Top 10 tips for education startups from the TiE Bangalore EduThon

The education market in India, presently worth around Rs 5.9 trillion (US$ 92.98 billion), is poised for major growth. According to industry estimates, by 2020 India will have the world's largest tertiary-age population and second largest graduate talent pipeline.

TiE Bangalore is showcasing this golden opportunity for education startups via a series of events such as EduThon, in association with the StartEdu Competition launched by Sylvant and Unitus Seed Fund. See also my coverage of the earlier EDUtPRO Summit: Tech Transformation in Education.

Six startups pitched their products at the TiE EduThon: PracticalCoding (tutoring by professional coders), Intuitive Labs (‘lab in app’ science learning via 3D graphics) HerSecondInnings.com (for mothers after or during a career break for parenting), Anakage (improving software skills of developers), Learnyst (customised learning management solutions for schools) and ClassMint (techniques for improving exam performance).

The startup founders received a wealth of insights and tips from a panel of experts that included Madan Padaki (Co-founder and CEO, Head Held High Services), Anand Sudarshan (Founder and Director, Sylvant Advisors), Srikanth Iyer (Founder and CEO, Homelane), Srikrishna Ramamoorthy (Partner, Unitus Seed Fund), Will Poole (Co-founder and Managing Partner, Unitus Seed Fund), Mukul Agarwal (Founder and CEO, eTutorWorld), and Swami Manohar (Founder and Managing Director, LimberLink Technologies). Here are my takeaways of their top 10 tips for education startups:

1. It is better to be in a ‘must have’ category than a ‘nice to have’ category

Startups will have better chance of success if they have an offering connected to what the educational institute prescribes, advised Srikanth Iyer. “Otherwise, success is harder by a factor of 100,” he cautioned. Particularly in the K-12 sector, it is difficult to succeed if startups offer something way beyond what is required for students to pass exams, which are a must in the Indian education system.

2. Choose your problem area carefully

“Ask yourself four questions: Are you solving a real problem? Is it a big problem? Is your solution easy to consume? Are people willing to pay for it?” advised Anand Sudarshan. Otherwise, it will be difficult to scale and even more difficult to find investors. In this space, develop a product which will have your customers howling for it; don’t rely only on how many institutions your sales team can ‘push’ the product to, advised Mukul Agrawal.

3. Do you want to launch a startup or an NGO?

If you are unable to create a sustainable business model around your product, ask yourself if an NGO model would be better for what you have in mind, advised Swami Manohar. This will open up a different ecosystem of funding, like foundations, CSR programmes and donors. “I have a problem with the term ‘social enterprise’ – it has connotations that companies that are not purely social in focus are ‘anti-social enterprises,’” joked Madan Padaki.

4. Align technology with the ecosystem

“Just having a great product won’t take you anywhere. It should be aligned with the larger technology ecosystem, business needs and educational outcomes,” advised Will Poole. “Even well-intentioned initiatives like the One Laptop Per Child were a disaster,” he recalled. In contrast, newer initiatives are based on open standards and have better ecosystem support from mobile operators and content developers. “Factor in governments, school principals and tablet manufacturers as influencers and enablers,” added Madan Padaki. This will require deep immersion in the education ecosystem (see my earlier YourStory article, The 8 Is of design thinking for startups).

5. Benchmark your price point

If you cannot find paying customers, re-examine your price point. “Ask yourself how much would the customer be willing to pay for it, what else are they paying for, how much paying power do they have,” advised Will Poole; that will give useful clues. Also examine if there are other products or services you can derive from your core offering, for which you may be able to build additional revenue streams in a mixed model. Some of these additional products can also help you build thought leadership, such as Pratham’s Annual Status of Education Report (ASER).

6. Understand the implications of scaling

As a startup scales, each market size will call for a different set of skills, structure, processes and culture. But many startup founders do not realise that it is one thing to get the first 50 customers, another thing to go from 50 to 200 customers, and a completely different game to go from 200 to 200,000 customers, cautioned Madan Padaki. “We have seen many startups getting stuck after acquiring their first few customers,” he said.

Not all education startups focus on pure technology, but having technology as an enabler helps a startup to scale its offerings and attract investors, said Srikrishna Ramamoorthy. Scaling between sectors can be difficult, for instance between K-12, higher education and corporate training.

7. Pitches and sales are as important as technology

Many startups are founded by a tech team, but having a sales person in the core founding team is as important as tech, advised Anand Sudarshan. “If you don’t have that person, go find him,” he urged. It will cost you much more than you expected to get things done, so make sure you have a passionate sales team to help raise revenues and profitability. All panelists agreed that taking part in startup competitions and talking to a number of angel investors will help you understand yourself better, refine your pitch and differentiate it from other startup pitches. “Learn how to make a convincing pitch within your first 10 words, not just first 10 minutes,” said Will Poole. Good sites to check out here are the Education Business Plan Competition (EBPC).

8. Put yourself in the shoes of your investors

If you need funds to scale, understand why and how investors look at startups. They assess startups in terms of strength of the team, articulation of the problem, passion, perseverance, market size, execution, existing traction, ability to scale, willingness to learn and exit options. “The toughest call is taken by angel and seed investors,” said Anand Sudarshan; by the time a startup approaches a Series A investor there is enough of a track record for success (see my book review on angel investing by David Rose). There are four kinds of exits: IPO, roll-up, sale to a competitor, and move to a higher level of investment (for instance, from seed to Series A, from Series A to PE or a strategic investor). In future, there will be more M&A and roll-up activity in Indian startup space, particularly in the education sector.

9. Be prepared to sell your company

Many Indian founders are reluctant to sell their company when the opportunity arises, unlike in the US, where serial entrepreneurship is not uncommon. “There are many opportunities out there, go find another one after your first success,” advised Anand Sudarshan. Startups should themselves look for potential partners and merger opportunities among other startups to improve their chances of success.

10. Create the future, don’t wait for predictions

Don’t agonise about what future trends will be in the education sector, start with what you have and build on it, advised Madan Padaki. He cited the research of Professor Saras Saraswathy of the University of Virginia’s Darden School (see YourStory article and interview from her earlier TiE workshop): make your losses affordable, form partnerships with existing players and co-create the future with them.

“There is no better time to think out of the box for education sector solutions than now,” summed up Srikanth Iyer.