Startup cost
$5k–$100k
TRUiC Business Ideas
How to Start an Edtech Business
Decision Snapshot
Edtech
Idea Score
53
Profit margin
6%
Break-even
4 mo–12 mo
Time to launch
12 wk–36 wk
Demand trend
Rising
5-yr failure rate
—
Capital intensity
High
Time commitment
Flexible
Part 1 - How to start an Edtech business - Background
An education technology – or edtech – business leverages technology to improve education. Many of these companies focus on educating students, typically in areas related to science, technology, engineering, and mathematics (STEM). However, there are many different types of edtech businesses and the variety continues to increase. While some edtech businesses do things like teaching programming and engineering using robots, others use tech to do things like create real-time classroom management apps and online learning platforms that teach languages.
Our guide is in 3 parts:
- Part 1 - How to start an Edtech business - Background
- Part 2 - Our planner tool to see if this idea is the right fit for you
- Part 3 - Action plan to get started
What are the costs involved in opening an edtech business?
The costs to start an edtech business can range from $0 to millions of dollars. It all depends on your goals and your existing resources. For example, you could start an education app business with your laptop and an internet connection. If you have education credentials, even better. In contrast, starting a robot programming company may require millions of dollars in capital. That’s because you have to produce the robots, which requires research, development, prototyping, and more.
What are the ongoing expenses for an edtech business?
The ongoing expenses for an edtech business will vary depending on the type of business. Common expenses include labor, certifications, licensing, insurance, and for hard goods manufacturers the various costs related to producing those goods.
One type of ongoing expense that edtech companies have that other businesses often don’t is pedagogy research and support. Teaching methods can change periodically and education organizations often require regular certification for product endorsements. For instance, if you are selling a product to state schools, you will need to keep it up to date with the state’s education requirements.
Who is the target market?
EdTech can be helpful to so many different people and organizations – that’s part of what makes it so exciting. It’s not just traditional students and teachers that can benefit from learning technologies. Anyone who wants or needs to learn something, or to teach something, can possibly benefit from the improvements tech offers. All this is to say that your target market could be anyone, so be careful to define it as thoroughly as you can.
How does an edtech business make money?
Edtech businesses offer products and/or services to customers to make money. While some charge a flat fee for a product, most go with the subscription billing model. For example, a school can pay a monthly or yearly fee to use a robot programming platform. In exchange for the subscription fee, the school gets the robots it needs, access to the programming platform, and ongoing support from the edtech business.
How much can you charge customers?
An edtech business can charge a little or a lot, depending on what it’s offering and the target audience. An app for studying languages aimed at K-12 might charge a modest monthly fee to use each app without ads. A programmable robots company that serves school districts might charge tens of thousands of dollars per school or even per grade for its robots and accompanying software.
How much profit can an edtech business make?
An edtech business can be extremely profitable. The global investment in edtech companies is already in the tens of billions and is likely to increase with each passing year. Whatever direction you take your company, whether more informal to reach a global audience or more formal to focus on educational institutions, you have the potential to earn a significant profit if you are successful.
How can you make your business more profitable?
A key strategy for increasing the profitability of an edtech company is to gain endorsements from relevant educational organizations. If your app becomes the favorite engineering-related app for major engineering schools, you are going to grow quickly and your profits will grow as well. That is why it’s so important to include educators and experts in your product development. Find out what their needs are, meet those needs, and make it easy for them to love your product.
Day-to-Day and Growth
What happens during a typical day at an edtech business?
There are so many different types of edtech businesses – a typical day can vary considerably depending on the business. However, there are some common tasks that most must take care of. These businesses need to find and maintain funding to get rolling, so a lot of time is spent on courting investors and selling the overall idea of the business. They also need to ensure that their products and services are fully addressing the needs of their target market, which means they focus on research and development. That might include consulting teachers, for example.
One ongoing task of edtech businesses is customer support. Customers need instruction on how to use edtech products and often need continued support – like troubleshooting services – to use the products and/or services in real-world settings.
What are some skills and experiences that will help you build a successful edtech business?
Some edtech entrepreneurs come from tech backgrounds, while others come from educational backgrounds. There are even edtech entrepreneurs with other backgrounds, such as accounting or banking, that partner with tech and education professionals to start a company. It’s helpful to have experience with the problem you are solving so you understand clearly what solutions are needed. For instance, you might have learned programming in college and found it difficult at first – then realized that your experience would have been easier had you learned more about programming at an earlier age. Your kid-friendly programming education product would help solve that problem for others.
What is the growth potential for an edtech business?
As computers become more and more ubiquitous it is important to understand how they work and what is possible through technology. As far as a learning tool, new businesses start up everyday, and according to a 2020 study the E-Learning market size surpassed $250 billion in 2020 and is expected to grow over 21% between 2021 and 2027. The pace of technology means that there are almost always opportunities to get in on the ground floor of a new innovative business.
What are some insider tips for jump starting an edtech business?
Don’t assume you know there is a need for the product and/or service you are planning to provide. It’s easy in the excitement of a new idea and with the right support to assume your target market will be ecstatic to buy your product. Then, after you have spent all that time and money, you may discover that your offering is not as compelling as you thought it was.
Market research is vital in edtech. Talk to your potential customers. Find out if they have a need that your product will meet. It’s better to find out now, before you dig in, that you need to change directions.
How and when to build a team
If you want your edtech business to grow, you need the help of others. Realistically, if you plan to do anything ambitious – like producing programmable robots – you need to build a team sooner rather than later. Even if you are just designing an app and have all the right skills, you will quickly need to build a team for marketing, customer service, investment, and more.
Edtech entrepreneurs are typically aiming for large markets. If that’s you, start adding to your team as soon as possible. Recruit experts, educators, advocates, and support staff to give your product legitimacy and ensure it meets the needs of your target market.
Part 2 - Is an Edtech business the right fit for you?
Business Evaluation & Strategy Tool
We'll walk you through the four pillars every business needs: Points of Leverage, Marketing Strategy, Financial Model, and Personal Compatibility. At the end you'll see a personalized report and your action plan below will be tailored to your answers.
Step 1 of 4 — Points of Leverage
Every viable business has natural advantages. Below are common leverage points across four categories. Pick the ones that apply to your Edtech business. We've pre-suggested a few based on your idea — review and adjust.
Step 2 of 4 — Marketing Strategy
Without a way to connect with customers, even great businesses fail. Pick the channels you plan to use to reach your customers.
Step 3 of 4 — Financial Model
Enter your monthly baseline costs — the minimum overhead to keep the business running. Then we'll calculate how many sales per month you need to break even.
Step 4 of 4 — Personal Compatibility
A business that doesn't fit your life will fail no matter how good the numbers look. Tell us how this business fits you.
Your Edtech Evaluation Report
Complete the four pillars and your personalized summary will appear here.
Points of Leverage
Marketing Strategy
Financial Model
Personal Compatibility
Part 3 - Action plan to launch your Edtech business in 90 days
Nine concrete steps to take you from idea to open business, grouped into 30-day phases. Complete the planner above and we'll highlight what's most important for your situation.
First 30 days — Foundation
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Form your legal entity
An LLC keeps your personal assets separate from business debts and lawsuits — the most common reason small business owners choose this structure. Sole proprietorships and partnerships do not provide this protection.
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Get an EIN and register for taxes
Apply for your free Employer Identification Number through the IRS, then register for any state or local taxes that apply to your business (sales tax, franchise tax).
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Open a business bank account and credit card
A dedicated business account is required to maintain personal asset protection. Mixing personal and business finances ('piercing the corporate veil') can void your LLC's liability shield.
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Set up business accounting
Recording expenses and income from day one makes tax filing easier and lets you see when the business is actually profitable. Use software (QuickBooks, Wave) or a part-time bookkeeper.
Days 30–60 — Compliance & Risk
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Get permits and licenses
State and local requirements vary widely. Brick-and-mortar businesses typically need a Certificate of Occupancy; service businesses may need specific professional licensing; food businesses need health permits.
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Get business insurance
General Liability Insurance is the most common starting point. If you'll have employees, most states require Workers' Compensation. Specific industries need additional coverage (product liability, professional liability, etc.).
Days 60–90 — Launch
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Define your brand
Your brand is how customers perceive and remember you. A clear name, logo, and visual identity make every later marketing decision easier and protect you legally as you grow.
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Create your business website
Every legitimate business needs a website. Social media pages are not a substitute — you don't own the platform. Modern website builders mean you can launch a clean site in a weekend without a developer.
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Set up your business phone system
A dedicated business number keeps your personal life private, makes the business look legitimate, and lets you route calls professionally. Cloud phone services start under $20/month.