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Language App Duolingo Raises $20M In Race To Teach English

Feb 18 2014, 5:06pm CST | by

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Language App Duolingo Raises $20M In Race To Teach English

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Language App Duolingo Raises $20M In Race To Teach English

Why waste your lunch break or commute playing Candy Crush or Flappy Bird when you could be well on your way to learning Italian or Portuguese? That’s the pitch of Duolingo, a popular language-learning  app that just raised $20 million from Kleiner Perkins Caufield & Byers. And outside the United States, it’s one that could spark an arms race as competitors race for pieces of the billions spent to learn English.

Duolingo’s app is near the top of the education charts for both iOS and Android phones, with what the company says is over 10 million monthly active users off more than 20 million downloads. While the United States is its largest market, making up a quarter of users, the app is popular in many non-English speaking countries in Europe and the Americas, as a quick glance at App Annie’s data can show.

Players start a language with different skills to unlock, like the vocabulary for popular foods. Complete the challenges for skills and you unlock more; screw things up, and you have to start a skill over.

Play for 34 hours and you can learn the equivalent of a semester-long college class, says founder Luis von Ahn. “If you ask people why they play Duolingo, some people tell you it’s because they really want to learn a language, but the most common answer is that it’s fun but they aren’t wasting their time. They’re procrastinating, but they think about it as healthy food.”

Its healthy user base has attracted several rounds of funding from top-tier investors, with a $3.3 million Series A from Union Square Venture Partners in 2011 and then a $15 million Series B led by New Enterprise Associates. Now the company’s adding $20 million from Kleiner Perkins Caufield & Byers, which continues its push into educational tech. Kleiner Perkins has invested in Coursera, an online classes startup, and most recently a $15 million bet on Remind101, a messaging app for teachers to reach students and their parents.

While von Ahn says Duolingo doesn’t call itself a game, the company embraces the fact that people say they “play” it. Duolingo chose Kleiner to lead this round specifically because of the prospect of working with former Electronics Arts executive and Kleiner partner Bing Gordon, who sits on the board for OUYA and Zynga and has invested in other gaming companies like Booyah.

Duolingo’s primary way to make money right now is through its web browser version, though 4 out of 5 users are playing on their phones. The company makes money by crowd-sourcing pieces of translation done by its students and selling them to companies like CNN and BuzzFeed.

“The vast majority of people learning a language are doing so in order to get a better job,” von Ahn says. “They are people of low socioeconomic status, and we are not going to try to charge them.”

So that means millions from backers like NEA and Kleiner while the company builds out a way to sell translations and eventually certifications for completion of standardized tests to demonstrate you’ve mastered a language, a revenue stream von Ahn hopes to get going soon.

Most importantly, though, Duolingo needs the money to tackle the Asian market, where competition will be fierce. It’s strong in the Americas and Europe, with almost 6 million ‘learners’ to date in the United States, 2.4 million in Brazil and 1.3 million in Mexico. France follows with about 800,000 users, then Italy with 944,000. But conspicuously absent are non-Romance language countries with different scripts like in the Middle East and Asia.

And Duolingo will face competition from both mobile apps and more desktop-friendly players in the Asian market. Just days ago, TutorGroup announced a $100 million funding round from some heavy-hitting Asian investors, Alibaba, Temasek and Qiming Venture Partners. And the freemium model popular in markets like China goes against the revenue model Duolingo has vowed to follow.

“We are on it, we are going for Chinese, Japanese and Korean in the next three or four months,” say von Ahn. Competition in the Asian market will be fierce, however.

The company’s used a community-based platform to build up to 18 courses and says it has 11 languages in the works in coming weeks as well. But Asia could prove Duolingo’s most critical area of growth in the long-term. With so much competition, Duolingo may soon need to raise again for the war chest if it’s looking to get involved in a language war in Asia.

Follow me on ForbesTwitter and Facebook for more tech coverage in startups, ad tech, enterprise software and venture capital.

Source: Forbes


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