For many ed-tech companies, limited school budgets remain a barrier to entry. Even if the school leader is excited and wants to use a new product, the budget for the current school year is often set in the previous school year. To start something unplanned, school leaders will need to find something to cut to make room in the budget to purchase a new product.

One potential way around these obstacles is for ed-tech companies to procure funding through a third party, such as philanthropic or Corporate Social Responsibility groups. From our experience selling a game-based assessment software for federal Head Start and pre-kindergarten programs, we have found that offering funding  from philanthropic organizations can significantly speed up the school adoption cycle.

Even with funding, schools still go through the same level of diligence to ensure that the product is the right fit. Especially today, as schools return to in-person instruction and where teacher time is more precious than ever, school leaders need to justify the return on investment in terms of both teacher and student time in using a new tool. However, with the help of philanthropic funding, school leaders do not need to delay adoption of a new product until the next budget cycle or to divert money from another project they want to fund.

In our experience at Cognitive ToyBox, we’ve found that outside funders have supported our work in three different types of circumstances.

1. Third Parties Can Provide Startup Capital for Initial Research and Development.

As an early-stage company, we leveraged organizations such as 4.0 Schools and initiatives like the AT&T Aspire accelerator, to raise the capital and expertise needed for the initial research and development onsite in the school environment. We used the funding to further adapt and refine our product to even more closely fit the needs of educators.

With regards to for-profit companies philanthropies are more apt to fund research and development rather than a school district’s purchase of an ed-tech product. This is especially true for early-stage companies that may still need to establish their products’ efficacy.

2. Outside Funders Can Provide the “Risk” Capital During the First Few Years of Implementation With Schools.

Even after an ed-tech company has established a foundation of research for its products, schools often still need to conduct pilots in order to understand how the product will mesh with their technology and specific student and teacher populations.

When corporations or philanthropies provide the initial “risk capital,” school leaders have the opportunity to test a product and gain the confidence in subsequent years to allocate their own budget towards a purchase. For example, at Cognitive ToyBox, we have been able to leverage a regional grant from the American Heart Association’s Bernard Tyson Impact Fund to subsidize the first year implementation costs with San Francisco and Oakland area schools. Given the exciting changes in California with universal transitional kindergarten, schools are understandably looking to pilot new tools to see what will work to see what new approaches will work with young children. With the “risk” capital from the heart association, these transitional kindergarten programs will be able to try out the product before deciding whether to adopt it and allocate their own budget to it for next year.

Because school districts struggle to find funding, “This makes it difficult for schools to get access to new technological innovations in education,” said Tontra Love, the transitional kindergarten teacher on special assignment central coach for academics and instructional innovation/early childhood education for the Oakland Unified School District. Because of a grant from the American Heart Association, “Oakland has had the opportunity to work together with Cognitive ToyBox and build a tool that is customized for Oakland students.”

3. Corporate Partners Can Provide the Capital Year Over Year to Sustain School Systems.

Another approach to getting over the barrier of limited school budgets is to find a partner that can sustain an investment over time. Now that we’ve established our research foundation and piloted with schools to ensure that our product fits with their needs and contexts, Cognitive ToyBox continues to pursue third-party funding to subsidize our product so that we don’t have to strain the limited budget of a school district or Head Start program.

Ed-tech companies such as Everfi, which provide digital lessons on topics such as financial education, social-emotional learning, and early learning, have gone “all-in” on this approach. They are committed to never accepting payments from K-12 institutions. Instead, Everfi has been successful in fully subsidizing product costs through corporate partners. On a smaller scale, at Cognitive ToyBox, we have been able to engage with a regional philanthropic funder, the Mebane Foundation, to provide long-term funding support for our work with North Carolina Pre-K programs.

With the disruptions due to COVID-19, corporations are committing more dollars to support education. For example, AT&T has committed $2B over the next three years to help reduce the “homework gap” by funding ed-tech organizations. PNC Bank’s Grow Up Great program, which had previously committed $350 million to early childhood, is now committing an additional $150 million, for a total of $500 million to strengthen Head Start programs, as well as to support purchases for public school teacher materials through organizations such as DonorsChoose.

Given how integral schools are to the future workforce and to the community, there are opportunities to engage with corporations to enable them to better support their local schools. In particular, we recommend exploring partnerships with regional corporations who are seeking to have deeper engagement with the children and families within their community.

Image by Getty

This article is co-authored by Tammy Kwan, CEO of Cognitive ToyBox and Nikki Navta, Director of Partnerships and Sales at Cognitive ToyBox

Follow EdWeek Market Brief on Twitter @EdMarketBrief or connect with us on LinkedIn.

See also:

• Global Venture Capital Investment in Ed-Tech Soared in 2021, Topping $21 Billion
• An Inside Look at Three SPACs That Could Take Education Companies Public