Of all the education technology startups that could go public next, there’s one that’s likely not on your radar: Busuu, a London-based developer of a language-learning platform. But its co-founder and CEO, Bernhard Niesner, has started to make his case.
Niesner claims the company is on track to hit $40 million in revenue in 2020. He says it broke even last year, has reached $24 million in gross bookings, and passed 100 million users at the start of the year with more than 200 corporate clients.
And he believes Busuu still has plenty of room to grow in the international and corporate learning markets. “There are so many players out there—and a few emerging winners” in edtech, says Niesner, 40. “We are one of them.”
The company is still shy of the $100 million revenue threshold commonly associated with IPO-ready companies. But to help it get there, Busuu has made its first acquisition: Verbling, a San Francisco-based provider of live language tutoring services delivered by video. The acquisition cost Busuu at least $10 million, according to a statement Thursday.
How They Work
Busuu has grown considerably since its 2008 founding. The company reached 25 million users by 2012 and 55 million users three years later. Its courses train users on vocabulary, grammar, writing, listening and speech. Community members provide feedback on exercises. The Busuu platform also offers flash cards, recordings of native speakers, reading materials and speech recognition tools that help users with pronunciation.
Busuu CEO Bernhard Niesner on his company's origins.
Busuu is free for individuals, and a premium package for about $70 a year offers practice with live native speakers and offline access to course materials. For about $80 a year, Busuu also offers language certification from educational publisher McGraw-Hill and a personal study plan.
The company launched a business-to-business offering in 2016. Among Busuu’s corporate clients are Puma, Adidas and Uber. It offers a specialty course for retailers and a package for universities. Education clients have included Texas Tech University.
Busuu’s growth has been partly fueled by $17 million in venture capital from investors that include PROfounders Capital and McGraw-Hill. It currently supports 12 languages, with the U.S. as its top market by revenue followed by China. The company has also seen strong growth in Latin America, Europe and Turkey. Niesner expects to grow in Africa, India and other locations in the future. Should the company go public, he has his eyes on a U.S. or London exchange.
The acquisition brings Verbling’s 10-person team to Busuu, which will use Verbling technology to launch a live language tutoring service called Busuu Live. Verbling CEO and co-founder Mikael Bernstein, 33, will become a product lead within Busuu.
Verbling was founded in 2011 by two Swedes who met while studying at Stanford University and graduated from startup accelerator Y Combinator that year. The company has grown to more than a million students and 10,000 teachers who offer one-on-one lessons in about 60 languages. The company has raised $4.4 million in venture capital from investors including Learn Capital, DFJ and Bullpen Capital.
Example of a Verbling teacher's introductory video for students.
Teachers set their own rates on Verbling, which can range from $5 to $75 an hour, according to the website. All Verbling teachers must have previous teaching experience and be a native speaker. They must submit resumes, reference letters and proof of past teaching experience before they can teach on the platform. The platform also comes with teacher-generated flash cards and articles for students. About 50 percent of users take English classes, according to Bernstein.
Customers of both companies shouldn’t expect any changes in the near future, Niesner says.
Co-opting the Competition
Serious acquisition talks started last year after a conference where Niesner met Bernstein. Busuu broke even in cash last year and decided the time was right to grow. “We decided to use our financial strength,” says Niesner, who is originally from Vienna. “We will now empower their tutors with the data points of our users.”
Busuu’s acquisition comes as competition in the language learning market heats up. Competitor Duolingo secured a $30 million Series F round in December, earning a “unicorn” valuation worth more than $1 billion, and claims more than 300 million users learning 38 languages.
Niesner says the market has plenty of room for multiple language learning apps, estimating that only 10 percent of that learning happens online. “All of us benefit from the shift to online,” he says.
Busuu may explore another funding round in the future, Niesner says. But for now, it is focused on integrating Verbling. “We will be quite busy over the next few months,” he says.