This candid small-group discussion was led by Shauntel Poulson from Reach Capital. Joining her at the table were Melissa Corto, Ben Grimley, Dr. Johnetta MacCalla, Rayford Davis, Maya Gat, Erin Mote and Cynthia Barbera. The discussion examined the current state of ed tech funding and how early stage companies can adjust their strategies to adjust to recent market changes.
Following the funding bubble in 2015, the ed tech market has seen a reset from 2016-2017 and the bar is now higher for entrepreneurs to raise seed funds. Seed rounds are shifting later into the venture life cycle and are being replaced by the “pre-seed” round. This change in the funding landscape is creating a huge gap in the investment space so the majority of entrepreneurs are now raising multiple seed rounds to reach series A.
- As a result of these new expectations, early-stage companies should not be afraid of participating in multiple accelerators; it’s not uncommon for companies to do 3, 4, even 5 accelerators to raise funds.
- As entrepreneurs think about early angels, early-stage companies should go to angels who have deeper pockets if possible. Shauntel advises having a conversation up front about whether a first investment could lead to additional investments later.
- Ed tech investment is growing rapidly in Asia, especially in China and Japan. Asian investors are looking for tools that can be applied internationally, i.e. multilingual abilities.
To show that a product is a great investment, Shauntel advises to demonstrate that both the product and the company are on a trajectory for success. Ways to do this include showing that product development and adoption is accelerating, that the team is making the best use of its resources, and the product is using cutting edge tech like AI or voice recognition.