EdTech Fundraising — Why Some Succeed and Others Fail
EdTechX Panel Spotlight — Tips & tricks from a panel of experts on the fundraising process for EdTechs.
Fundraising is a hurdle all EdTech companies have to face. A panel of investors and experts* joined us at the EdTechX Summit in June to share tips and tricks on the fundraising process. Here are the key takeaways.
Start the process early and choose your investors wisely
It can take months or even years to find the right investors for your business, so starting the process early is highly recommended. Startups should first determine what their targets are and what types of investors are right for the company. “Think about what sort of role you want the investor to play — do you just want the funds or do you want them to be an active advisor?”, said Cooley Attorney, Matthew Johnson.
Build links with sector specific investors
Helen Gironi, Director of Ufi Ventures recommended building links with business angels that know your sector. “They will provide a sense of comfort to institutions that come in later”, she explained. Sector specific funds can also make decisions more quickly, and will have other startups in their portfolio that you can collaborate with and learn from. Lumina Foundation President and CEO, Jamie Merisotis recommended attending as many conferences as possible to make these connections.
Key metrics investors look for: social impact, benchmarks and ARR
For Helen Gironi, social impact is as important as the commercial impact. “If a company is generating profit, it will scale more quickly and lead to greater social impact”, she said. On financial metrics, Matthew Johnson advised companies to establish benchmarks for seed rounds — where will the funding get the business to in terms of scale, profitability and year-on-year growth — and what will the time frame be? Other key metrics that Helen Gironi looks for include growth in annual recurring revenue and user engagement. Having a business model that demonstrates a deep understanding of the market is also paramount according to Julia Steger, Chief Operating Officer at EDUvation.
Take on board the feedback and work on it
How should entrepreneurs deal with rejection? First of all, accept a ‘no’ for a ‘no’, remarked Jamie Merisotis. However, a ‘no, not now’ is very different and should be taken seriously. “Study the feedback and decide if you still want to work with that investor. Adapt your business plan based on the feedback if necessary”, he advised. Matthew Johnson also pointed out that, in the current climate, things are moving more slowly so you need to be patient. “Use that time to build on your relationships with your clients”, said Julia Steger. “This will strengthen your case with future investment conversations”, she added. But take heed. A ‘yes’ that needed convincing is not a good outcome.
*Thank you to our panellists Matthew Johnson, Attorney at Cooley, Helen Gironi, Director of Ufi Ventures, Jamie Merisotis, President & CEO at Lumina Foundation, Julia Steger, COO at EDUvation and Svenia Busson, Co-founder & Chairwoman of the board at the European Edtech Alliance (Panel moderator)
Watch the full panel session recording here*
*To access the recorded sessions, registered ticket holders can log in using their registered email address. Non-ticket holders can purchase the 2022 OD Content Pass to access all the session recordings from the 2022 EdTechX Summit.
