, they'll get a smooth ride, as with the Facebook model. Get to a point where they just grow and grow and grow. Ubiquity is the target. Billions of dollars the result.

And that won't happen. If you're in the US market, for example, then getting your product actually used by actual schools, actual teachers and their pupils, then you're at the bottom of a very large mountain. Daunting isn't the word.

School districts and universities decide on tech purchases and they all already have well-established relationships with large-scale companies and are reluctant to take on newer companies which may not even be there next year. And they might not be there because educational purchases are cyclical, and take place at the beginning of a school year. A start-up has to have a phenomenal selling season to make enough to keep the cashflow going til the next, equally short, hunting season.

And guess which companies can afford such a long-term outlook? So that's why Pearson, McGraw-Hill, and Houghton Mifflin Harcourt still own around three quarters of the textbook, testing, platform and curriculum market in the US. And they don't do so badly in higher education either.

So while the old guard looks like what it is - old, it is also the biggest source of hope for innovators and start-ups, since they are desperate to reinvent themselves with new ideas, new approaches and new people. On that basis, EdTech companies make juicy targets - bringing fresh blood and ideas to companies who can suddenly look themselves in the eye and say words like 'disruption' and 'innovation'.

There are lots of people and organisations out there making compelling and effective learning technologies that could work well in schools. Often the problem is delivering them in a way that makes enough money to keep them going. Sales, market profile, sustainable cash-flows and scaling up offer huge challenges to start-ups.

While they may dream of sailing past the monoliths of the old guard, their best response may actually be not to beat them, but to join them. And take their cash to do so.


Edtech C-suite