What we can learn from the expansion efforts of edtech startups in Europe – TechCrunch

It is a story Common to all industries today: Investors just want to see ‘uppy-righty’ charts at a launch. However, the growth of educational technology in the last 18 months has exploded to such an extent that companies must report 3x + growth in annual recurring revenue to even get noticed for their favorite funds.

Some companies can take this out of the park, such as GoStudent, Ornikar and YouSchool, but others, possibly less adapted to the conditions presented by the pandemic, have found it more difficult to present this type of growth.

One of the most common themes Brighteye sees in young companies is the emphasis on international expansion for growth. For additional information on this trend, we surveyed educational technology companies about their expansion plans, priorities, and challenges. We received 57 responses and supplemented them with interviews with leading companies and investors. Europe is home to 49 of the surveyed companies, six are based in the US and three are based in Asia.

Internationalization later in the trip or when more funds are available, possibly due to a venture capital round, seems to make facets of expansion more feasible. Higher budgets also allow entry to multiple markets almost simultaneously.

The survey revealed a more or less uniform division of target customers between companies, institutions and consumers, as well as a good distribution of national markets. The largest contingents came from the United Kingdom and France, with 13 and nine respondents respectively, followed by the United States with seven, Norway with five, and Spain, Finland and Switzerland with four each. Approximately 40% of these companies had not yet made inroads beyond their home country and the rest had gone international.

International expansion is an interesting and nuanced part of the growth path of an educational technology company. Unlike their fintech neighbors, educational technology companies are supposed to need to expand into a number of large markets to reach a scale that makes them attractive to venture capitalists. This is less true than it was in early 2020, as digital education and work are now so common that it is possible to build a billion dollar edtech in a single, larger European market.

But naturally, almost all ambitious educational technology founders realize that they need to expand abroad to grow at an attractive rate for investors. They also have good reason to believe that: the complexities of selling to schools and universities, for example, are extensively documented, so it might seem logical to take a chance and build market share internationally. It follows that some see expansion as a way to diversify risk, for example, we are growing well in market X, but what if the opportunity in Y is greater and our business begins to decline for some reason in the market X?

International expansion sounds good, but what does it mean? We asked several organizations this question as part of the survey analysis. The responses were quite broad, and their breadth somewhat reflected their target customer groups and how those customers are reached. If the product is web-based and accessible from anywhere, then it is relatively easy for a company with a good product to reach customers in a large number of markets (50+). The company can then build teams and broader infrastructure around that traction.


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