A firm believer in the idea that "technology has the power to drive equity," Secretary of Education Arne Duncan released Tuesday the Department of Education's Ed Tech Developer's Guide, a 68-page report intended to serve as a primer for software developers, startups and entrepreneurs. Given that the guide is so long, we scoured its contents to find what we think you'll want to know most: How to acquire initial funding for innovative edtech ventures.
The section on edtech funding provides vetted advice from experienced people in the industry whose expertise and early financial resources can help young edtech startups get off the ground and hopefully achieve self-sufficiency. Here are six tips you should know in order to secure the funding you need for your edtech company to thrive:
1.) You need a community to bounce ideas off of. Surrounding yourself with other motivated and inspiring people within the edtech sphere will provide you with more knowledge about the industry you're trying to break into. Finding like-minded people will lead to idea-sharing, possible acquisitions and even funding opportunities, which makes establishing a community a must for any up-and-coming edtech hopeful. Attend education hackathons at universities, startup weekends focused on designing and validating an edtech solution, meetups like the upcoming DC Tech Meetup: College Demos Edition on April 21, EdCamps, and unconferences.
2.) Know the differences between incubators and accelerators. It's important to understand the pros and cons to incubators and accelerators. On the one hand, these places offer mentorship and workspace, but they might not be right for you. Check out the informative table below that effectively showcases a comparison of incubators vs. accelerators.
3.) For additional funding, try crowdfunding. Crowdfunding is a great capital-raising tool. You ask for small contributions from your supporters, many of them friends and family, and provide early versions of your product or related items in return. Crowdfunding also helps ensure that you have a solid beta tester base. There are many crowfunding platforms to choose from in this day in age. Do your due diligence and check out which one might be best for you between Indiegogo, Kickstarter and Tilt (which originated at Virginia Tech).
4.) Grants and innovation funds are just within grasp. Do your homework. There are tons of grants and innovations funds that can help you get your small business up and running. Some government programs and foundations worth looking into include:
5.) Raise capital by connecting with angel investors and venture capitalists. If you're looking to raise private capital, angel investors are the way to go. AngelList is a great go-to resource for all of your angel investor needs. More often than not, though, early angels will be friends and family. Angels tend to be a good low risk funding source option, which you might want to lean towards before you get involved with venture capitalists. Deals with VCs tend to be more complex, given that they can take large portions of equity and try to assume control of your company. That's not to say VCs are a bad idea for funding, it just depends on the VC you're seeking out. Significant capital is necessary to keep a business growing, and VCs may fit your needs.
6.) Solve a problem. In the Department of Education's guide, Matt Greenfield, managing partner at Rethink Education, is quoted saying, "Your goal should not be to start a company: Your goal should be to solve a problem." As someone who invests in progressive growth-stage companies in the edtech industry that have the potential to make positive impacts on their communities, Greenfield said that you should ask yourself whether the world really needs your company before you pursue your dream idea. He advises that you also do your research to check out whether someone else is already in that space and to question all your assumptions. "If you choose the startup route, be prepared for the long haul and possible disappointment," he said. "Be a zealot on a crusade. That is the only way to survive the journey."
