Edtech sales are nearly impossible, so Chalkable sold itself

By Erin Griffith , written on December 2, 2013

From The News Desk

Chalkable, an edtech startup which provides a platform for all of the apps used by teachers, has sold itself to STI, a private equity-backed data management company serving K-12 schools. The deal value was not disclosed.

Chalkable had raised $1.3 million in seed funding from 500 Startups, Expansion Venture Capital and Prolific Venture Capital.

Chalkable faced all the challenges typical of an edtech startup trying to ramp up sales. The company offered a useful tool which teachers wanted (I personally saw several of them express interest in it during a school visit earlier this year). Its platform integrates class data and students' accounts across multiple apps including ClassDojo, Khan Academy, Google Books and Dropbox. It acts as a universal log-in, similar to Google or Facebook OAuth, but for all of a teachers' class-related apps and accounts.

But schools are slow to adopt new technologies, despite their best intentions. They're set up to be risk-averse, and the costs of switching providers, of anything, are incredibly high. They also make buying decisions by committee upon committee upon committee. For that reason they have long procurement cycles of six or more months. Some young startups might not be alive by the time they finally win a contract.

I've written about this quite a bit in the past: The bottom up approach doesn't work here. And that's the only play lean startups really have.

Schools are large entities that are only comfortable doing business with other large entities. Startups struggle to find their place amid that.

But Chalkable had a clever way around this issue: After painstakingly securing 50 schools on its platform independently, Chalkable decided to make friends with the mature edtech companies it was disrupting: Chalkable announced it would partner with competitors which already have a foothold in school systems to co-sell their products.

But that didn't last too long. The company's first partnership ended up leading to an outright sale. Eight months later, Chalkable is becoming a part of STI.

As part of the deal, Chalkable will be implemented in 5000 schools in Alabama, adding 1.5 million students.

Chalkable COO Zoli Honig says the slog of going it alone wasn't worth it. For Chalkable to get to 5000 schools and 1.5 million students, it would take five years and many rounds of dilutive fundraising. "We just leapfrogged that in a couple of years," he says. "For a relatively young company, the scale and distribution we are able to get is pretty great."

"We looked at it like, instead of working like crazy, let's partner with someone who already has the sales channel and the schools and connections to the state," he says.

That is the essential issue facing ed-tech startups: sales is a bitch. It is so insanely hard to sell into schools. Chalkable got out early, while others remain dedicated to the uphill battle. The question remains as to whether this wave of edtech startups will produce a big, profitable competitor to the incumbents.

Chalkable is in the process of working out how it will support the 50 clients it fought so hard to secure on its own, while preparing its platform for 5000 new schools in the Fall of 2014.

[Image courtesy World Bank Photo Collection]