Startup Founders Apply Education Experience

Former educators with technology interests are increasingly making their way from classrooms into the startup world as they try to use their school expertise to create ed-tech products and services that solve common problems. What these new “edupreneurs” are often lacking is the knowledge needed to launch and run a business.

Even if the concept for the new venture is sound, experts say, educators-turned-entrepreneurs must develop their business acumen to avoid startup failure.

“Most ed-tech startups that don’t have a history or experience with schools generally don’t do well,” said R. Keith Sawyer, a professor of educational innovations at the University of North Carolina at Chapel Hill, who is overseeing the creation of new programs for education entrepreneurship. “But people who are experienced at teaching generally don’t know much about entrepreneurship and its basic elements.”

Highly motivated business creators with education backgrounds are working to close that knowledge gap to help their ideas succeed. That is one of the themes of a yearlong Education Week series that will follow three ed-tech startups—all with founders who are former educators or have other classroom experience—as they try to gain a foothold in the marketplace.

Presented in partnership with the University of Pennsylvania Graduate School of Education, the series features startups that were finalists or winners in the school’s Milken-Penn GSE business-plan competition. One venture offers a digital tool to boost students’ vocabulary, another provides a platform that helps teachers use video more effectively in the classroom, and a third has developed an online teacher-coaching program.

For Benjamin Levy, a former middle school science teacher and the co-founder of eduCanon, an online video platform for teachers, the lure of moving from teaching in a classroom to running a startup came from the possibility of seeing his influence in a more immediate form with wider reach. Instead of waiting years to find out if his former students went into the sciences, for example, Mr. Levy began seeing results and getting positive feedback from his startup quickly.

“There’s a lot of satisfaction and fulfillment in reaching thousands of teachers and their students and empowering them with the set of tools I developed,” said Mr. Levy, who estimated that eduCanon has 35,000 teacher-users.

The K-12 Pipeline

More educators seems to be making their way into the startup world. Jennifer Carolan, a managing director for the NewSchools Venture Fund, an Oakland, Calif.-based nonprofit that invests in many educational startups, said of the 48 K-12 ed-tech startups the seed fund has invested in over the last five years, 22 were created by educators.

“The number of former educators who are startup founders is growing for sure,” Ms. Carolan said. “There are different challenges, however, for educators making that shift.”

The new crop of edupreneurs is stepping into a startup marketplace that is attracting significant attention from investors, especially those interested in ideas that tap educational technology. From the second quarter of 2012 to the second quarter of 2014, venture-capital investment in the K-12 ed-tech sector was more than $1 billion, spread across 243 deals, said Vivek Murali, an associate partner at NewSchools.

Mr. Levy knew he needed support when he decided to launch eduCanon. The idea for the Galesville, Md.-based company was sparked by his own quest as a teacher to integrate video into his classroom lessons. Once he developed a rough platform, Mr. Levy quickly learned that other teachers wanted to use it too, and the idea for the company was born.

Realizing he didn’t have business expertise, in 2012 Mr. Levy entered the MIT Sloan School of Management, in Cambridge, Mass. But he left halfway through the program because he felt his time was better spent doing the actual work to launch eduCanon. Shortly after that decision, he was accepted into Boston’s LearnLaunchX ed-tech accelerator, which gave him a rapid, “boot camp” experience in product and business development.

Along the way, he realized he preferred to collaborate with someone to build the business, and he linked up with co-founder and data analyst Swaroop Raju.

Through the LearnLaunchX accelerator, Mr. Levy traded 6 percent equity in the company for $18,000 in seed money.

“We were extra scrappy,” relying on friends for favors, using free office space, and living on beans and Ramen noodles, he said.

Then, during the same week last May, eduCanon won $100,000 in the Washington-based incubator 1776‘s Challenge Cup and $15,000 at the Milken-Penn competition. Since then, eduCanon has accepted $20,000 from an angel investor and established a “freemium” business model, in which the basic tool is free, but customers pay for an upgraded product or service. Several hundred users are paying for the upgraded model and a few dozen schools are paying for the service, Mr. Levy said.

The financial boost didn’t end eduCanon’s fiscal concerns, but made it easier to focus on developing the product, instead of raising capital. Mr. Levy said he and Mr. Raju are being careful about how much influence over the company they cede to investors in return for financial support.

“We’ve been very conscious that we want to make sure the vision of the company is sustained,” Mr. Levy said. “It doesn’t mean investors won’t have a bigger role to play as we roll out, but right now we want to maintain control.”

But startup founders’ worries about providing investors with a piece of the company in return for investment, like those voiced by Mr. Levy, though common, can be “the biggest mistake of education entrepreneurs,” said Barbara “Bobbi” Kurshan, the executive director of academic innovation and a senior fellow at the University of Pennsylvania Graduate School of Education.

“The investor might want 30 percent, ... but the truth of the matter is, you haven’t created any value yet,” she said. “A few pilots and some paying customers are not evidence of scalability or traction.”

Difficult Business Decisions

But Ms. Kurshan emphasized that despite the need for many edupreneurs to build business acumen, the characteristics of great teachers and successful entrepreneurs often overlap. Both are innovative, can iterate quickly, and adapt to new situations, she said.

ProfessorWord co-founders Betty Hsu, a former English teacher, and Ivan Chang, a former stock-investment analyst and a self-taught web developer, saw a problem they thought they could fix. Both are the children of immigrants and helped their parents learn English. Ms. Hsu taught English at an elementary school in France after graduating from college in the United States, and both have done a significant amount of SAT tutoring.

When Ms. Hsu found herself using reading materials to teach her students English vocabulary words, instead of giving them lists of words to memorize, she felt that she was on to something.

Mr. Chang, who has one failed startup under his belt—not uncommon, given that most startups don’t succeed—went to work on the prototype for ProfessorWord. Ms. Hsu realized she needed to add to her business knowledge and enrolled in the M.B.A. program at the University of Pennsylvania’s Wharton School. She graduated in May.

Ms. Hsu and Mr. Chang have operated ProfessorWord, which highlights and defines vocabulary words on most websites, on a shoestring budget that includes dollars they invested themselves along with about $30,000 they won in contests such as the Milken-Penn competition. Right now, the fact that it’s just the two of them working on the Philadelphia-based company is part of the appeal—and the peril—of being entrepreneurs, Mr. Chang said.

“What you do has a big impact,” he said. “But it’s also the biggest risk and the scariest part.”

So far, the co-founders have not determined how to make money from their product. They’re weighing the possibility of subscription sales and a freemium version.

“We don’t want to give away too little so that people don’t try it, but we also want some people to become paid users,” Mr. Chang said. “It’s a delicate balance.”

‘Crafting My Own Destiny’

Those business questions are the ones that educators may find themselves struggling with.

In response, William B. Morris III, the founder of EdConnective, a Richmond, Va.-based startup, has decided to take on a co-founder with a financial background to complement his own experience.

After a year spent mentoring students and teaching a character education course at a Chicago charter school, Mr. Morris focused on the idea of coaching to improve teacher quality—with a particular emphasis on improving educator practice to reach minority students.

He got his master’s degree in education from the University of Pennsylvania, and after a deep dive into research on how to improve teacher practice, he founded EdConnective last year.

But he quickly realized he needed help. So, now, he’s getting some assistance through the university’s education school, which awarded him a spot in its Education Design Studio incubator along with $10,000 in seed money. The studio provides mentors and advice on how to navigate the business aspects of a startup.

And Mr. Morris began looking for a partner—someone who could shoulder some of the day-to-day burden of trying to launch a business. “Solo is cool, but it gets a bit heavy after a while,” he said. “I needed someone with business-operation or financial expertise.”

He spent several months courting a Wharton School graduate, only to have the relationship fizzle when the business expert asked for 30 percent of the company—something the mentors at the Education Design Studio recommended against.

More recently, Mr. Morris has been working with a former college fraternity brother and accountant, but the two still have not discussed official financial details, Mr. Morris said.

In the midst of the uncertainty, Mr. Morris is still trying to snag his first real sale. He’s piloted projects with individual teachers, and a grant is paying his costs to work with teachers at a high school in New York City this school year. He also believes he’s on the cusp of striking a paying deal—the details are still unclear—to work with teachers at a charter school.

Meanwhile, finances have been tight. Mr. Morris kicked off his startup with $19,000 he raised on the crowdfunding site Upstart, some of which he has to repay eventually. He moved back home to live with his mother in Richmond, and recently took a part-time job with his undergraduate alma mater, the College of William and Mary in Williamsburg, Va., as an administrative fellow to pay the bills.

Even with some hardships, Mr. Morris believes in what he’s doing.

“I’m creating something that wasn’t out there already,” he said. “I’m crafting my own destiny.”