Five years ago, I co-founded an edtech startup with a friend, although I no longer work with the team, I learnt some very valuable lessons. For one, edtech is not a quick money play and founders will need to think long term. It can take a while to fine tune your business model and to figure out exactly what the market needs. Although long term thinking is also required for most startups being built in Nigeria, it is especially so for edtech startups. Building a startup is generally tough but building it in Nigeria comes with its own unique challenges. In this article, I’ll share some of the lessons I learnt about building an Edtech startup in Nigeria including thoughts from a few Edtech founders in the country.
Deciding What To Build
One of the things we quickly realized at my edtech startup was that online learning was not mainstream amongst Nigerian netizens. At our startup we were trying to deliver skills training online. While a few people take courses on popular platforms like Udemy, Coursera among others, the numbers were not exactly high enough to sustain our business at the time. Although startups like DoviLearn are currently playing in the eLearning space, those looking to do so might need to be patient or focus on selling directly to corporates. This is where businesses like Edutech helping universities to deliver degree programs online come in. As internet penetration grows as a result of initiatives like Google Station, Express WiFi among others, the demand for online learning is expected to grow.
Startups building tutor marketplaces are among the most successful in the country which probably gives an insight into the current needs of customers and what solutions can be delivered given available mobile and internet infrastructure. B2C edtech businesses tend to be generally easier to build than B2B but if startups get it right with a B2B idea it can be very rewarding. An example is Krystal Digital which sells a school management information system and now has annual revenues of $3 million.
While it can be exciting to build ground-breaking edtech platforms, startups must be aware of market demands and what is achievable. When deciding what business to build, founders have to consider that internet speed in the country is relatively low, many of those online are on mobile (76%) and customers are very price sensitive. Keeping these in mind will help edtech founders quickly onboard customers and grow their revenue.
Long Term Focus
Founders would need to ensure that they are flexible and patient regarding their business model. According to Olumide Ogunlana (Co-founder at PrepClass), “figuring out a very scalable business model would take a while”. Concerning startups being flexible, Bola Lawal (CEO, ScholarX) said, “The most important part of Edtech is understanding the market and people that are going to use your product. When we started ScholarX we thought people would bring their scholarships and grants to us to give to those in need but we saw that it doesn’t work that way”. The Edtech founders I contacted all identified a long term focus as a major element those looking to play in the space must keep in mind.
Speaking further to the need for patience and thinking long term, Henry Mascot (previously a team member at online training marketplace Beavly) shared this in an article; “Don’t expect a quick flip or quick growth. Building a large, successful education company will take 20 years. The growth curve will not be like an Internet technology company until you hit millions in revenue. Then things will ramp quickly because you will have identified your core market and built the beginnings of a brand…”
Distribution, Pricing & Product Delivery
On one occasion, I was trying to get a training provider to join our edtech platform, she told me she was already delivering her training online via Whatsapp and wasn’t sure she needed another platform. Founders have to take into consideration where their customers are spending their time on the internet. We know that Facebook has about 26 million active users monthly in Nigeria (with majority of them on mobile) and statistics platform, Statista, suggests Whatsapp may have the same number (it’s most likely more). Having these facts in mind will help founders design a distribution strategy that is most effective. This may probably explain why startups like ScholarX are investing in an offline strategy. It is building what it calls SuccessHubs across Nigeria where people in hard to reach communities (with little or no access to the internet) can walk in to receive trainings, experience new technologies and access educational financing including scholarships. It has already gone live with one center in Badagry, Lagos. Approaches like this will help founders hack distribution and make it easier to acquire customers.
As mentioned earlier, pricing is a very important element and as Henry Mascot put it in his article, “Don’t believe that building a better product will make you successful. Delivering something for cheaper will. Even if that cheaper thing is lower quality”. If you have to make a choice between cost and design then you will need to optimize for cost without necessarily sacrificing having a simple, clean and user friendly design. This is true considering that you want to reach as many customers as possible and will need to deliver your product on mobile for many of them.
Success Metrics And Opportunities
Edtech founders measuring their success by the amount of funding they have raised may be slightly disappointed given that there is not much funding going into the sector with the exception of very few startups. In Olumide Ogunlana’s view, “startups should focus more on the learning outcomes than anything else”. It may be challenging especially if you have investors whose focus are commercial metrics. This is one reason why Henry Mascot in his article, advises edtech startups not to take VC funding. According to him “the growth curve in your education business will not live up to VC expectations early on”. While profit is important, impact is what will keep an edtech business alive in the long run. Impact will ultimately lead to customers spreading the word about a business thereby increasing goodwill and sales.
There are opportunities that currently exist that have not exactly been fully tapped into. One of such is gamified learning and the production of rich local content to be distributed at scale across the continent. There are very few startups tapping into this opportunity, one of such is Genii Games. The field is still wide open for many more players to take advantage of.
Overall, building an edtech business in Nigeria is hard work but with a lot of patience and long-term focus it will pay off. Founders will need to take into consideration the infrastructure (mobile & internet) that currently exists, customer demand and figure out the best way to distribute their products and services. While doing so they will need to keep in mind that learning outcomes and impact trumps any other metric, this will ensure that they continue to build a product that customers cannot do without.