FINLATICS PROJECT - 2

1. Among the three proposals, the one that interests me the most is the Education
Technology Company with the augmented reality app for biology students.

SWOT Matrix for the Education Technology Company:

Strengths Weaknesses

Solid IT background of the founders Requires all students to have smart phones

Improved learning experience Not suitable for all instructors

Opportunities Threats

Growing demand for educational technology Competition

Potential partnerships with educational institutions Technological Limitations

 Stage of the Proposal: Ideation Stage
Evidence:
As discussed in the lecture, there are two principles for an ideation stage.
• The product must act as an intellectual property.
This tech driven product is a successful intellectual property for the company as it
improved understanding in biology for a sample of students.
• The product must be mass marketable.
This product is catered towards the tech savvy Millennials and Gen Z and therefore
has mass marketability potential.
Although, this potential has not turned into reality due to lack of value communication.
This demonstrates that the product needs funding and expertise to catch sight of its
market before commercializing and finding the right product-market fit.

2. The AR system may be revolutionizing the digital ecosystem but is still weighed down
by several challenges

i). Technological Challenges: Creating an effective AR app for biology students requires
cutting-edge technology and expertise. Some challenges include:
a. Technical Infrastructure: Building a robust and scalable platform that can handle the
AR capabilities and provide a seamless user experience can be complex and resource
intensive. The company can overcome this challenge by collaborating with experienced
software developers and leveraging cloud-based solutions for storage and processing, as
done by successful companies like Niantic (creators of Pokémon GO).
b. Device Compatibility: Ensuring compatibility with various devices, operating systems,
and AR frameworks can be a significant challenge. The company should prioritize cross-
platform development and optimize the app for popular devices, leveraging technologies
like Apple's ARKit and Google's ARCore. A successful example is the IKEA Place app,
which works across iOS and Android devices, showcasing furniture in AR.
 ii) Content Creation and Accuracy: Developing accurate and engaging biology content is
crucial for the success of the app. Challenges in this area include:
a. Curriculum Alignment: The app needs to align with existing biology curricula to
ensure relevance and usefulness in educational settings. The company can collaborate with
biology educators and experts to ensure accurate content mapping and alignment, similar
to Khan Academy, which collaborates with experts to create educational content.
b. Visual Representation: Presenting biology concepts effectively in augmented reality
requires careful attention to detail. The company can hire subject matter experts and
collaborate with professional animators and graphic designers to create visually appealing
and accurate 3D models, similar to how BioDigital provides interactive 3D models for
biology education.

iii) User Engagement and Adoption: To succeed, the company needs to attract and retain a
significant user base. Challenges in this area include:
a. Marketing and Distribution: Overcoming the competition and reaching the target
audience can be challenging. The company should invest in targeted digital marketing
campaigns, collaborate with educational institutions, and leverage social media platforms
to raise awareness about the app, similar to how Duolingo grew its user base by targeting
language learners.
b. Gamification and Progress Tracking: Incorporating gamification elements, such as
achievements, challenges, and progress tracking, can enhance user engagement. The
company can draw inspiration from successful educational apps like Quizlet, which
gamifies learning and allows students to track their progress.
Conclusion: An education technology company with an AR app for biology students in its
seed stage faces various challenges, ranging from technological hurdles to content creation
and user engagement. By addressing these challenges through strategic partnerships,
technical expertise, curriculum alignment, and effective marketing strategies, the company
can increase its chances of success. Learning from the experiences of successful companies
like Niantic, IKEA, Khan Academy, BioDigital, Duolingo, and Quizlet can provide
valuable insights and guidance in overcoming these challenges. With the right approach,
the company can offer an innovative and immersive learning tool that significantly
enhances biology education
In the seed stage of the selected portfolio, it is crucial to focus on user acquisition and
revenue generation to demonstrate the viability of the business. By setting these parameters
and associated milestones, the investor can track the progress and evaluate the company's
performance. The conversion rates are inversely proportional to the difficulty of achieving
each milestone. As the milestones become more challenging, the conversion rates decrease,
reflecting the increased value and impact of reaching those milestones.
Based on these parameters, we can create milestones and corresponding rates of conversion
for the selected business as follows:

Milestone 1:
• Parameter 1: Achieve 1,000 active users on the app.
• Parameter 2: Generate revenue of Rs. 1 lakh
Milestone 2:
• Parameter 1: Achieve 5,000 active users on the app.
• Parameter 2: Generate revenue of Rs. 5 lakhs
Milestone 3:
• Parameter 1: Achieve 10,000 active users on the app.
Milestone 4:
• Parameter 1: Achieve 20,000 active users on the app.
• Parameter 2: Generate revenue of Rs. 20 lakhs
Milestone 5:
• Parameter 1: Achieve 50,000 active users on the app.
• Parameter 2: Generate revenue of Rs. 50 lakhs
 Milestone Parameter 1 (Active Users) Parameter 2 (Revenue) Conversion Rate

Milestone 1 1,000 Rs. 1 lakh 24%

Milestone 2 5,000 Rs. 5 lakhs 16%

Milestone 3 10,000 Rs. 10 lakhs 10%

Milestone 4 20,000 Rs. 20 lakhs 6%

Milestone 5 50,000 Rs. 50 lakhs 3%

From the abovementioned, table, we have taken the total number of active users on and
Revenue as the milestone. The initial investment that we are looking to make in the
company is Rs. 50,00,000 and the time period of investment is 5 years. From the table, we
can see that the respective conversion rates that are applicable to the investment and how
they are range bound and based on the number of students that the app is able to have and
Revenue that app is able to generate. In the first case, which is possibly the grimmest one
– in case the company takes 5 years to reach the first milestone itself, the conversion rate
would be 24%. In the second case, in case the company takes 5 years to reach milestone 2,
the conversion rate would be 16%. In the third case, in case the company takes 5 years to
achieve milestone 3, the conversion rate would be 10%. In the fourth case, in case the
company reaches the set milestone in 5 years, the conversion rate would be 6% and in case
fifth, in case the company reaches the set milestone in 5 years the conversion rate would
be 3%. We have kept the conversion rates, rangebound in each of the cases as they would
depend on the exact number of students that are onboarded in 5 years.

4
For an augmented reality app, the customer acquisition cost will be mainly driven by
placing digital ads across a range of media to drive installation. Boosting social media
posts, google ads and having a well-designed website can deliver a significant payoff.
Although, the primary cost the company may face is b-to-b costs like printing brochures
for students, sponsoring college events or providing promotional discounts.

Customer Acquisition Cost = Total marketing expense to achieve milestone

(CAC) Number of customers acquired till milestone

Assuming Total marketing expense to achieve milestone to be Rs. 10,00,000 and Number
of customers acquired till milestone to be equal to Rs. 500

CAC = 10,00,000
500

= Rs. 2000

Customer Lifetime Value (CLV) is a metric that estimates the total revenue a business can
expect from a customer over the course of their relationship.
Formula:
Customer Lifetime Value = (Average value of customer’s purchase) * ( Number of time
customer will purchase in a year) * (Time period of customer’s purchase )
Let's assume that the average purchase value of the app is Rs.200, and students are likely
to make multiple purchases over their educational journey. The estimated average purchase
frequency could be around four times a year (quarterly).

CLV for first year = 200 * 4 * 1 = Rs 800

This table shows the 5-year analysis of Customer Acquisition Cost and Customer
Lifetime Value.

No. of
Time Period
Avg. Value Times a Customer
of Customer Customer
of Customer customer Acquisition
Customer’s Lifetime Value Profitability
Purchase will Cost
Purchase
Purchase

200 4 1 800 2000 -1200

200 4 2 1600 2000 -400

200 4 3 2400 2000 400

200 4 4 3200 2000 1200

200 4 5 4000 2000 2000

In the first year, the company earns Rs. 800 from the customer and spends Rs. 2000 as
CAC to acquire the customer. Therefore, from a unit economics perspective, the customer
is not yet profitable for the company as it is losing Rs. 1200 on him.

If the customer continues with the streaming service in the second year, its lifetime value
has increased to Rs. 1600. However, the company is yet losing Rs. 400 on the customer
as it had initially incurred Rs. 2000 as the CAC.

Only when the customer continues with the service in the 3rd, 4th and 5th year; the
company achieves a Customer Lifetime Value of Rs. 2400, Rs. 3200 and Rs. 4000 from
him respectively. In this period, the customer becomes profitable for the company.
The Company has to keep innovating and enriching the customer experience for a
minimum period of 3 years to achieve customer loyalty to an extent that it can cover its
customer acquisition cost
The actual CLV and CAC may vary depending on the specific market conditions,
marketing strategies, and customer behaviour. Therefore, it's crucial for the business to
track and optimize these metrics continuously to ensure profitability and long-term
success.