Proposal Selection: Education Technology Company

Stage of the Company Life Cycle:

The Education Technology Company is in the Seed Stage. This is evidenced by the
following:

• The company has developed an innovative product (augmented reality app for biology
students) but has not yet determined a product-market fit.
• The technology has been pilot tested with positive results, but there is no significant
traction or market presence yet.
• The primary challenge is value communication, indicating an early phase where the
company is focusing on establishing its product's value proposition.

SWOT Analysis:

Strengths:

• Innovative Product: The AR app offers a unique and interactive way to learn human
anatomy, which can significantly enhance student engagement and understanding.
• Positive Pilot Results: The pilot testing showed a 40% improvement in marks and
understanding, indicating the product's potential effectiveness.
• Experienced Founders: The team has a solid background in IT products, which is
crucial for developing and scaling the technology.

Weaknesses:

• Lack of Traction: The product has not yet been widely adopted or tested in diverse
educational settings.
• Value Communication: Difficulty in effectively communicating the product’s value
to potential users and buyers (schools, educational institutions, parents).

Opportunities:

• Growing EdTech Market: The global education technology market is expanding,

providing a favorable environment for innovative solutions.
• Scalability: The product has potential for scalability across different regions and
educational levels.
• Partnerships: Opportunities for partnerships with educational institutions, schools,
and educational content providers.

Threats:

• Competitive Market: The EdTech space is highly competitive with many players
offering diverse solutions.
• Technological Dependency: Dependence on mobile devices and AR technology,
which may not be accessible to all students.
• Regulatory Hurdles: Potential regulatory and policy changes in the education sector
that could affect implementation.
Challenges and Solutions:

Challenge: Value Communication One of the main challenges faced by the Education
Technology Company is effectively communicating the value of its augmented reality app to
potential customers.

Solution:

• Clear Demonstration of Benefits: Organize workshops, webinars, and live

demonstrations for educators, school administrators, and parents to showcase how the
AR app works and its benefits in improving student understanding.
• Case Studies and Testimonials: Develop detailed case studies from the pilot test
results and gather testimonials from students and teachers who have benefited from
the app. These can be used in marketing materials and presentations.
• Targeted Marketing: Focus on targeted marketing campaigns that highlight the
unique features and proven results of the AR app. Use social media, educational
forums, and EdTech conferences to reach the right audience.

Challenge: Lack of Traction With no significant traction yet, the company needs to
establish a strong market presence and user base.

Solution:

• Pilot Programs in More Schools: Expand the pilot program to include more schools
in different regions to gather more data and build a user base.
• Freemium Model: Consider a freemium model where basic features are free to use,
encouraging more users to try the app before committing to a purchase. This approach
was successfully used by Duolingo in the language learning space.
• Strategic Partnerships: Form partnerships with educational content providers and
school districts to integrate the AR app into their curricula. Similar to how Coursera
partners with universities to offer online courses.

Challenge: Monetization Developing a sustainable revenue model is critical for the

company's long-term success.

Solution:

• Subscription Model: Implement a subscription-based model for schools and

individual users, offering different tiers based on features and usage levels.
• Licensing: License the technology to textbook publishers and educational content
developers to integrate AR into their products.
• Grant Funding: Seek grant funding from educational foundations and government
programs focused on innovative teaching solutions.

Milestones and Convertible Notes:

Assuming an investment of Rs. 50 lakhs using convertible notes, here are the proposed
milestones and conversion rates:

Milestone 1: Product-Market Fit

 • Objective: Achieve product-market fit by validating the AR app with at least 10
schools and obtaining positive feedback from 80% of the users.
• Conversion Rate: 20% discount on the next funding round valuation if achieved
within 12 months.

Milestone 2: User Growth

• Objective: Reach 50,000 active users within 18 months through targeted marketing
and partnerships.
• Conversion Rate: Additional 10% discount on the next funding round valuation if
achieved within the specified timeframe.

Milestone 3: Revenue Generation

• Objective: Generate Rs. 1 crore in annual recurring revenue (ARR) within 24

months.
• Conversion Rate: Additional 10% discount on the next funding round valuation if
achieved within the specified timeframe.

Milestone 4: Expansion and Scalability

• Objective: Expand the product to at least three new regional markets (e.g., states or
countries) within 30 months.
• Conversion Rate: Additional 10% discount on the next funding round valuation if
achieved within the specified timeframe.

Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC) Analysis:

Assumptions:

• Average Revenue per User (ARPU): Rs. 2,000 per year (subscription fee)
• Customer Lifetime: 3 years (typical duration a student uses the product)
• Customer Acquisition Cost (CAC): Rs. 3,000 (cost of marketing, sales efforts, and
onboarding)

Customer Lifetime Value (CLV):

CLV=ARPU×Customer Lifetime=2,000×3=Rs.6,000CLV} = {ARPU} times{Customer
Lifetime} = 2,000 \times 3 = Rs. 6,000CLV=ARPU×Customer Lifetime=2,000×3=Rs.6,000

Analysis: To ensure the business is profitable, the CLV should exceed the CAC. In this case:
CLV=Rs.6,000{CLV} = Rs. 6,000CLV=Rs.6,000 CAC=Rs.3,000{CAC} = Rs.
3,000CAC=Rs.3,000

Since the CLV is greater than the CAC, the business model is viable. However, it is essential
to maintain customer loyalty for at least 1.5 years to break even (CLV = CAC). To achieve
this:

• Enhance User Experience: Continuously improve the app’s features and usability to
retain students and schools.
 • Customer Support: Provide excellent customer support to address any issues
promptly.
• Engagement Programs: Implement engagement programs such as regular updates,
new content, and interactive sessions to keep users engaged and satisfied.

By focusing on these strategies, the company can ensure a higher retention rate, maximizing
the customer lifetime value and ensuring profitability.