5 failed education startups you should study
According to numbers cited in the Chronicle of Higher Education, education technology startups have been enjoying healthy financial backing. Funding hit $429 million in 2011, up from $146 million ten years before. (Venturebeat has a history of venture capital funding of education startups explored in an infographic.)
This is certainly good news for entrepreneurs in the space. But amid those healthy numbers, the recent demise of Kno — its intellectual property and employees were snapped up by Intel for what amounts to pennies on the dollar — brought a reminder that they don't all make it.
It’s not easy for any startup. Data compiled by Statistic Brain suggest that after four years, 56% of education or health startups are still running. That’s high compared to many other types of startups, but it still doesn’t give education startups much better than a 50/50 shot at survival.
Here’s a rundown of five education startups that didn’t survive:
This startup that offered interactive e-textbooks missed going under completely by a nose. In the end, Intel acquired Kno for $15 million —pennies on the dollar, given that the startup raised almost $73.4 million in venture capital and debt. Kno began as Kakai Inc. and lasted four years, during which its tablet flopped as Apple took over the market and its shift in focus to an app-based textbook platform failed to gain traction. The startup was acquired mostly for its intellectual property and employees.
Knack billed itself as "a different kind of online gradebook built on the truth that teachers are short on time and support." Unfortunately, Knack also found itself short on time and support. It shut down in 2011. According to a blog post by its founder, Knack shut down because it "had a very low number of users for a very long time." Knack head Jarrod Drysdale wrote that he learned a lot about teachers and education, "including the truth that Knack is not a solution people want."
This teacher lesson plan and collaboration site failed because, according to its founder, it was treated like a side project and never got the attention or traction it needed. Still, AJ Juliani, writes in a thoughtful post-mortem blog piece that he might have been onto something: "Three months after shutting down ... two other companies received multi-million dollar rounds with painstakingly similar ideas. What was worse is how much better they were at executing and shipping than our team was." Juliani is now the founder and an editor at educationismylife.com.
The online tutoring marketplace got respectable venture capital funding, but in the end it didn't work out. One problem, according to Pando Daily, was that once the tutor and student found each other, there wasn't much to stop the two from cutting Tutorspree out of the transaction and depriving the company of its cut (a healthy 50% when the company started out). A final blog post highlights successes the company had but notes that its founders could not "make it the company we wanted."
This Pearson-backed startup aimed to help students become better prepared for college and at one point claimed 100,000 users. At launch, a Mashable article billed it the "Zynga for learning." Alleyoop planned to offer online learning exercise and get users to pay for extra exercises using virtual currency — online currency that was, of course, purchased with cold hard cash— not unlike the way Zynga's Facebook games charge for upgrades.
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