Can You Say Unicorn? Duolingo Raises $30 Million at $1.5 Billion Valuation
Learning a new tongue has helped Duolingo grow a horn. For the third time this year, an American education technology company is laying claim to the magical “unicorn” status.
The Pittsburgh-based developer of a popular language learning app has raised $30 million in a Series F round from CapitalG, the growth equity investment fund from Alphabet (the umbrella company for Google) and an existing investor in Duolingo. To date, company has raised $138 million.
The latest funding round gives Duolingo a valuation of $1.5 billion, and a claim to fame as Steel City’s first tech startup unicorn.
Founded in 2012, Duolingo claims more than 300 million users, of whom 30 million are active on a monthly basis, according to the company. Today, it offers 94 courses across 38 languages, including widely spoken languages such as Arabic, Chinese and English, and more regional-specific tongues such as Navajo, Hawaiian, Welsh and Irish Gaelic.
Some of the courses are specifically tailored to a learner’s native language, such as Chinese for Japanese speakers and Swedish for Spanish speakers. The language exercises include a mix of multiple-choice and fill-in-the-blank questions, along with digital flashcards and oral speaking practice.
Recently, the company debuted podcasts in Spanish and French, and mini-stories that provide additional reading and listening comprehension practice. It also created an “Events” portal where language learners can organize local meetups.
Just as important for the company and its investors, Duolingo says it has reached $100 million in bookings, up from $1 million three years ago. The majority of its revenue comes from a $6.99 monthly subscription that removes ads and allows users to download lessons for offline use. (The ads themselves are another source of revenue.) The company also offers an English proficiency test for non-native speakers, which costs $49 and is accepted by more than 400 higher-ed institutions across the world.
A Duolingo spokesperson says the company expects to break even this year and be cashflow positive in 2020.
Language learning has long been a popular business, and the adoption of mobile devices has been accompanied by a proliferation of competing upstarts, including Babbel, Busuu and Memrise, along with more established players like Rosetta Stone. Market estimates for the global online language market range from $3.8 billion in 2020 to $10.5 billion by 2025.
According to SensorTower, a mobile app analytics firm, Duolingo is the top-grossing education mobile app worldwide.Top grossing education apps, according to Sensor Tower.
As its users, offerings and revenues have grown, so too has its headcount. Today Duolingo numbers 200 employees, up from 95 in July 2017, when the company last raised funding. The company has offices in Beijing, New York and Seattle.
The latest funding will support the company’s efforts to add new content and refine its machine learning and artificial intelligence technology that fuels its language courses. The company is also seeking to hire country managers in Japan and Brazil, having recently done the same in Mexico and the U.K. In an interview with CNBC, Duolingo co-founder and CEO Luis von Ahn said the company is planning to employ 300 staff by the end of 2020.
For all the new features Duolingo has added, it has also pulled back on a few. An AI chatbot for conversation practice was removed last year, but the company plans to reintegrate the tool into the regular lessons eventually, von Ahn said in an email to EdSurge.
The company also previously tested a feature that connected Spanish learners to a live tutor. “A lot of people said they wanted something like this, but after testing this on thousands of people, we found that they actually don’t,” von Ahn added. “Practicing a new language with a live person is intimidating or anxiety-inducing for a lot of people and given the choice, our data showed they’d actually prefer not to.”
The company runs up to 100 experiments at a time on any given feature, von Ahn adds, and launching, pausing and shuttering features based on user engagement is a regular part of its product development process.
Prior to starting Duolingo, von Ahn, who hails from Guatemala and also speaks Spanish, was a full-time professor at Carnegie Mellon University. There, he developed the technology behind CAPTCHA, a security function now used in many websites that asks users to enter text or select images to prove they are human. He turned that research into a company which was acquired by Google in 2009.
Duolingo is the third U.S.-based education technology company to claim the vaunted unicorn status in 2019. Last month, Guild Education, which helps corporate employees take online classes from postsecondary institutions, raised $157 million. Coursera, which also offers access to online higher-ed courses, secured $103 million in April.