An ed-tech company that specializes in literacy and education apps has closed on a $50 million round of venture capital funding from several big name investors with plans to use the money to build a comprehensive early learning platform.
The investment is one of the biggest rounds of funding for a U.S.-based company focusing on early childhood education products and services, and its CEO believes the investment marks a broader signal that venture capital backers are starting to recognize the potential of startups in what still amounts to a niche segment of the K-12 marketplace.
BEGiN, the startup that offers the Homer early learning program, recently announced the Series C round of funding, which includes backing from LEGO Ventures, Gymboree Play & Music and Sesame Workshop, the nonprofit behind Sesame Street.
CEO Neal Shenoy said the money is being used to expand its early-learning app and digital curriculum offering beyond reading to now include other subject areas such as math, critical thinking, social emotional learning and STEM. That will widen the age and range of children that can be served with the product. Previously, the Homer program served children ages two to five with its reading tools, but now the company can target children up to 8 years old, Shenoy said.
The company is also planning to deliver the newly-expanded Homer learning curriculum beyond its apps, through activity kits sent to homes tailored to a child’s interest so parents can support physical play and via group classes held at Gymboree franchises across the globe.
“The program is based on a model that grows with the child and delivers content digitally, and through physical play, classroom learning and through parenting guidance,” Shenoy said. “It’s deeply personalized based on age, interest and motivation, so the child can find it really engaging on an independent use basis.”
Launched in 2012, Shenoy said its reading apps have become some of the most popular available in app stores, estimating subscribers in the “hundreds of thousands.” He did not disclose a valuation for Homer, but said the company “has a very clear path and trajectory to profitability toward the end of next year.”
Prior to closing on the $50 million in Series C funding, BEGiN had raised about $42 million.
Shenoy said he believes the company’s latest round of funding is possibly the second-largest for a U.S.-based company in the early childhood education space. Age of Learning, a developer of online instructional materials and games for young children, tops the list by raising $150 million at a $1 billion valuation back in 2016.
The CEO said ed-tech investors traditionally have mostly been focused on education companies building products for older students and that can be sold to school districts or private schools.
Those financial backers are now not only starting to see the value in early education companies, but also in ed-tech firms with a direct-to-consumer business model that involves targeting parents as customers, not schools.
“In the past that money has gone to companies focused on high-stakes outcomes, tutoring, test prep, college admission, accreditation or skills training. Most of the unicorns in the ed-tech space have products that serve older students,” he said. “But the tide is turning, and there’s a lot more focus and appreciation for early childhood now. That has led to increased interest from investors.”