How to Achieve Financial Wellness as an eLearning Startup

Editor’s note: This article is based on a conversation with Eli Marx-Kahn, Co-Founder and Chief Wellness Officer of Holistic Learning. Holistic Learning offers an online education platform to help high school students thrive in all aspects of their lives. Services offered include 1-on-1 tutoring, meditation & wellness courses, learning strategies, career seminars, college & career counseling, life skills, and personalized progress tracking.

As the founder of an eLearning startup, you wear many hats. In addition to being the visionary and chief strategist for your company, you’re also responsible for its financial performance. This can be a daunting task, especially if you’re not financially savvy or have no background in accounting or bookkeeping.

This was the recent experience of Eli Marx-Kahn, Co-Founder and Chief Wellness Officer (CWO) of Holistic Learning. Eli and his co-founder, Kush Patel, started Holistic Learning in 2021 during the COVID-19 pandemic to help counter a decade-long trend in secondary education of schools focusing on test-taking proficiency and ignoring the overall wellbeing of students.

A Unique Approach To Student Online Learning and Wellness

"We thought it would be great to try and build a single destination online for students to get access to tools, not only for academic success, but also personal and professional growth.

Some of the services we provide are one-on-one tutoring, learning, strategy sessions, life skills, workshops, career seminars, and meditation and wellness courses.

We're trying to see students as whole people, and also trying to recognize that one of the best places to start, if you want to create a better world, is with young people, helping them establish good habits, helping them realize what's important to them," said Eli.

Given their unique approach, Eli and Kush knew they needed to provide tangible proof to the educators and administrators of potential partner schools. In addition to their own contributed funds, they raised money from friends and family. They used these funds primarily to build their team, develop a minimum viable product (MVP), and do a beta launch.

They gained traction with some initial prospective partners, but also faced uncertainty as restrictions were lifted post-COVID and more students and educators wanted to resume in-person learning, about whether or not there would continue to be sufficient demand for their online-only delivery modality.

Uncertain Revenue Requires Dynamic Financial Forecasting

Given this uncertainty, Eli knew that financial forecasting would be crucial, but also challenging:

"We don't have super solid revenue just yet. The main concern for us has been ensuring that our runway is long enough to sustain us into the post-revenue phase. With the business model that we have and with the company structure that we have, and with us as founders not taking any income yet, we've been able to keep our costs fixed and calculate our runway pretty reliably. We just try and keep our estimates conservative as much as possible."

Conservative estimates are one approach, as long as they are believable and based on detailed thinking around the drivers of your business. One way to do this effectively is to create a financial model that encompasses all of the revenue and expense streams for your business. This will help you to not only forecast your financial performance but also stress-test different scenarios (e.g., what if we lose our biggest client? What if COVID-19 persists?) to see how they impact your business.

Once you have a handle on your financial situation, you can start to look at ways to improve your financial performance. This may include renegotiating contracts with vendors, exploring new pricing models, or seeking out new sources of revenue.

It’s also important to keep in mind that your financial health is not just about making ends meet today, but also ensuring that you are prepared for the future. This is where drivers-based dynamic forecasting helps.

The goal of dynamic forecasting is not to produce a single “correct” forecast, but rather to generate a range of possible outcomes based on different assumptions about the drivers of your business. This approach can help you to identify potential risks and opportunities so that you can make proactive decisions to improve your business's financial health.

Effective forecasting is also important for managing your cash, the lifeblood of any startup. This matters whether you bootstrap your business or raise outside funds. Eli and his business partner took a hybrid approach to funding Holistic Learning.

Funding an EdTech Startup via Bootstrapping and Institutional Capital Raising

"We did initially self-finance and used savings to build the first iteration of our website, to get legal filings, and to do some initial hiring. We were lucky enough to be able to do two rounds of friends and family fundraising. That's enabled us to pursue the project as we have. And frankly, it would have been very difficult to put as much into it as we have been able to if we hadn't had that financing. We probably would have had to work at least part-time otherwise.

We recently had to consider whether we wanted to go the route of institutional fundraising. What we've decided to do is take a business loan from a local foundation where I live in Colorado. It's a sort of enterprise fund for entrepreneurs who have trouble getting favorable interest rates from traditional institutions like banks. We've managed to get a really low interest rate. Well, below inflation. That's our current approach to try and extend our runway a bit and see if we can't retain equity while building the business.

And, you know, at some point I think it would be great to have a strategic partner in the form of an angel investor who really knows the industry, who's built something in the EdTech space before."

When you do decide to take on outside funding it's important to ensure that it's "intelligent capital" that you're bringing in that can provide more than money and help connect dots for you in your business with connections and expertise.

Managing an eLearning Startup's Expenses

Another important aspect of an eLearning startup's financial health is keeping up with expense tracking, forecasting, and management. This was a major pain point for Holistic Learning.

"That has been a headache and often takes up more of our bandwidth than we would prefer. We have QuickBooks, which has been pretty helpful. We got that fairly recently, but up to that point, it was converting bank statements into spreadsheets and making visuals based on spreadsheets that could tell us how much of our money was going towards [different expenses]. It was pretty crude.

Quickbooks has helped, we can certainly always use more resources when it comes to budgeting and forecasting. 

Something that I didn't expect when we got started with marketing is the cost of marketing to individuals online, it can be pretty colossal. It's pretty easy to have double-digit customer acquisition costs and bleed into the triple digits.

And that can be intimidating, especially when your marketing budget is small," said Eli.

Get Educated with our Free Bookkeeping and Financial Performance Guides

Don’t worry if all of this seems overwhelming. You achieve financial wellness for your startup by taking some simple steps and understanding some key financial concepts. To get started, download our free eBooks on the 12 Most Common Bookkeeping Mistakes and 5 Common Financial Mistakes Made by 7-Figure Businesses.

And remember, if you ever have any questions, don’t hesitate to schedule a free 25-minute call with one of our financial growth professionals.