Business Model and Investment Considerations for EdTech Ventures

  • Vincent YIP, CEO, Cultural Enterprise, K11, New World Development
  • Bill Ning, Founding Partner, Blue Elephant Capital
  • Furuzonfar Zehni, Partner, Fresco Capital  (Moderator)

Ning and Yip got involved with EdTech because of the positive impact to the society. Edtech, especially with live streaming and AI in the last 5 years, can catalyse the access and delivery of education on a bigger scale. Technology and finance can empower the education system to address some of the problems of 21st century learning. 

Challenges of edtech ventures: Yip pointed out the need for teachers and students to adapt to the new mode of interaction and the importance of designing the appropriate contents accordingly. Educators and the technology providers have to work together to ensure proper delivery of the contents. As investors, they would only invest in startups with business models that work. Edtech is more challenging than other investment themes because there are multiple stakeholders (students, teachers, investors, parents, schools, coordinators etc.) Edtech startups have to manage the stakeholder relationship skilfully. 

Investment bubble in China? The EdTech market in China is  growing phenomenally with lots of capital. Ning believes that capital is ‘neutral’. It is good to attract talents, build the necessary infrastructure and the awareness of educators, the government and the community at large. Whilst there may be bubbles when an industry is expanding rapidly, the market will return to a rational level later.

Differences between VCs and corporate VCs (CVCs):  VCs will focus on financial returns and possibility of IPO and acquisitions, while CVCs will look into the strategic considerations, long-term business growth and development, and new business opportunities brought to the company. Ning expects more CVCs in the edtech space as they may have a longer investment horizon. Startups have to be clear who they are pitching to and their expectations.

Differences between edtech and other businesses: Ning believes that many businesses are actually doing education, such as Apple, Alibaba, Facebook, Starbucks and Tencent. Blue Elephant is also in the education business, providing ‘vocational training’ to edtech startups. In 10-20 years, we will all be educators irrespective of our industry.

In response to questions from the audience, Ning offers his suggestions to edtech startups:

  • Know your customers: B2B will be very different from B2C. 
  • Know who the potential investors are: The investor community is very small. Knowing one will easily get access to others.
  • Do your homework: Startups should know how the potential investors do their evaluation. 

Bill welcomes edtech startups to approach their VC firm. Their associates have public accounts on WeChat.

Future of User-Generated Contents: Ning and Yip think both user-generated and in-house developed contents will have a role to play. They just mean different business models. That said, Ning has witnessed the growing trend of user-generated contents with the popularity of TikTok and other similar platforms. There are extraordinary talents everywhere and this will lead to the proliferation of quality contents.

We are all educators: To conclude, Yip rehearsed the importance of having the right contents and the need to look into the education system holistically. Zehni believes success is not overnight, but an accumulation of all the decisions a venture made. Ning anticipates drastic changes in education in the next 10 years, with everyone going to be in the education business one way or another.