Are you ready to approach an investor for your EdTech startup?
This session will provide an overview of key investment trends and common investment term sheets in education. It will also help you refine your pitch and provide practical tips for preparing your business for investment.
Approaching an investor for your EdTech startup
Explore key investment trends and common investment term sheets in education. Refine your pitch and provide practical tips for preparing your business for investment.
Preparing the business for investment
When you first approach an investor, they will have no clue about your business. It is important to catch them up to speed in an effective way. Be careful not to overwhelm your investor with technical language.
Focus on conveying the underlying principles of your solution which are scalable and profitable. Summarise the basics of business and market dynamics revolving around your proposed concept. Appeal to their broader knowledge of the business ecosystem.
It is also important to recognise your competitors, other EdTech startups and established companies. Define where you sit in relation to other market offerings to demonstrate your competitive advantage. As an Australian EdTech startup, be specific when describing what the market is already offering, and potential opportunities for growth. Your business approaches the market in a unique way, and it is your job to show this to your investor.
Approaching an investor
Be transparent about what you do and don’t know. While it is important you understand your own concept, be honest about the areas that need improvement. Investors are able to provide valuable feedback to help inform your knowledge gaps, so remain honest.
How you approach and respond to questions is also important. While an investor is focusing on your proposed EdTech concept, they are also analysing you as an individual. Driving your own startup in Australian education, you will be responsible for transforming the investment into a successful outcome.
When forecasting trends, think less about numbers and more about the underlying thought pattern. All graphs tend to go from bottom left to top right – but what are you trying to prove?
Consider the most relevant time frames to forecast within, and the best variables to scope the position of your offering. It’s not about pulling the wool over the investor’s eyes. It is important to be as open as possible.
Investment trends in the Australian EdTech market
Where is funding going into schools at the moment?
At the moment the EdTech market is bullish. Especially since the COVID pandemic, there are many new ideas breeding quickly and with the support of eager investors. The COVID pandemic has greatly impacted the EdTech landscape and encouraged the adoption of digital technologies. This is especially important considering the slow adoption rates in education which has been observed in the past.
There is an emphasis on personalised learning for individual learners. Education institutions are also outsourcing models across sectors. Significant workforce transformations have also opened gaps in the market for workforce training and management.
There are certainly a lot of skill gaps in the current Australian EdTech market. Recognise this when communicating your EdTech solution to an investor.
How is the role of education changing in our society?
Becoming more common are beliefs of longer learning for a career and longer-term life fulfilment in the workforce. There are new labour upskill potentials being recognised in the workforce.
Employees can now receive personalised learning recommendations based on where they are and where they want to go. This demonstrates a wider movement for self-actualisation through education.
Investment term sheets
Recognise the importance of investment term sheets when preparing negotiations with an investor. Investors will be there to help educate and guide companies. So, it is important to have a basic understanding but you will not need to know everything. As long as you are transparent about your own understandings, your investor will help you as you pursue your mutual objectives.
In the current EdTech landscape, the term sheet turnover is slowing down. Both parties require more time to consider and negotiate terms to ensure there is a good business and investor match. Investors are weary about the current market state and more cautious when creating term sheets.
Overall, we are seeing much more investment in the EdTech startup sector. We are observing a highly digitised education market in the post-COVID era. There is great potential for new technologies to transform the future of education. Utilise this time and engage with an investor authentically to cultivate the best relationship possible and prosper in our innovative ecosystem.
Managing Director | EduGrowth
David leads EduGrowth, Australia’s education technology and innovation industry hub. Through connection and collaboration EduGrowth is accelerating Australia’s EdTech ecosystem globally.
David has decades of experience across the education sector having led Asia Pacific operations of global listed EdTech companies, founding new ventures and providing strategic support to leading EdTech companies.
Today, David is a strategic advocate, supporter and champion of the Australian EdTech sector at home and across the globe.
Managing Partner | Five Sigma
Peter is Managing Partner of Five Sigma, a global, EdTech focused growth fund. He is a long time investor in EdTech and 2x exited founder.
Peter has public and private company experience as a founder, CEO, executive, non-executive director and chair. Peter holds degrees in commerce and law, is admitted to practise in the Supreme Court of NSW, is Chapter Chair of YPO Sydney and graduate of the AICD Company Directors Course.
Principal Consultant | Owl Ventures
Judy has a deep passion for education stemming from her experiences immigrating to the U.S. at 9 years old in search for better educational opportunities. Judy helped found Bain Capital’s impact investment fund and spent several years as an Analyst in Bain Capital’s Private Credit Group where she executed and monitored 11 investments across education, media, healthcare, consumer, and retail.
Judy received her M.B.A from Stanford Graduate School of Business, where she was the Co-Chief Investment Officer of the Impact Fund and recipient of the Miller Social Change Leadership Award.