Funding Options

How can app designers and EdTech innovators get the funding required to support the development of their product?

There are a countless different ways to fund a business venture, with a number being especially applicable to education apps. Here are a number of the most successful ways that education app innovators are currently funding their apps:

  1. Venture Capitalists
    Being backed by venture capitalists is currently the most established and dependable way of funding an educational app, and the market is booming. According to investment research firm CBInsights, in 2009 the total funds invested in education apps was $385 million, growing to $1.87 billion in 2014. Ultimately it is predicted by the end of 2015 that venture funding for education apps will top the $2 billion mark. Investors have noticed that the education industry is ripe for investment do to the number of students, low overhead and future stability schooling.It is important to note though, that with Venture Capitalist funding come contracts and terms. Often which involve large percentages of the app being owned by your backers. Bob Sun, founder of First in Math explains why the education market is increasingly attractive to venture capitalists. “There’s a high profit margin with no warehouses and not much cost except for research and development.”
  2. Crowdfunding
    b36221d64e8352d8e08651fbd1d53299Crowdfunding sites such as Kickstarter and Indiegogo have taken the technology investing by storm over the last couple of years. No longer does an innovator need to mortgage their house or convince leery investors of the potential value of their product. They can take their creation directly to the people that would appreciate it most.Through bridging the gap between creators and end-users, many products targeting niche markets are now being produced that previously wouldn’t have received the funding necessary to survive. It is important to point out that investors get certain perks for investing, such as early access to the product. They do not gain any ownership, nor does the innovator lose any ownership of their company.The sites Kickstarter and Indiegogo are the two most well known but are not specific to mobile app development. They feature invention and creations of all types in dozens of different categories. Sites such as AppBackr and AppsFunder  are specifically dedicated to the funding of apps.
  3. Educational Grants
    Governments, corporations and nonprofits all offer grants for educational initiatives. There are thousands available annually for countless different categories. While the monetary size of the grant can vary dramatically, it gives an innovator an exact idea what they will be getting if their bid is successful. Some of the biggest up and coming apps today were started with government grants (ie. Prodigy and Kahoot). This remains a viable option for many creators.Like crowdfunding, this would not require one to relinquish control or ownership of their app, but it is more restrictive in what it requires. Grants are often very specific in what the design of the app is to accomplish, with the app needing to meet a number of stringent criteria.
  4. Self-Funded
    Startup apps, like many other entrepreneurial ventures provide an innovator with the opportunity to develop the app independently. Countless successful apps and business have started with a quality idea, a vision and copious amounts of time spent trying to see the vision be successful. Education apps can use this same model, with the innovator using their own resources exclusively to help develop the app. Often times this means app development happens in addition to a full time job.This approach, like crowdfunding and grants allows the creator to remain control. Unlike those other approaches, it does not bring in a fresh flow of investment capital, and often doesn’t allow the innovator the valuable time needed to develop the app.

Next: Emerging Revenue Models