Bill Bavin 
Education entrepreneurs rarely fail for lack of ideas. Schools have no shortage of problems worth solving, and founders who come from teaching, research or technology usually arrive with real conviction about the product they have built. The harder part is the market itself: how slowly it adopts, how carefully it guards against risk, and how often the person who uses a product is not the person who pays for it.
In this 2015 conversation, five education business leaders were asked: what is the biggest challenge for education entrepreneurs? Their answers describe the conditions a new company met in 2015 when it tried to sell to schools and districts.
A slow market, and the cash to outlast it
Bill Bavin, Partner, Chessiecap, put the problem in financial terms. Education, he said, is “a slow market to get penetration into.” A company has to find “enough traction and enough cash flow from your clients to be able to stay in business while you’re growing your solution, refining your solution, and getting to critical mass.” In his view that is “ultimately the biggest challenge that most entrepreneurs face in this market.”
The point matters for district leaders as well as founders. A product that is still being refined is often being refined in real classrooms, with real teachers, during the years when its maker is least financially secure. A district that adopts early is, in effect, helping a young company survive, and it is reasonable for that district to ask how the company is funded and what happens to its data and its contract if the company does not reach critical mass.
Early success that stays close to home
Joseph Olchefske, CEO, Flex Academies, described a pattern he said he sees in many young technology companies. Founders are passionate, they build a product they believe in, and they “get some early sales to school districts typically within 20 miles of their home or maybe someone that they know personally.” Those first accounts can add up to meaningful revenue, from half a million to two million dollars in his example, “but everything is within 20 miles, 100 miles.”
Local sales built on relationships prove that a product can work. They do not prove that it can be sold to a district where nobody knows the founder. Moving from the first handful of nearby customers to a regional or national market requires a different kind of selling, and many companies discover that only after the early momentum fades.
Districts are built to avoid risk
Jim Kohlmoos, Principal, EDGE Consulting, approached the question from the school side. One of the biggest challenges, he said, is “to ensure that the entrepreneurial spirit and the innovation that is derived from it doesn’t put established schools at risk.” Schools and school districts tend to be cautious, and trying new things is difficult because of “their governance structure and the infrastructure that’s already in place.”
His answer was trust. “Entrepreneurs need to be able to establish trust within school districts to develop promising activities,” he said. Drawing on 20 years in research, he added that the entrepreneurial side of the field had probably not done enough to build “a knowledge base or a research base on what works and what doesn’t work,” or to look at new ways of conducting the research and development that leads to innovation.
For school leaders, that is a fair standard to hold vendors to. A company that can show how its product was tested, in what kinds of schools and with what results, is easier to trust than one that offers enthusiasm and a demonstration. For founders, it means evidence is part of the product, not a marketing task for later.
The buyer is not the user
Clement Erbmann, Managing Director, First Analysis, described education as “a very old industry” with “a very structured method of purchasing and sales, which is really undergoing currently a disruption.” Entrepreneurs, he said, have to understand what that disruption is, what is changing and who the purchasers are. He singled out one feature that makes the market unusual: “the consumer of the product is not the purchaser of the product.”
Students and teachers use the product. A principal, a curriculum office, a technology department or a school board buys it. Each of those groups judges value differently, and a company that wins over teachers can still lose the sale in a budget meeting it never attended.
Solve a problem big enough to matter
Idit Harel, CEO, Globaloria, framed the challenge as one of ambition. The toughest task, she said, is to come up with “a company, with a concept, with a product that is solving a big problem.” She argued that there is no shortage of such problems: “there are a lot of big problems to solve in education, so we need a lot of entrepreneurs in education.” In her view the system was failing to give students the knowledge, skills and expertise they need for the innovation economy, and she called on entrepreneurs from every field to turn their attention to education.
What these answers mean for schools and companies
Taken together, the five answers describe one market from several sides. Founders need enough capital to survive a slow adoption curve, a plan for selling beyond the districts where they have personal connections, and evidence that their product works. Districts, for their part, carry real responsibility for the risks of trying something new, and they are right to ask hard questions about funding, research and support before they sign.
None of that argues against new companies in education. It argues for partnerships built on clear expectations: a district that knows what it is testing and why, and a company that understands who will buy its product, who will use it and how long the decision is likely to take. Readers planning a new venture may also find edCircuit’s guide on how to launch an edtech startup useful, and more coverage of founders and their companies is collected in edCircuit’s EdTech Entrepreneurs section.
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