EdTech Startups: Finding & Attracting Investment

The need to raise money is something that the majority of startups face within the first 12 months of operation. What many don’t realize, however, is the length of the process, and how much time they can save by adequately preparing themselves and by looking in the right places for potential investors.

Even for startups that are well-prepared and have mind-blowing numbers, the journey from initial contact with an investor to money reaching the bank account can still take the best part of six months. You need to do everything you can to make the investor’s decision an easy one at the start. Here are my top tips:

#1 Prove That There Is A Market

Before you preach to your potential investors about how fantastic your product is and why you just know that it’s going to “totally revolutionize education”, make sure you prove that there is a market for it and that people want it.

IDEA: If you are building a mobile or tablet educational app, run some ads on Facebook for your target audience. Step up the daily spend so you can see how receptive the world is to your product. Investors love numbers and proof that people want your product.

#2 Have A Vision And A Plan To Achieve It

Want 1,000,000 downloads in the next 12 months? Or perhaps you want to have built twenty schools within the next ten years. Whatever your goal, communicate it to your potential investors. You may find that angel investors are more interested in the short term (1 – 3 years), while venture capitalists (VCs) are also interested in your plans for the next 5 – 10 years. Make sure you know both your short-term and long-term vision, and that your team are aware of it too.

A vision, or a goal, requires long-term strategic planning: steps to reach that goal. If you can illustrate the stepping stones towards your vision, you’ll make it appear far more realistic and achievable to investors.

#3 Research Your Investors Beforehand

Knowing your potential investors’ backstories not only ensures that you are engaging with the right people, but it also allows you to build up an instant rapport. By being aware of your investors’ interests, their business backgrounds, and their personalities, you can direct your conversations in ways that you know they will respond to positively.

A great place to start is Crunchbase, where you can search for investors by name and see which other companies they have invested in. After this, I would suggest researching those companies and trying to analyze what might have attracted those investors. Finally, you can search the usual places such as LinkedIn; and even a simple Google search will likely yield some interesting results.

#4 Team, Team, Team

They say that the very first hires at a company are the most important. And they’re right! You need a solid backbone. People who are willing to work long hours with no extra pay. People who are as excited as you are about committing to the vision of the company. People whom you brag about with every investor you meet.

There’s no doubt about it. Investors invest in Teams. In People. Bring in the right people, and learn which of their attributes investors find most impressive. (We recently had two developers who continually slept overnight in the office on a piece of cardboard to hit a deadline! It may not have been so comfortable, but it shows an incredible work ethic, and demonstrates their trust in the direction and leadership of the company.)

#5 Know Your Numbers

Memorize them. Write them down. Tattoo them on your arm. Do whatever you need to do, but make sure you know the key numbers.

What are key numbers? At this early stage, what investors are looking for is whether there is a market for your product or service, and whether users (or potential users) find value in it. (Are they likely to part with their hard-earned cash?)

Number of monthly active users (as a percentage of total downloads/sign-ups). Average user spend. Company burn rate. These are just some examples.

For a detailed list of the numbers investors are looking for, check out Danny Crichton’s Complete Quantitative Guide to Judging Your Startup.
For a less traditional (but equally relevant) list, check out Peter Cohan’s 5 Must-Track Metrics.

#6 Find Your “Wow”

When you have that first meeting with a potential investor, you are essentially selling your product or service to them. You need to make them express a wide-eyed “wow!”. Is it in your numbers? Is it in your vision? Learn what it is by talking to friends and family and seeing what makes them go “wow!”. Then, make this the focal point of your conversation with the investor. Hint: This “wow” factor is often tied to your unique selling point (USP).

#7 Learn What Makes Your Customers And Users Tick

This is an extension of the “wow” factor. What positive experiences have you had with users or testers of your product? Perhaps you have taken your new Science Learning app into some primary schools and the kids loved it so much, they couldn’t put it down. Or perhaps some teachers have been tweeting about how great your student-performance data platform is.

Learn what makes your users tick, and subtly drop it into conversations with investors.

#8 Enter Pitching Competitions

Not only do pitching competitions give you unrivaled pitching practice, but they are also great places to meet other startups and potential investors. Some big ones in the UK are Pitch@Palace, The Pitch UK, and Thinking Digital.

Another option is conferences. The famous Web Summit in Dublin brings together around 25,000 of the world’s startup founders, investors, company CEOs and representatives from some of the largest companies on the planet. It is possible for Education Startups to exhibit at Web Summit for a reduced fee. Check out the website here.

Believe In Yourself

Putting these eight points into practice will give you a head start on your journey to finding and attracting investment for your startup. Be confident and passionate about what you do, and remember, you are selling yourself as much as you are selling your company.

Good luck!

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