IBEP Project -2

Among the three, investing in an Education Company, Technology is good. The idea is unique and
targets a large market, and AR also has immense growth in the education sector.
1.
Among the five stages of a company life cycle, I believe the product of this education technology
company lies in the ideation stage. There are two principles for an ideation stage; the product must
act as intellectual property and has mass marketable. This app successful intellectual property as it
improved understanding of biology for a sample of students. Also, this product target students and
teachers, therefore, has mass marketability potential. In this stage, an entrepreneur innovates an
idea that will provide a solution for any existing problems and later implemented the best one. The
Augmented reality app helps students who face difficulty in biology to visualize the organ systems.
This AR app displays the live organ functioning and makes an interactive session and easily accessible
through a smartphone.

SWOT ANALYSIS
Strength:
• Increase content understanding
• Long-term memory retention
• Make creative and interactive learning
• Increase student motivation for learning
Weakness:
• Reduces connection with human
• Mandatory to have a smartphone and good connectivity
• Can be expensive
• It may create eye strain because of addiction to the virtual screen.
Opportunity:
• Suitable for practical learning
• Ideal for education as well as training
• Provide Digital learning anytime, anywhere
Threats:
• Expensive and high maintenance cost
• Data privacy for users
• As it is technology-based so security threats and malware attacks

2.
Augment Reality take over the virtual world, and now it is widely used in education, marketing,
military, manufacturing, healthcare, social media, gaming, retail, entertainment, real estate, fashion,
and travel. AR or Augmented Reality has been working backstage for a long; however, it came into
the limelight with the arrival of Pokemon Go, launched in 2016. The Pokemon game was one of the
most widely exciting phenomena that helped the technology gain popularity even among the non-
techies. As users walk around in the real world, they spot Pokémon on the game app and throw
poke-balls at them to capture them. The AR also revolutionize the education sector to give practical
knowledge. But there are also several challenges to it. Similar apps in the market are unacademy,
byjus, Vedantu, and udemy.

Reduce connection with humans: AR technology provides a virtual experience with practical
learning. It helps us retain knowledge for a long time, giving us an understanding of practical
learning. It offers digital learning anytime from anywhere. But this way, we may not be able to do
social development. There will be less human interaction in digital learning. And there will be no
mentor in this digital learning to share his problems or for any guidance. To cope up with that, we
should use AR in the presence of a teacher or mentor. For example, there is an educational startup-
like unacademy, byjus, Vedantu, etc. They allotted a personal mentor to every student to contact
their mentor for any doubts and personal suggestions and carrier guidance. The conversation with
these mentors helps us also to build our social skills and connected us with humans.

Eye strain or cognitive problem: The revolution of digitalization provides us many benefits. We can
access it at any time or anywhere. On the other side, it has some cons. Due to the prolonged sitting
on-screen, it may create a cognitive problem or eye strain. It may be a severe issue for some people.
To reduce this issue, we can provide an inbuilt option of blue light filters or night mode in the app,
which may help us reduce eye strain. Or we can provide a function that will stop the screen for a few
minutes in each hour to relax users’ eyes. And users will not face eye strain during prolonged sitting.

To become cost-effective and maintain profit: Tech has become cost-effective for users, but the
research and development are costly. AR technology constantly updates using real-time data, and it
has to be maintained continuously. It may be challenging to get profit through a free app. So, to
keep it, the company can introduce ads to generate some revenue for the company. The other way
is to provide free access for few days and later charge them for continuous use, so people can
experience our content and attract them to subscribe to the app. And give some discount
individually or in a group to attract users. They can provide some benefits for share the app so it will
reach large users and revenue will maximize. The same methods were used by unacademy, byjus,
udemy, Vedantu to maintain their profit.

3.
In the ideation stage of any product, it is precarious for an investor to fund the product. To
safeguard from potential loss, an investor use convertible note. A convertible note is a loan
extended to an early-stage company that is convertible to equity after achieving certain milestones
in a defined period. The conversion percentage varies on what extent the company can achieve its
slated milestones mentioned in the convertible note agreement. It allows the start-up to align its
objectives and start operating towards the bigger picture instead of immediately bringing in a large
chunk of sales to impress potential investors.
Given that value communication is one of the biggest obstacles the company faces, as an investor, I
would create some stringent milestones for the company to achieve the goal and protect my
investment.

Milestone 1
The most important things to determine the product's success would be institution tie-up and usage
per institute. The first milestone would test the concept’s potential. In pilot testing, the product has
got a positive response. Now it’s time to commercialize the product and find the right product-
market fit. It would help the start-up understand the desired goal. The parameters would be set as
follows:
Institution tie-ups: Minimum 5 medium to upper-tier institutes.
Usage per institute: Minimum 100 students (Grade 7 to 10)

Milestone 2
After the commercialization of the product, the second milestone is to focus on expanding the
market through tie-ups. The product also tests in the market now it’s time to capture the market.
The parameters would be set as follows:
Institution tie-ups:
Minimum ten medium to upper-tier institutes
Usage per institute:
Minimum 125 students (Grade 7 to 10)

Milestone 3
Entering into the market is not enough, we should maintain growth of product also. Therefore, this
milestone considers multi-fold growth in the students and tie-up institution also. It would indicate
that the product has found its right product-market fit and has the potential to grow. The
parameters for adding new institutes would be set as follows:
Institution tie-ups: Minimum 20 medium to upper-tier institutes
Usage per institute: Minimum 150 students (Grade 7 to 10)

Milestone 4
Once the product is set up in the market, it can step forward to grow higher market share and
broadening its services. This milestone would focus on the company ability to maintain market
share, grow target audience and accelerate their service offering. It can be done by advancing the
technology for higher-level students and researchers. The parameters for adding new institutes
would be set as follows:
Institution tie-ups: Minimum 40 institutes (not restricted to medium to upper tier)
Usage per institute: Minimum 200 students (not restricted to grade)

Note: The company should reach the 4th milestone in approximately five years.

Initial Investment Milestone users Conversion Rate

5000000 500 30%
5000000 1250 18%
5000000 3000 11%
5000000 8000 5%

The above table shows the conversion rate of each milestone in the given period. For example, if a
company takes five years to reach milestone 1, then the conversion rate is 30%. And if a company
takes five years to reach milestone 4, then the conversion rate is 6%. We can see that the milestone
users and conversion rate have an inverse relation. It also motivates a company to reach the desired
milestone within a period.

4.
The customer acquisition cost will be mainly driven by placing digital ads, boosting social media
posts, google ads, and having a well-designed website for any app. Although, in starting phase of the
product, the company may wear costs like printing brochures for students, sponsoring college
events, or providing promotional discounts or free trial subscriptions.

Customer Acquisition cost = Total marketing expenses in a given period

No. of customer acquired in a given period

Total marketing cost to achieve milestone 1 = Rs 8,00,000

Total number of customers acquired till milestone 1 = 500

Customer acquisition cost = 800000/500

= Rs. 1600

Customer Lifetime Value is the total money that a customer is expected to on a company’s offerings
during a customer’s lifetime. The customer lifetime value can be calculated as the average value of a
customer’s purchase, the number of times a customer purchases within a period.

Customer Lifetime value = Average value of customer purchase × no. of times a customer
purchases.

Price for 6-month subscription = Rs 300 per student

Average value of customer’s purchase for = Rs 300
Frequency of customer purchase = 2
Time period of a customer purchase = 12 month

Customer lifetime value for 1st year = 300 * 2

= Rs.600

Avg. No. of Time Period Customer Customer Customer

Value of Times a of Acquisition Lifetime Profitability
Customer Customer Customer’s Cost Value
Purchase will Purchase
Purchase
300 2 12 1600 600 -1000
300 4 24 0 1200 -400
300 6 36 0 1800 200
300 8 48 0 2400 800
300 10 60 0 3000 1400

The customer acquisition cost for a customer is Rs. 1600, and the company earns Rs. 600 from a
customer in a year. As the above table shows that, the company stops making losses from year three
onward. It indicated that the company needs to keep a customer loyal for at least three years to be
profitable.