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The edtech industry was ripe for a revolution long before the global pandemic forced parents to become teachers and schools to go virtual. This accelerated shift to e-learning has also prompted investors to throw money at edtech startups, in the hope that the education sector will be changed forever.
Education market researchers HolonIQ reported that edtech companies received $ 16.1 billion in venture capital in 2020. A recent survey by Brighteye Ventures, Europe’s largest edtech venture capital firm, said that European funding for edtech should increase from $ 711 million in 2020 to $ 1.8 billion in 2021.
As part of Tech.eu’s Crossing Borders series on international expansion, we spoke to three European edtech startups about their scaling-up stories, how they got through the pandemic year (and a half ) and how it shaped expansion plans for the future.
How to play on the education landscape
Poland-based learning platform Brainly, for its part, has seen its monthly user base grow to 350 million today, up from 150 million in 2019. Brainly, which empowers students and their parents to getting help with homework is available to people in 35 countries around the world. markets, including the United States, India, Indonesia, Brazil, and Russia.
“The shift from offline education to online education has been very important to us,” Brainly founder Michal Borkowski told Tech.eu. “We have seen a dramatic increase in our usage in Brazil, Indonesia and India. This is where we saw most of our growth come from during this time.
Borkowski says much of the momentum around online education has come from parents, who have found themselves in the role of teachers. While Brainly saw an initial decline in use at the start of closures, as people feared the pandemic would evolve, that use quickly rebounded and remained robust even after schools reopened.
Felix Ohswald, co-founder and CEO of GoStudent, said the pandemic was a mixed bag at first.
“On the teacher side, overnight we had 4 times as many applications just because a lot of young people were looking for remote jobs… and offering online education is a pretty attractive opportunity,” said Ohswald at Tech.eu.
However, on the parent side, the team saw a decrease in the volume of looking for tutoring services as there was less pressure in school and fewer regular exams, which ultimately made it more expensive for the company acquiring new customers.
Post-pandemic edtech crisis
GoStudent, headquartered in Vienna, Austria, became Europe’s first edtech unicorn in June 2021, after raising 205 million euros ($ 242.5 million) which valued the company at 1.4 billion euros ($ 1.65 billion). The company is present in more than 15 countries and is set to add Colombia, Chile, Mexico, Brazil and Canada in the coming months, as part of its stated ambition to become the school in line n ° 1 in the world.
Neither GoStudent nor Brainly had to fundamentally adapt their business model because of the pandemic. One startup that has had to pivot quickly is tech education startup Ironhack, which operates nine campuses in cities such as Madrid, Berlin, Miami, Amsterdam, and São Paolo.
Adrià Baqués, Ironhack’s global operations manager, said the Spain-based startup needs to immediately move from offline education to online education, training teachers in the evenings so they can teach the next day. On the positive side, it gave them the option of launching a remote campus.
The pandemic has already forced a rethinking of Ironhack’s international expansion strategy for the future. With its latest Series B raise of $ 20 million, the company now plans to put the physical expansion on hold to see what happens with the pandemic and instead focus on launching new lines of business, such as the creating distance and hybrid courses and working with businesses, universities, and governments to train more people.
Checklists for Market Expansion
There are some basic criteria that these edtech companies should check off when considering entering new markets. The founder of Brainly said that historically they have looked at the most populous countries in the world and good internet adoption.
“Based on that, we created a map and, by default, we focused on markets that have a high percentage of GDP, or more household income spent on additional education,” Borkowski explained.
He says they “kind of left Western Europe” out of their plans because there is already a lot of public money invested in schools and little spent on further education, especially at middle and secondary levels.
GoStudent also looks at two main criteria to make it clear whether it’s worth going to a new country. One is the size of private extracurricular education markets and the other is Google Trends results on search volume for keywords related to tutoring.
“In a country like Finland, the [search] the volume is quite low and the amount of money spent in the afternoon is also quite low compared to a country like Italy, where you spend a lot in the afternoon, so it is obvious for us to go in Italy rather than Finland, ”says Ohswald.
Integrate edtech into the curriculum
As a campus-based business, Ironhack has grown based on factors such as cost of renting teaching space, cost of living in the city, ease of hiring teachers and program managers and the number of competitors. Competition and the astronomical cost of space and living have excluded London, Baqués says.
The Ironhack playbook for assessing potential new markets includes a demand analysis for the types of positions their graduates are trained for, including projections on the number of web developers, UX designers and data analysts including different cities will probably need in the years to come.
Next, the team examines whether there are enough potential students who would be willing and able to pay for Ironhack’s classes. “If you went to Sweden, for example, education is free there, who will pay for the education? Said Baqués.
Once the company begins to grow again after the pandemic, it will adapt its strategy to target the second and third cities in existing markets, where it already has a strong brand and relationships with governments and businesses.
In terms of what he would have liked to know at the start of this expansion journey, he says that sometimes you make assumptions that don’t work – for example, you can’t necessarily increase the price of tuition to balance the cost. cost of being in an expensive city.
“You would think that really big cities have a lot of potential, and that might not be the case – for example Amsterdam is a really expat-based tech hub, then COVID comes along, expats s ‘going, what are you doing? “
Talent – the challenge of eternal expansion
For any startup, finding the right staff to help them succeed in a new country can be a major headache. It is often even more difficult for edtech companies if they also have to find tutors and teachers.
“Teachers are the unicorns that you never find, and we are a teacher-dependent business,” says Baqués, adding that it is difficult to find people in high-level technical positions who also turn out to be talented. ‘excellent communicators and good at managing groups of students, especially considering that education is not the highest paid sector.
“It’s about hiring the right people,” says Ohswald. The company favors hiring top country leaders, who tend to be more experienced and “very stress-resistant” people to build the operational team in each country.
“It probably sounds very easy, but that’s the biggest challenge because you can’t be in the country 24/7 … so you have to have people running the operation and developing this culture, and you have to trust them 100% “, adds.
Acquisition of users of the “momfluencers” rule in new markets
Ohswald says the biggest surprise of the expansion for him has been how finding educational aid for children is a common problem in all of the company’s markets. The central variable is the way in which training offers differ in each market, which implies deploying different acquisition strategies.
“There are countries where you have a strong offline offering, like Greece, for example, where no one is looking for teachers online, it’s just word of mouth. And in Germany, for example, the [number] of people looking online is significantly higher, ”he says.
In Russia, where the business was launched three months ago, referrals and influencer marketing are extremely effective: “When an Instagram mom posts that GoStudent is awesome, you… instantly [have] the people who request the service.
Brainly does very little marketing, according to Borkowski, relying on SEO, driven by its users creating huge amounts of content and word of mouth from students, parents and teachers.
The same goes for Ironhack, where recommendations attract 30% to 40% of new students and the emphasis is on building a community among alumni, who often write or make videos of their course experiences and help spread the word.
While Brainly doesn’t expect a big drop in user numbers after the pandemic ends, the company believes user growth will likely be a bit slower.
Ohswald says he expects a slowdown instead once schools are fully back. “What we are now seeing in countries that have had schools for longer is actually a big spike and more and more people are looking for it [tutoring] because they realized how much they missed last year. GoStudent expects a boom in September and October of this year.
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This story originally appeared on Tech.eu. Copyright 2021
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