The ads are everywhere. “Learn from the best!” “Guaranteed job placement!” “Industry-recognized certification!” Ed-tech companies promise to transform your career, teach you valuable skills, and set you on the path to financial freedom.
But behind the glossy marketing and celebrity endorsements, there’s a uncomfortable question: Are these companies actually in the business of educating you—or are they in the business of extracting money from you?
Let’s pull back the curtain on the ed-tech industry and examine whether students are getting genuine knowledge or just another financial product.
The Fundamental Conflict: Education vs. Profit
At its core, every ed-tech company faces the same tension: the mission to educate versus the need to make money. These two goals aren’t always aligned.
As one industry observer pointed out: “Most, almost all EdTechs aren’t run with a focus on actual student outcomes. They are just run on metrics an investor would be interested in.”
Look at the leadership teams of major ed-tech companies. How many actual educators do you find? According to industry insiders, most ed-tech firms are “overstaffed with MBAs & IITians and almost none have real educationalists (apart from a few token professors from Harvard or elsewhere in the US to attract that VC money).”
The uncomfortable truth: When the focus is on making money rather than delivering quality, the business model becomes inherently unstable. And when that happens, students—not investors—are the ones who lose.
The BloomTech Case: When Promises Turn Into Nightmares
Perhaps the most dramatic example of ed-tech deception came in April 2024, when the US Consumer Financial Protection Bureau (CFPB) took action against BloomTech (formerly Lambda School) and its CEO Austen Allred .
What BloomTech Promised
BloomTech marketed itself as a revolutionary coding bootcamp with a student-friendly financing model. Their pitch was compelling:
- “Income share agreements” that weren’t loans
- No debt, no finance charges, “risk-free” education
- Job placement rates as high as 86% within six months of graduation
- “We don’t get paid until you do”
The Reality
The CFPB’s investigation revealed a very different picture :
| What They Claimed | What Actually Happened |
|---|---|
| Income share agreements were “not loans” | They were loans with average finance charges of $4,000 |
| “Risk-free” financing | A single missed payment triggered default, and the entire $30,000 became due immediately |
| 71-86% job placement rates | Internal metrics showed 50% placement rates, sometimes as low as 30% |
| CEO tweeted 100% placement in one cohort | Later admitted sample size was one student |
| “We don’t get paid until you do” | They sold loans to investors and got paid long before students found jobs |
The CFPB found that BloomTech “lured prospective enrollees with inflated promises” and “hid the cost and nature of the ‘income share’ loans by not disclosing key terms like the finance charge and annual percentage rate, as required by law.”
The consequence: BloomTech was permanently banned from consumer lending activities, and Allred was banned from student lending for ten years. They were ordered to pay over $164,000 in penalties and to stop collecting payments from certain graduates .
The Investor Metrics Problem
Why do ed-tech companies make these promises? Because investors demand growth.
Venture capital-backed ed-tech firms are under immense pressure to show metrics that attract funding: user numbers, revenue growth, market share. Student outcomes are harder to measure, take longer to materialize, and don’t appear in quarterly investor reports.
As one industry veteran noted: “When the focus is actually on making money and not on really focusing on delivering quality, isn’t it obvious the business will tank eventually?”
What Investors Actually Care About
The ECMC Foundation’s Education Innovation Ventures market update paints a clear picture of what matters in today’s ed-tech landscape :
- Funding is scarce: Only 12% of startups graduate from Seed to Series A (down from 41% in 2020)
- Investors want proven growth: Capital is available, but only for companies with “traction, efficiency, and a clear path to profitability”
- Valuations are dropping: Seed-stage valuations are down 20-30% from 2023 peaks
Nowhere in this investor-focused analysis is “student learning outcomes” listed as a priority. The metrics that matter to investors are financial, not educational.
The Indian Ed-Tech Landscape: Growth and Challenges
India’s ed-tech sector has seen explosive growth, with companies like Eruditus leading the revenue charts at Rs 3,733 crore in FY24 . But even successful companies face fundamental questions about their business models.
Lead Group’s Journey
Lead Group, an ed-tech unicorn providing solutions to schools, reported flat revenue in FY25 but managed to cut losses by 69% . CEO Sumeet Mehta acknowledged the challenges: “Post-Covid, we had a couple of years where we were struggling because many schools were struggling.”
The company’s path to profitability came through:
- Stronger school retention
- Reduced customer acquisition costs
- AI-led operational efficiencies
Notably, Mehta emphasized that “as implementation and usage of our system improved and learning outcomes got better, retention naturally came back.”
The connection is clear: Better learning outcomes lead to better business outcomes. But not all companies make that connection early enough.
Educational Initiatives’ Long-Term View
Educational Initiatives (Ei), founded in 2001, represents a different approach. The company has spent over two decades building tools to measure and improve learning outcomes, working with about 1,000 schools and reaching over half a million students annually .
CEO Pranav Kothari frames their mission in educational terms: “Our mission is to see a world where children are learning with understanding and by asking better questions.”
Ei’s acquisition of Open Door Education in 2025 reflects a strategy focused on enhancing learning through “thinking-focused approach to enhance learning in schools” .
The Outcomes-Based Contracting Revolution
A promising development in the ed-tech space is the rise of outcomes-based contracts (OBCs), where payment is tied directly to student results rather than just product delivery .
How Outcomes-Based Contracts Work
Under these agreements, schools and districts pay ed-tech companies based on whether students actually show improvement :
- A base fee is collected upfront
- Additional payments are tied to specific academic benchmarks
- Up to 40% of a contract’s total value can be contingent on student outcomes
- If vendors don’t hit metrics (like improvements in student performance), they don’t get paid the full amount
Early Results
The Southern Education Foundation has helped about 20 school districts implement OBCs, initially for tutoring and now expanding to digital intervention tools .
In Orange County Public Schools, Florida (one of the largest districts in the US with over 200,000 students), officials awarded an outcomes-based contract to Amira Learning, an AI-powered reading support tool. The district pays half upfront and half contingent on Amira meeting four different outcomes based on state assessment results .
Why this matters: When payment depends on outcomes, companies suddenly care deeply about whether students actually learn. Their financial incentives align with educational goals.
Resistance from Traditional Vendors
Not all ed-tech companies welcome this shift. Brittney Miller of the Southern Education Foundation noted: “We got more pushback from the ed-tech marketplace than we did from high-impact tutoring. Ed-tech is a more established marketplace, and so it’s just kind of a paradigm shift for them.”
Some companies question whether they can be fairly judged on performance without assurances that their product will be “used with fidelity” by schools .
But for districts, the appeal is obvious. As Harold Border, chief strategy officer for Orange County schools, put it: “For us, it really comes down to how we can make sure every dollar is being utilized to the best of our ability to get outcomes for students.”
Kinsley Nelon of Uplift Education in Texas was even more direct: “When I’m having a conversation with a vendor, if they’re not willing to discuss OBC with me… that’s a pretty big turnoff.”
The Metrics That Actually Matter
What Ed-Tech Companies Measure
Most ed-tech companies track metrics like :
- Profits and revenue growth
- Number of products sold
- Market share
- User acquisition
- Monthly active users
What Should Matter
According to education technology writer Matthew Lynch, “In EdTech, you have to do business with schools or universities. These institutions don’t operate like traditional businesses. The goal of education is to teach students, not to make money.”
The only metric that truly matters: Student outcomes. “If you can show that your product will deliver the results they want, other factors won’t matter.”
The Gap Between Promise and Reality
A LinkedIn post by Pranav Chaithanya captured the frustration many feel: “While talking about an infamous EdTech company which contrary to its name, didn’t seem to think or learn – my wife pointed out something… Most, almost all EdTechs aren’t run with a focus on actual student outcomes.”
The problem is structural. Focusing on quality “means you have to contend with the fact that your company won’t be described as ‘burgeoning’ or ‘Unicorn’ or whatever adjective floats your boat. Focusing on quality means things will get worse, much worse before they get better. Who has the patience?”
The Alternative Model: Industry-Linked Programs
Some newer ed-tech companies are attempting to bridge the gap between education and employment by design.
Edept’s Approach
Edept, a Bengaluru-based company founded in 2023 by alumni of INSEAD and IIMs, operates on a B2B2C model, partnering with universities to design “industry-led postgraduate and degree programs” .
- Collaborating with corporations to ensure curriculum aligns with market needs
- Handling everything from student acquisition to admissions, academic delivery, internships, and final placements
- Providing real-world immersion programs in global hubs
The company’s focus is explicitly on “career-focused education that improves job outcomes for students” .
The Key Difference
Unlike companies that sell courses directly to consumers with job guarantees they can’t back, Edept’s model involves :
- University partnerships that provide oversight and credibility
- Corporate involvement in curriculum design
- End-to-end responsibility including actual placements
This model doesn’t eliminate the profit motive, but it creates stronger alignment between what students need and what the company delivers.
Red Flags: How to Spot Ed-Tech Companies Prioritizing Money Over Knowledge
🚩 Red Flag #1: Vague or Inflated Job Placement Claims
BloomTech advertised 71-86% placement rates when internal data showed 50% . If a company won’t share verified, third-party audited placement data, be suspicious.
🚩 Red Flag #2: Complex Financing That Sounds “Too Good”
“If it’s not a loan, but you have to pay $30,000 if you miss a payment—it’s a loan.” Any financing that obscures true costs, APR, or consequences of default is designed to confuse, not help .
🚩 Red Flag #3: Leadership Without Educational Background
When leadership teams are packed with MBAs and investment bankers but lack experienced educators, whose interests are being served?
🚩 Red Flag #4: Outcomes Data That’s “Coming Soon”
Companies that can’t demonstrate actual student outcomes—improved test scores, career advancement, skill acquisition—are selling hope, not results .
🚩 Red Flag #5: Pressure to Enroll Immediately
“Limited seats!” “Last chance!” “Prices going up tomorrow!”—these tactics create urgency to bypass your rational decision-making.
🚩 Red Flag #6: Refusal to Consider Outcomes-Based Payment
If a company won’t tie any portion of their payment to your success, ask why they’re so confident in their product .
The Bottom Line: Are You Getting Money or Knowledge?
The honest answer is: it depends on the company.
Some ed-tech firms genuinely prioritize student outcomes. They employ educators, measure learning gains, publish transparent data, and align their financial incentives with your success. Educational Initiatives, with its 20+ year focus on learning measurement, represents this approach .
Others are primarily financial engineering projects dressed in educational clothing. They maximize investor metrics, minimize transparency, and treat students as revenue sources rather than learners. BloomTech’s lending scheme represents this darker side .
Questions to Ask Before Enrolling
- Who leads this company? Look for educators, not just business graduates.
- What do independent reviews say? Not testimonials on their website.
- Can they show verified outcome data? Audited placement rates, learning gains, career progression.
- How do they get paid? If they get money before you get results, understand what that means.
- Would they accept outcomes-based payment? If they’re confident, they should.
- What do former students say after 1-2 years? Immediate reviews are less valuable than long-term outcomes.
The Emerging Solution
Outcomes-based contracting offers a path forward. When payment depends on student success, companies suddenly care deeply about whether you actually learn . This aligns incentives in a way that traditional tuition models never have.
As more districts and individual learners demand outcomes-based arrangements, the market will shift. Companies that deliver genuine knowledge will thrive. Those that just extract money will eventually be exposed—as BloomTech was.
The Final Truth
The ed-tech industry sits at a crossroads. One path leads toward treating education as just another financial product—extracting maximum revenue while delivering minimum value. The other path leads toward genuine partnership in student success, with financial rewards following from demonstrated outcomes.
As a consumer of education, you have power. You can choose companies that prioritize learning over fundraising. You can demand transparency about outcomes. You can walk away from pressure tactics and vague promises.
Remember: Real education transforms lives. It should never put you in debt without delivering the skills and opportunities you were promised.
The question isn’t whether ed-tech companies can make money. Of course they can—and should. The question is whether they make money because they educate you well, or whether they make money despite failing to educate you.
Choose the companies that succeed only when you do. Those are the ones giving you knowledge, not just taking your money.
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