Finlatics Project 2

Education Technology Company

1. Among the five stages of the company life cycle, this company is in the ideation stage with a
proof of concept in place and a pilot testing done for the proof of concept. In this stage the
company has identified a problem, which is complex nature of human anatomy in the
subject of biology where students sometimes find it difficult to comprehend the various
parts of the body . This Augmented Reality app would help student visualize what is being
taught in the class. This would help the students in better understanding of the subject and
improved performance in the subject.
It is also important to note that many students having an interest in Biology do take up
medicine as their profession going forward. This AR based app would not only help students
understand the subject from an early stage, but would also help them in the long run.
Today many companies are using technology in the education sector, companies such as
Byju’s, Whitehat jnr shows us that many students are adopting technology in their study
practices. Thus, this AR based app has a good potential to bring a change in the ed-tech
sector. The IPR has been developed and the initial proof of concept shows that the students
using this app has an improved performance of 40% in the subject.
The challenge that this app is facing is of value communication. This can be overcome by
being backed by an eminent investor who has expertise in the ed-tech sector. This funding
from eminent investor would add a stamp of quality to this app which would improve its
value communication. People would start taking cognisance of this app if it is backed by a
powerful investor.

Strength:
1) First of its kind app in the ed-tech sector which is using Augmented Reality
2) POC already shows a 40% improvement in marks
3) Would help student with the nitty-gritty aspect of the subjects through visualization

Weakness:

1) AR is a new concept and would take time for people to understand and adopt
2) Many schools and colleges still have teachers who are not tech-savvy and would find it
difficult to use this service
3) Needs a smartphone to use this app, which can be a problem for lower socio-economic
class

Opportunity:

1) Establish a first of its kind company to provide this service using AR

2) Can be a game changer for the ed-tech sector
3) Other higher class subjects such as engineering, automobile etc can also be taught in
colleges using this product
 Threat:

1) High purchase cost for the users

2) Not suitable for lower socio-economy class
3) Not suitable for all schools and colleges

2. One of the biggest challenges is to develop the AR product as close as possible to the human
anatomy. This development of software requires extensive and delicate coding. As the
human body consists of many small organs and miniscule veins, arteries or even organs.
Depicting them correctly and accurately in the app is going to be the biggest challenge for
this company. Also, the position of the body parts in the human anatomy needs to be exact
and accurate, otherwise the students would be taught wrong. This challenge can be
overcome through a team of good developers having extensive experience in AR. There have
been many AR based games and with Meta launching its own Metaverse, and Augmented
Reality space. Thus this technology is slowly gaining popularity and the challenge of finding
good developer of the product will be addressed.

The other challenge will be the hardware compatibility of the smartphones. Not all smartphone have
a strong enough processor and adequate RAM to run AR apps. More so the students would not be
having a high end smartphone with latest processor and bigger RAM. Thus, the company needs to
develop the software which requires minimum hardware specification. We have earlier seen how EA
sports tweaked its games to run on lower RAM computers and computers with no graphic processor.
The team needs to come up with such plan to reduce the hardware dependency for the AR app.

Data Security and Privacy is also another concern that users might have. As AR apps requires
location permission to deliver the best performance, this might be an issue for the users who are
very concerned about their privacy. Also, AR apps works by using camera, microphone and GPS
which can be an issue for many users. Thus, the company needs to develop a robust data security
centre which would allow the users to use the app without worrying about their privacy and
security.

4) As the start up is in an ideation stage, a convertible note should be the instrument used by
the investors while investing in this idea. The convertible note safeguards the investors
money in case the start up does not do well or does not give the return expected by the
investor. As such a convertible note should be the best option that an investor should be
looking to. Under this, the start up would get the money they need now to get their project
up and running. Since the company has already made a prototype and tested it with
successful result. The convertible note can be converted into equity in the future The
percentage of equity could be lessened or increased in the future.
The milestone that I would set for the start up is as follows.
 Milestone 1

In the first milestone stage, since the start up has still not launched, it would be difficult to
convince schools to opt this Augmented reality software. The schools would be
apprehensive to invest in this start up.
On the other hand, medical coaching institutes have a substantial amount of money with
them and they would be willing to invest in it. They have the monetary power to purchase
this software only if for testing. As medical colleges would also benefit form such a software,
they would be the best initial customer of this software. Once they opt for this software and
if it helps them in improving their result, other medical coaching centres would also follow
suit.

Tier 1 medical college centres: Minimum 5

Usage per institute : Minimum 100 students

Milestone 2

Once a few of the Tier 1 institute starts using this software and it brings them the success,
other medical centres would also opt for it. In this phase the start up should look to expand
the market share by tying up with more medical coaching centres. Like wise, they should
now look to penetrate into upper tier schools in the city.

Tier 1 medical coaching centres : Minimum 10

Tier 1 city, Upper Institute : Minimum 5
Usage per institute : Minimum 100

Milestone 3

In this phase the company should look to market their product aggressively and look to
penetrate deeper in the market. The company should look to retain their existing customers
while aggressively acquiring new customers through better marketing.

Upper Institute : Minimum 30

Medium level institute : Minimum 5

Usage per institute : Minimum 100

Milestone 4

Once the product has established itself in the market, it can aggressively pursue a larger
market share and broaden its service offering. This milestone would be centred on the company's
ability to maintain its system, penetrate the market, and accelerate its service offerings. This can be
accomplished by improving technology for higher-level students.

Upper Institute : Minimum 45

Medium Institute : 15
 Usage per institute : Minimum 100

Initial Investment Students added per Total number of Convertible note

milestone (Optimally) students( in 5 years) Conversion rate (%)

50,000
500 < 500 25%

50,000
1500 1500- 2500 15- 23 %

50,000 3500 4500- 5500 10- 13%

50,000 6000 10,000 – 15,000 5- 8 %

We chose the total number of students as the milestone from the above-mentioned table.
The initial investment that we are looking to make in the company is Rs. 50,00,000, with a 5-
year investment period. The table shows the respective conversion rates that are applicable
to the investment, as well as how they are range bound and based on the number of
students that the app can accommodate. In the first, and possibly most bleak, scenario, if
the company takes 5 years to reach the first milestone, the conversion rate would be 25
percent. In the second case, if the company takes 5 years to reach milestone 2, the
conversion rate is between15-23 %. In the third case, if the company takes 5 years to reach
milestone 3, the conversion rate is 10- 13%. In milestone 4 if the company reaches the set
milestone in 5 years, the conversion rate is 5- 8%.
We kept the conversion rates rangebound in each case because they would depend on the
exact number of students onboarded in five years.

4. The customer acquisition cost of an augmented reality app will be primarily driven by placing
digital ads across a variety of media to drive installation. Boosting social media posts,
running Google ads, and having a well-designed website can all yield significant results.
Total marketing expense to achieve milestone 1: Rs. 6,00000

Number of customers acquired till milestone 1: 500

Customer Acquisition Cost = Rs 1200

Price per 1-year subscription = Rs 500 per student

Average value of customer’s purchase for = Rs 500

Frequency of customer purchase = 1

Time period of a customer purchase = 1 year

Customer Lifetime Value for 1st year = Rs 500

Avg Value of No. of times a Time period CAC Total CLV Net profit on
customer’s customer will of customer customer
purchase purchase purchase
(Cumulative)
500 1 1 1200 500 -700
500 2 2 0 1000 200
500 3 3 0 1500 500
500 4 4 0 2000 800
500 5 5 0 2500 1300

The company incurs a Rs 1200 acquisition cost per customer and earns Rs 500 per customer to
achieve milestone 1. As shown in the table above, the company stops making losses from the second
year onwards. This indicates that the business needs to keep a customer loyal for at least 2 years in
order to make profit.