Nearly all EdTech startups are going to need to ask for seed funding to survive. When is the right time?
The question of when to ask for investor money is a difficult one to answer because the state of EdTech is a moving target and investors are quite fickle about what the hot item is of the day.
The short answer is “Ask for money when you need the money.” But it isn’t that simple. If you are like many EdTech companies, you will bootstrap for as long as you can, but rarely does that create a viable, profitable company. An entrepreneur in the EdTech space with a great idea or product is almost always going to need some outside funding to get the product off the ground. The vast majority of tech startups that don’t secure funding die.
Planting the Funding Seeds
The first round of money a company gets is usually called seed funding. But you can plant the seeds to have a successful seed funding round long before you are ready to accept the check. From the very beginning, a smart CEO should be building relationships with potential investors. You need to be part of the investor ecosystem, meet investors, go to events where you know there are going to be investors and talk to them. But more importantly, listen to them, listen to their advice and learn what types of investments they are interested in.
Many investors will wait to pull out their checkbooks until they’ve known the founder or other leaders of the company for a very long time, often since the beginning of the company. The only way that can happen is for the CEO or founder to be out in the world of investors, getting to know them on a personal level.
Have a Compelling Story
There are many of factors that go into a successful seed round of funding, but one of the most important is your ability to have a fresh, compelling story about why your product is going to change the world and why you and your team are just the right people to handle it.
However, be aware that just good pitching skills aren’t going to be enough. You’ll need to add some hard facts, like a demo of your product, the amount of traction you’re getting, realistic near-term revenue projections, and an explanation of how your product fits into the marketplace and what specific problems your product solves.