The spotlight on edtech grows brighter and harsher: On one end, remote-learning startups are attracting millions in venture capital. On the other, many educators and parents are unimpressed with the technology that enables virtual learning and gaps remain in and out of the classroom.
It’s clear that edtech’s nebulous pain points — screen time, childcare and classroom management — require innovation. But as founders flurry to a sector recently rejuvenated with capital, the influx of interest has not fostered any breakout solutions. As a result, edtech investors must hone their skills at sorting the innovators from the opportunists amid the rush.
Lucky for us, investors shared notes during TechCrunch Disrupt and offline regarding how they are separating the gold from the sand, giving us a peek into their due diligence process (and inboxes).
Putting profitability over growth
The pandemic has broadly forced founders to get more conservative and prioritize profitability over the usual “growth at all costs” startup mentality. Growth still matters, but within edtech, the boom comes with a big focus on profitability, efficacy, outcomes and societal impact.
“The goal of all of education is personalized learning, when every student receives exactly the instruction in the way that they need it at the time that they need it. And that’s really, really difficult to do if you’re trying to have one person teach 180 students,” said Mercedes Bent of Lightspeed Venture Partners. “And so I’ve been excited to see more solutions that are focused on creating smaller class sizes that are also focused on allowing students to connect with people outside of their homes as well.”
During Disrupt, Reach Capital’s Jennifer Carolan brought up a recent Netflix documentary, “The Social Dilemma,” which illustrates the impact screen time can have on society. When vetting companies, Carolan said she wanted to see founders who have considered how their products may impact young users.
“Are they aware of the developmental needs of children? And do they take that seriously? And are they hiring child development specialists to think about the impact of their product on children?” she said during TechCrunch Disrupt.
Carolan added that companies should hire outside expertise to fill in knowledge gaps like these because it’s “just as important as their growth hackers.”
“What I really don’t want to see in 20-30 years are articles where we’re talking about the lost generation of low-income kids who weren’t able to access the same opportunities and Zoom school wasn’t sufficient for one to two years,” said Lightspeed’s Bent. “That’s unacceptable. And so I think what we have to do is figure out how do we make these more inclusive? I’ve heard of pods doing scholarship opportunities, [but] how do we get the schools back … to being able to teach online effectively?”
Beyond the 1%
Ian Chiu of Owl Ventures said his firm looks for startups that are more cost-effective and accessible to low-income families.
“If you’re serving simply the 1%, you’re by definition serving a much more limited market,” he said, adding that replacing analog solutions with digital solutions can often reduce costs dramatically for schools. Kami, for example, helps teachers digitize worksheets and can save school districts $80,000 per year by getting rid of printed handouts, CEO and founder Hengjie Wang told me in a recent interview.
Owl Ventures did invest in Swing, a startup that works on pod-based learning. Pandemic pods have received criticism for widening the inequality gap, but Chiu said the startup’s strategy will not remain pod-based forever and scholarships help expand access.
Owl Ventures has hired a director of efficacy and outcomes, Malvika Bhagwat, to make sure the firm is evaluating companies upon first meeting on their strength and have a solution.
Bhagwat, who clocked in time with Newsela and Emerson Collective before joining Owl Ventures, added that metrics in edtech come with caveats. Founders, she says, often “conflate engagement numbers for outcome numbers.”
“Something could get a lot of traction, but it doesn’t always mean it’s good for us,” she said. “Monthly active users and usage are important to know your scale, but it’s not always synonymous with outcomes.”
Instead, Bhagwat outlined the big questions each startup needs to answer to prove outcome, based on a simple logic model:
- What’s your problem?
- What’s your need?
- What actions do you need to take to solve the needs of this population?
- How often should you take those actions?
- Do those actions lead to the intended outcome?
She concluded with a more obvious tip for new founders — be realistic about the amount of time teachers or students have in a school day.
“If you say that they need to spend 100 minutes on your product, chances are that isn’t feasible for them,” she said.