Monopsony in Blue: Is there a market for Edtech?

Is there a market for Edtech?

Education is one of the favoured market for a new generation of entrepreneurs. Edtech’s ambition is to rhyme with Fintech, Healthtech, Cleantech… and Edtech funds ambition to transform into billions the Edtech magic.

Counting by the number of startups or application apps, this new eldorado is already there.

But a paradox remains: “why is it so hard for Edtech startups to sell to schools?”. In a recent article, there was an attempt to give some explanations:

  • It is not easy to reach the people who make the decisions.
  • There is fear of change and new things.
  • There are many stakeholders.
  • The market is overcrowded.
  • Products lack validation.

In fact, they are all part of the same story: all innovations target the same decision makers. When it comes to innovation in the classroom, nothing can be done without the teacher’s asentment (even if the intention would be to substitute him or her!) and the head master’s agreement.

The Edtech market has therefore a unique characteristic: it is a one-buyer market or better said, a monopsony. Only one buyer (the school) interacts with many potential sellers (the Edtech entrepreneurs) and has therefore almost absolute market power.

In this monopsony, there is no other alternative than to convince, seduce, attract the teacher. New strategies could be designed and joining forces may be desirable: why should entrepreneurs struggle desperately and separately to capture teachers’ attention. Joint offers could be made. New forms of distribution could be envisaged.

Monopsony in Blue

Monopsony in Blue

 

But to start with, there is a core issue to take into consideration: teacher’s risk preference. In other words, are teachers ready to take risks to change their practices and innovate in the classroom?

Intuition often says no and research evidences seem to confirm it.  Bowen analyses Teacher Risk Preferences  and by comparing preferences of new teachers with those entering other professions, he finds that individuals choosing to teach are significantly more risk averse.

He also suggests that new policies introducing for instance performance incentives for teachers (performance pay programs) could attract less risk-averse individuals into the teaching profession. In the meanwhile the Edtech entrepreneurs should invest time and money to train a new generation of teachers into innovation.

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