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This article first appeared on aud.life

As my own records about ed-tech funding only go back a year, I’m struggling to answer a question: which ed-tech startups have not raised money in the past couple of years? That’s a prelude to the real question, I suppose: which ed-tech startups might be in danger of running out of money?

So far this year, investment in ed-tech is way, way down. And it’s not just ed-tech either. Across the tech sector, “startup funding is dying up.”

I’ve been a little obsessed the last few days, I admit, with the napkin math – well, mostly speculation – about how much money ed-tech startups are burning through and how quickly. The recommendation, according to venture capitalist Fred Wilson (back in 2011 at least): have at least $10,000 per employee per month in the bank.

Pick a startup. Look up how much money it’s raised (via, say, Crunchbase). Look up how many people are on its team (via, say, the company website). Do the math.

Add to the equation: does the startup have revenue? Could that revenue offset the burn? (How transparent is the startup about its funding and its revenue?)

Also worth asking: how often do you see this company at conferences? Is it a sponsor? Does it have an exhibit booth? The cost of these expenses, after all, can range from the tens to hundreds of thousands of dollars a pop.

Are there other signals that we can look for to gauge the health of a company? Perhaps. Perhaps blog and social media activity (although these can easily be “fluffed”); new feature releases; pivots and re-branding; and/or staffing levels and changes (including reviews from employees via Glassdoor).

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Audrey Watters


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