Dena Speranza on EdTech Startups
A recent edition of “Education Technology” magazine featured Denison University Chief Information Officer Dena Speranza speaking on “Steps Toward a Thriving EdTech Startup.”
Walking down Start-up Alley at the Educause Expo, you see them…hungry, enthusiastic, they have vision to change the world: The EdTech Startup company. Visionary entrepreneurs who want to tell you their story.
I’ve had the opportunity to work with several EdTech startups over my career in higher ed. As the COO and principal consultant in a software development company for ten years, I also have experienced the challenges of running a successful small business. Transformations in our industry have made the market ripe for innovative thinkers. Before you jump into the exhilarating, yet risky waters of working with an EdTech startup, I’d like to share some insights.
When you evaluate what it takes to survive and succeed as an entrepreneurial venture, and what it takes to be a good client and partner for an EdTech startup, you will be able to enter into a relationship with clear expectations.
What does it take to prevail through the grind of launching a thriving EdTech startup? Mission! Money! Mentors! Moxie! Marquee Clients! More Money!
Mission: The moment you talk with an EdTech startup founder, you get swept up in the passionate portrayal of their mission. Infectious stories and visionary roadmaps compel you to buy into their vision and take on the risk of becoming a client.
It takes focus, grit, and determination to stay on track, survive the excruciatingly long hours, work through roadblocks, and recover from setbacks. Mission-focus will drive founders and their teams to press on through adversity.
Money: Cashflow is king! No matter how innovative the idea, or spot-on the solution, a startup must have adequate funding to survive all of the early phases of launching a company. Depending on their startup lifecycle phase, they may be working with dwindling resources while attempting to raise more funds to get to a minimum viable product and win paying customers. If you are able to build trust with the founders, ask them to provide a view into their operation so you can make a fair assessment of their strengths, weaknesses, and likelihood of success.
Are they still in the bootstrapping phase, or have they already received a cash infusion from a Series A investment? If you believe in the founders, their mission and business plan, consider what you can do to frontload your agreement to help them get a financial foothold.
Mentors: Do they have a board of advisors or an experienced mentor? Startups must move fast and be strategic. They need wise counsel while not getting bogged down with old thinking that doesn’t match today’s rapidly evolving business models. In his book, Wisdom @ Work, Chip Conley, strategic advisor at Airbnb, encourages entrepreneurs to find “Modern Elders” who “create the space for those younger than them to accelerate their learning by means of providing wise counsel.”
Moxie: Are you working with serial entrepreneurs or newbies? Do they have any business acumen? If not, do they have the funds to outsource critical things like issuing invoices, filing sales tax, and balancing the books while ensuring employees are paid on time? Are the founders also the developers, customer support, and sales reps? Answers to these questions may send up red flags in your vetting process.
You may discover a startup with the perfect vision to solve a problem for your institution. Consider becoming a co-creator by teaming up with them in the early phase of product development. This requires your commitment to invest time and resources in product design, focus groups, testing, telling your success story at conferences, and providing customer references. It takes patience and flexibility. Demands on internal teams may be significant, so get clarity upfront on expectations. Denison University has recently done this with two EdTech startups Notebowl and Wisr and accomplished big wins by being able to help design new products to meet our institutional needs.
Marquee Client: A marquee client can be just as valuable as money to a startup firm. Investors want to see that a startup has landed one or more recognizable customers. Your university could be the one who helps bring recognition to a fledgling firm. Allowing your name to be used in marketing, press releases, and social media will bring credibility to a startup.
More Money: Can they scale? Do they have enough staff to succeed? Can they manage rapid expansion and growing customer support needs? Are they organized to track requests and changes? Can they quickly capitalize on opportunities?
Succeeding as an EdTech startup may also take a bit of a Miracle. The Higher Ed industry is historically risk-averse. Evaluate your risk tolerance before you decide to partner with a startup. Riding the wave of the EdTech startup journey requires much grit and determination, but it can also be an exhilarating, transformative opportunity.