Why Do Many EdTech Startups Fail?

ByKaukab Azhar

EdTech startups have gained massive popularity all over the globe in recent years. It has made education fun and accessible for millions of people worldwide. Integration of technology has benefitted the education sector immensely. There is a boom in the edtech industry and it has seen growth at a rapid pace in the last decade.

Seemingly, it does not take a lot to enter the edtech industry as it does not require a high amount of capital, extensive human resources, and physical assets. Furthermore, all market forces seem to be indicating a high level of profitability in the edtech industry. However, these assumptions are all wrong because starting a business in the edtech industry is a lot more challenging than one can imagine. 

Challenges faced by edtech startups

The rapid and enormous growth in the edtech industry has attracted many entrepreneurs in recent years. Now there are hundreds of education platforms and apps covering different educational gaps, which has made it extremely tough for new startups to stand out. The competitive nature of the industry does not have any space for an average learning management system that lacks originality. Even if someone can raise funds with a non-original idea, it is highly likely that this approach will not take them too far. 

In an already crowded market, edtech startups need to be innovative and different to create an impression in the market. Suddenly the edtech space has become extremely competitive and many startups are fighting a battle for their survival. People might consider getting started in EdTech as easy but it has become challenging to break through the clutter with so many educators, businessmen, companies, and even students entering the edtech businesses. 

Many edtech startup founders perceived that they have developed an understanding of the education system but when they launch their projects on a global scale, they realise that there is no way possible to fully comprehend the varying need of teachers and students on a global scale. It is one of the reasons that edtech startups that have teachers as founders have been more successful. Since teachers have a better understanding of the educational needs they are able to identify a gap that technology can solve.  

This is one of the reasons why some of the successful edtech businesses have been founded by educators. For instance, Paul Edelman, a former public school teacher founded Teachers Pay Teachers, a platform that allows teachers to buy and sell courses and educational materials. Amanda DoAmaral launched her company Fiveable by leveraging her experiences and building a business around it. As an educator, she could see the benefits of group study as students were often able to learn more when they were working together in groups. Therefore, she came up with this platform which promotes the idea of social accountability. Virtually, students can work side by side on an interactive and user-friendly platform. 

However, other startups have been founded by different stakeholders of the education sector, for instance, Sketchy was founded by medical students. They were dissatisfied with the conventional teaching methods so they decided to create a platform that would use characters, humour, and story in the medical lessons. The online visual learning platform has become extremely popular in the community of medical students as they feel connected to the content and can learn effectively through it. 

If someone is not working in the field of education that does not mean that he/she cannot build an edtech startup. Taking input from the key stakeholders is critical because that allows the entrepreneurs to build a foundation for a successful business model. The idea is to gain a deep understanding of how students learn and how the right technology can impact learning outcomes.  One of the leading edtech organisations “Outschool” was co-founded by Amir Nathoo who was an Engineer, he knew that the education system of the future will be that of mass customisation so he worked with Mikhail Seregine and Nick Grandy to form Outschool. It has now become a leading platform for live online classes connecting teachers, students, and parents from all over the world. 

Many startups also struggle when it comes to dishing out a satisfactory user experience and that is reflected in their low conversions. Often users are unable to grasp and understand the system. Especially the teachers often find these platforms difficult to use; hence they are resistant to implementing or suggesting the use of such platforms. Therefore, the success of edtech startups relies heavily on an easy-to-follow and flawless UX. User interface and visual design play an integral role in enhancing the appeal of an edtech platform.

Unlike the other industries integrated with technology, edtech has to face resistance to change. It is ironic that the very universities, colleges, and schools that aim to produce innovators and leaders of the future, are resistant to change. Most educational institutes are comfortable with the whiteboard and traditional book approach. In addition, many administrators and teachers are not willing to accept edtech because they consider it to be a threat to their positions. 

To change that mindset, edtech startups need to demonstrate the real benefits and value of edtech to the relevant stakeholders. The doubtful decision makers need to be convinced that EdTech can cost-effectively solve their problems. They also need to convince the teachers that it is easy to learn and implement which can ultimately make their lives better. In addition, the students also need to be turned into advocates by showcasing how the innovative features can enhance their learning.

However, not all educational institutions are sceptical about the significance of edtech. Many of these institutions have been proactive in their approaches and implemented technology in classrooms even before the pandemic. However, they have a limited budget, especially for public institutions. Therefore, they are more likely to use free platforms and apps with limited features. 

Edtech startups need to be innovative in terms of their pricing strategies so that they can cater to individual requirements of different kinds of educational institutions, regardless of their budgets. Most of the EdTech companies offer free trial versions but their conversion rate is quite low. Some have come up with different monetisation options that allow for building partnerships with educational institutes. 

There is a massive gap between the startup and academic worlds. The difference in ideologies is what poses a big challenge for entrepreneurs. Startups are focused on results, deliverables, action items, and iterations while education is all about learning, knowledge, debate, and abstract concepts. Furthermore, educational institutions operate exactly in the opposite way compared to startups, especially when it comes to agility. The workflow is slow and tedious which makes the change implementation a long process. Startups find it hard to force educational institutes to accelerate the process of buying till implementation. However, this also allows the edtech companies as the educational institutions are likely to stick to their choices for the long term, so in that way, they can potentially retain their customers for a longer duration. Edtech startups need to embrace the academic world for better outcomes. 


Although it might seem that edtech startups would be flourishing because of the disruption in the education sector due to the pandemic; the reality is different as the edtech industry is going through a challenging phase. Many entrepreneurs entered the market of edtech with high ambitions of revolutionising the education landscape, but they have failed. There needs to be a lot of homework done before entering this competitive space otherwise a quick exit is on the cards. Thousands of companies have entered the market, from tech giants such as Google and Microsoft to small players in every single niche. Yet there is still room for innovative and creative ideas as the potential of digital education has not been realised.

It is clear that the future of education will include many tech-based solutions. Until a few years ago some of the technologies were considered optional but many of these techniques have become a mandatory need for establishing a conducive learning environment. With the fast-penetrating wave of edtech startups coming, it is safe to say that there will be a rise in the application of technology in education. 

Edtech will definitely increase in size, value and growth, but not all edtech companies will survive such a challenging market. The education market is unique and it poses a different challenge for entrepreneurs because of its diversity. There are multiple stakeholders involved and they all need to be convinced of your solution to make it a success. For many edtech companies, administrators are the point of contact, students are the consumers, teachers are the influencers, parents are the gatekeepers, and institutes are the buyers. It is difficult to cater to so many stakeholders all at one time. 

In addition, the competition has become intense as the number of edtech startups has grown enormously in the past two years. The only way to stand out from the competition and break the clutter is by offering something unique and different. Therefore, innovation and creativity hold the key in edtech startups.

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