Impact of COVID-19 on Business Model Innovation at EdTech Startups

Abstract

Purpose: COVID-19 occurred at the end of 2019 and forced the world to change daily routines. Schools and offices were closed and needed to move to online mode. Educational technology (EdTech) aims to advance the learning results for students, foster individual approaches, and diminish teachers' burnout. The study aims to understand the impact of COVID-19 on business model innovation (BMI) at EdTech startups. Modern scholars show interest in researching firms that have various business models simultaneously. It is still unclear how business model diversification corresponds to its accomplishments. COVID-19 was a rapid and unexpected change. Hence, companies did not have much time to change their strategies and act on the spot. The level of the company's agility depends on many factors. For example, the area of operations and its size may affect the eagerness to shift dramatically. The study sheds light on the research gap on how agility and dynamic capabilities help companies to survive during crisis.

Approach: The data was collected by reviewing the existing literature and conducting 17 semistructured in-depth interviews with 14 EdTech startups and three industry’s experts. To analyze qualitative data, the researchers utilized content analysis and MAXQDA 2020 software in which data was coded into 14 categories to find answers to the research questions.

Results: There is no doubt that COVID-19 compelled the educational industry to utilize digital tools more actively than ever before. As a result, COVID-19 forced the EdTech industry to grow faster than expected. EdTech startups did not invent a new business model. They still use SaaS (Software as a Service) as a basis and charge users per specific time. Business model innovation (BMI) occurred in all segments of a business model. The main alteration happened in discovering parents as a new target audience and offer pricing plans for them. Second, EdTech startups accentuated their marketing efforts on the advantages of remote education and usability of the products at home. Lastly, EdTech startups focus on adjustability to hybrid learning environments, integrations with the existing platforms, and customer support for teachers and parents. As for the pricing plan, most EdTech startups provided their solution for free for a longer time than usual to support the educational community, increase awareness of the tool, and boost the user base.

Implications: The study is beneficial for EdTech startups in the following ways. First, it allows them understanding how other startups from the same industry coped with the pandemic. Second, the study makes it possible for EdTech startups to start internal discussions on revisiting the business model and think about what should be changed. Concerning uncertain time as COVID-19 in the future, EdTech startups must always believe in their product and understand the target audience.