Company: Lepaya

Press Release: Silicon Canals

Market (geography): Global

Market (industry verticals): Corporate training

Customer demographic: Enterprise

Leadership Team: René Janssen, Peter Kuperas 

Investors: Endeit Capital, Educapital, Mars Growth Capital, Liquidity Group, Target Global, Mediahuis Ventures

Business in brief:

Lepaya delivers large-scale training programs for corporates, focused on “power skills” – a combination of soft and hard skills. Its hybrid all-in-one capability platform includes microlearning in the flow of work, VR training, an AI-coach to practise new skills and in-person encounters. With this new investment round, Lepaya wants to enhance its AI tools and data analysis capabilities; the Dutch edtech company says it will accelerate the development and adoption of an AI coach, which will adjust learning content to an individual learner’s context and career level, and more sophisticated skills data analysis.

Public business data:

• To date, the company has raised more than $80M in funding from various investors 

• More than 500 clients, with learners across more than 120 countries (company-provided)

• Customers include Roche, ING, Microsoft, Dell, KPMG and Freundenberg  

• 281 employees (Pitchbook)

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ETCH Assessment

Bull case:

While the wider edtech market has struggled to attract funding in the last few years, Lepaya has had a stellar 2023 so far. This latest raise is the biggest corporate edtech funding round in EMEA this year, and follows the purchase of German leadership training provider Krauthammer in May. It further strengthens Lepaya’s position in the region after three earlier acquisitions – SmartenUp (2020), vCoach (2022) and SpeakFirst (2022) – and a tripling in revenue since its $40 million Series B round in 2021.

The global corporate training market was worth an estimated $600bn in 2022 and that figure is expected to grow to $850bn by 2030. According to the World Economic Forum, 50% of employees will need reskilling by 2025. A third of all jobs — more than 1.2bn employees worldwide — will be affected by automation technologies in the next decade, yet only 30% of those at risk of job displacement received training in recent years. For organisations, a tight labour market and unemployment rates near all-time lows means that upskilling an existing workforce instead of hiring externally now looks like a more attractive route.

Still, closing skills gaps is much easier said than done. Organisations need support to identify future skills needs and to build contextualised pathways to solve them. McKinsey’s 2023 State of Organizations report identifies a ‘capability chasm’, where issues include the fact that learning and development often isn’t integrated into employees’ on-the-job experiences and that organisations don’t adequately measure desired learning outcomes or link learning outcomes directly to business outcomes. 

Is Lepaya poised to exploit this? The corporate training market is highly fragmented and still dominated by traditional in-person training. As a challenger in a crowded market, Lepaya has already built an impressive clientele, with more than 200 clients including ING, Dell, Maersk and KPMG. Lepaya has also scaled internationally, with a significant presence in crucial European countries: the UK, France, Germany, Netherlands. This enables them to deliver whole training programs, at scale and internationally for large corporates, a key advantage in such a fragmented market. Lepaya has also built a strong M&A strategy to accelerate growth, expand to new markets and launch new/augmented products. This consolidation in the EMEA market, coupled with global and US-based customers, should mean that Lepaya is primed for growth in other regions.

Bear case:

At the level of product, proving business impact is the golden ticket in corporate L&D, yet there is no obvious frontrunner in the space yet. Achieving impact at scale will mean moving away from traditional but ineffective L&D metrics (such as engagement and user satisfaction), and mobilising data-driven insights that capture the efficacy of learning in relation to individual and organisational goals. In its AI-powered bid towards full alignment of L&D with business KPIs, Lepaya will soon start to nestle up against big competitors in this space – such as Axonify, Coursera for Business, Degreed and more – who have built vast proprietary datasets over many years.

The corporate training ecosystem may be big but it’s crowded and heavily fragmented. To scale across multiple regions brings a host of linguistic, cultural and legal considerations that need to be navigated in increasingly challenging conditions. The shift to a truly skills-based talent management approach is a massive piece of work that is changing rapidly. At a global scale, the task is made even harder by inconsistent skills taxonomies and different ways of tagging jobs and learning content to skills – which makes it very difficult to create clear upskilling and reskilling pathways built on that taxonomy. Generative AI is expected to further complicate this process, bringing new skills to the forefront. The problem is solvable but it’s not easy, and it won’t be solved by one company alone. Different stakeholders (industry, ministries of education, credit organisations and higher education institutions) will need to work together.

In the company’s words:

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Lepaya leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: Correcto

Press Release: TechLoy

Market (geography): Spain, Latin America, US

Market (industry verticals): SaaS, AI copilot

Customer demographic: Enterprise, HE, Adults

TAM estimate: 591M global Spanish-speaking population

Leadership Team: Abraham López Lee, Ignacio Prieto Mayorgas, Antonio Triguero Noriega

Investors: Octopus Ventures, Carya Venture Partner, River Park Ventures

Business in brief: Correcto’s writing assistant checks for spelling, grammar, punctuation, and style errors in Spanish, offering users corrections and explanations to help them learn from mistakes. The tool also uses machine learning to suggest improvements adapted to your writing context, from informal communications like emails to business and academic formats. The business model is oriented towards B2B and B2C sales: corrections are offered freemium, while writing assistance and text statistics are additional paid-for features (at a cost of €9.99/month or €69.99/year for the B2C model, and €12.99/month or €89.99/year B2B).

Public business data:

• 120,000+ downloads (company-provided)

• 70,000 monthly active users (company-provided)

• Follows a €575K ($616k) round in 2022, led by Fuel Ventures and Asymmetry Ventures.

ETCH Assessment

Bull case:

This is the second raise in as many years for Madrid-based Correcto. Founded in 2021, the company has already built a strong presence in countries like Argentina, Colombia, Mexico, Spain and the US. The product is exclusively focused on Spanish, which is the third most popular language in the world – spoken by 591M people in 44 countries, and considered the official language in 21. In this context, Correcto’s goal to reach 1M users by 2024 doesn’t seem outlandishly ambitious. Latin America, where 82% of native Spanish speakers live, presents a compelling growth opportunity.

Correcto also seems to have found a gap in the SaaS market. Their biggest competitor, Grammarly, is firmly directed into the English market and doesn’t seem to have intentions to diversify into another language any time soon. But Grammarly provides a helpful case study on the size of the opportunity: the company has raised $400 million to date, including a $200 million round two years ago at a reported $13B valuation. By contrast, indirect competitors such as Language Tool, MyStilus, Sapling.ai, SpellBoy and Plagly are spread across 15-20 different languages, so it’s easy to imagine how Correcto will add more value for users by developing and innovating Spanish-specific features, and by catering to the diverse variations of Spanish spoken across different countries. (Latin American companies tend to prefer using Castellano as their main point of reference, for example, so Correcto follows La raíz guidelines in terms of grammatical standards.) The roadmap that could enable Correcto to become a global leader in Spanish language writing improvement is clear. As well as international expansion, these funds will be used for further product development and growing the team (which has already swelled from 6 to 25 in the past year).

Bear case:

GTM strategy will be key. While the public conversation is full of doom and despair, there are no shortage of AI copilots receiving venture funding for a wide range of workplace productivity needs, such as Glyphic AI for sales teams, Magic for coders, Spellbook for lawyers, and Writer Inc’s $100M Series B. 

Most of these copilots simply wrap a user interface around OpenAI, so Correcto’s proprietary dataset provides some useful differentiation to build upon. But to achieve scale, it will be crucial for Correcto users to understand the value-add of a specific writing assistant plug-in rather than automatically reaching for a general-purpose AI language tool like ChatGPT. (We are watching the battle between ChatGPT and Chegg closely.) There is white space here: ChatGPT can be useful for generating ideas or writing prompts, but it doesn’t provide the same level of feedback and is not designed specifically for writing assistance. If Correcto can make this case, the demand is there. Businesses now use an average of 130 SaaS applications and there are plenty of writing copilots in the English language but no comparable tool – yet – in the Spanish-speaking market. 

We’re still early in the introduction of AI-enabled writing tools, so it’s tough to predict which features will become table stakes and which will create genuine differentiation. As things stand, Correcto is bullish about the power of its model compared to big players who depend upon straightforward statistical predictions for writing suggestions – so while Gmail sees you write “kind” and suggests you follow this with “regards” (because if millions of people are starting a sentence the same way, there’s a high probability that you are too), Correcto’s in-house dataset contains >1.5 million phrases in Spanish and uses ML models to understand the overall context of your text to drive targeted recommendations. For now, Correcto can get an edge with integrations to essential platforms for businesses and students writing in Spanish, such as Microsoft Word, Slack, Gmail, and so on. But can they create medium-term defensibility if any of the big players were to set their minds to it?

In the company’s words:

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Correcto leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: MagicSchool

Press Release: EdTech Review

Market (geography): US

Market (industry verticals): K12 Professional Development and SAAS Tools

Customer demographic: K12 teachers and schools

Leadership Team: Adeel Khan

Investors: Range Ventures, GSV, Rethink Education, Charter School Growth Fund, Gary Community Investments, Transcend Fund, Edovate Capital

Business in brief: Denver-based MagicSchool provides a portfolio of tools to help teachers work smarter and more efficiently. The company leveraged AI to rapidly develop and deploy 40+ tools over the past year, including rubric and (standards-aligned) assessment generators, and tools for student support, text leveling, and email responding. Funding from this round will go towards continued product expansion and further commercialization efforts. 

Public business data:

• 10,000 instructor users, including 2K+ users in a Facebook group

• Outputs are translatable to 25+ languages

ETCH Assessment

Bull case: One of the best qualities of today’s artificial intelligence tools is a user’s ability to quickly build, test, and iterate new concepts. MagicSchool has leveraged this quality to impressive effect, having built a portfolio of 40+ teacher tools in under a year. 

The founder’s classroom and school administration experience is also aligned with this product development approach. What the company lacks in AI experience (see below), it makes up for in experience with all of the little workarounds the company’s target users (i.e. teachers) currently use to support their students.

Additional funding should only increase the velocity with which the company builds, allowing the team to invest further in the clear winners of the portfolio while maintaining niche and/or less useful apps with minimal expense.

Bear case: While MagicSchool’s founder has highly relevant experience for the company’s customer base, the team has < 10 years of experience across the tech and edtech industries, and no formal experience with AI. (Granted, this gap could be addressed with 1-2 great hires.)

The MagicSchool team scaled their user base to over 10K users with minimal funding, but has not yet found a reliable monetization model. It is not clear how much discretionary spending money schools will have as ESSER funds wind down. Teachers are already spending an average of $673 for classroom supplies out of pocket, but investing into this strategy may eventually raise ethical concerns.

In the company’s words:

We wrote this post using the information publicly available to the ETCH team. If you are a member of the MagicSchool leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication toETCH Weekend Reading and theETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: Sizzle AI

Press Release: Business Insider

Market (geography): US

Market (industry verticals): Tutoring

Customer demographic: US Middle and High School STEM Courses

Leadership Team: Jerome Perenti, Vijay Koduri

Investors: Owl Ventures, 8VC

Business in brief: San Francisco-based Sizzle endeavors to build the leading AI platform for personalized learning. Led by Meta’s former VP of AI, the company will start with a focus on question-and-answer tools for K12 STEM courses before expanding to other topics of inquiry inside and out of the traditional education system

Public business data:

• 90% accuracy rate on queries

• Public app launch in August 2023 (too soon to measure users)

ETCH Assessment

Bull case: The size of the market for a personalized learning assistant is enormous. Though the company faces stiff domestic competition (see below), there is almost no limit on it if the company is able to successfully serve users from the start of their formal education through their professional careers. 

Further, Sizzle’s founder and founding teams is one of the best-equipped company leaders to steward a large-scale adoption of AI products, having been Meta’s VP of AI during the R&D phase of most of today’s cutting-edge AI models.

Bear case: Sizzle’s initial value proposition, answering student questions, is one of the most competitive markets in education - featuring industry heavyweights such as Chegg, Learneo, Study.com, Khan Academy, and Photomath as well as upstarts like Kira Learning and Atypical AI. For better or for worse, both the AI and Education industries have historically favored distribution-led rather than product-led approaches to adoption, which tend to favor large incumbents.

Additionally, while the Sizzle team has substantial experience in Big Tech, including building consumer-oriented companies, they launched without a full-time expert in education (though it does have strong education advisors). This type of experience will likely be of increasing importance as the company tries to bridge the gap from 90% correct answers to ~100% - a bar which Sizzle’s large incumbent competitors all meet (albeit at a much higher cost base). 

In the company’s words:

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Sizzle leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: Speak

Press Release: Speak Announcement

Market (geography): US-based, with South Korea the focus of initial go-to-market

Market (industry verticals): Language Learning

Customer demographic: Adults

TAM estimate: $32.5 billion by 2029

Leadership Team: Connor Zwick, Andrew Hsu

Investors: Lachy Groom, Neo, GSV, OpenAI Startup Fund

Public business data:

• Total funding is $63M.

• Platform is live in 20 countries including Japan, Taiwan, Germany, France, Brazil, Mexico

• 100,000+ subscribers in South Korea.

• OpenAI is an ongoing investor, Speak has gained early access to their technologies

ETCH Assessment

Bull case:

Language learning apps grabbed headlines in the EdTech industry over the past ~18 months. Preply recently raised a $70m Series C, Loora raised a $9.5m seed round, Duolingo grew their revenue by 47% from 2021 to 2022, and OpenAI led Speak’s $27m Series B round in November 2022.

Traditional methods of language learning are ineffective and expensive, drawing customers towards low-cost and convenient solutions. Language learning platforms, such as Duolingo and Babbel are great for casual, beginner-friendly use. Preply uses a live tutoring model with an AI assistant, and Busuu combines a learning platform with community feedback from native speakers. However, Speak posits that the best way to learn a language is through immersive use. 

Speak is built for conversational practice with AI tutors to provide instant feedback on pronunciation, grammar, and style conventions. Rather than competing across the globe for users, Speak focused their product-market fit efforts in South Korea, where English language learning (ELL) is a fundamental requirement. Up to one-third of the total Korean private education spending (same link) is on English language education. Loora, a Tel Aviv-based startup, uses a similar audio AI language tutor model for the ELL market.

In addition to Speak’s narrow and deep product development approach, Speak differentiates itself through its partnership with OpenAI, who led the company’s Series B last November. While other companies in the space, including Duolingo, leverage OpenAI’s large language models, Speak believes the relationship between the two companies will help it stay at the forefront of AI and language learning.

Bear case:

Language learning is layered: reading, writing, and speaking are all a function of proficiency. While language learning platforms and apps do parts of this continuum really well, holistic language learning is notoriously difficult. Duolingo has focused on engaging their user base through gamification, notifications, and streaks, which has been great for supporting learners at the A1 (Basic User) to B2 (Independent User) proficiency levels. Speak hasn’t publicly announced the level of rigor their content aligns to, but since Speak is designed for conversation, the acquisition of new language knowledge or holistic language is an existential question.

The use of AI speech recognition is also being used across language platforms. Babbel, Busuu, and Rosetta Stone all use AI models to send the user feedback on their language pronunciation. Loora and Memrise are using AI to support everything from grammar to conversation skills. Preply is using AI to support tutors in content and lesson creation. Speak has a tough road ahead to maintain any lead they might have in the AI-for-language-learning race.

Finally, Speak’s narrow and deep product development strategy worked well in South Korea. However, this strategy also means the company will need to invest proportionately more in each new market it enters, which likely necessitates careful stepwise selection of those markets. 

In the company’s words:

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Speak leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: Noodle & Meteor Learning

Press Release: PR Newswire

Market (geography): US

Market (industry verticals): Online Program Management/Experience (OPM/OPX)

Customer demographic: Universities

Leadership Team: John Katzman, Keri Hoyt, Lee Bradshaw, William Rieders, Donna Ritchie (Org Chart)

Investors: No disclosure of net new funding for this acquisition, but Noodle is previously backed by Blackrock, ValueAct Spring Fund, Owl Ventures, Lumina Foundation

Public business data:

• Noodle now supports 65 US and UK universities

• Noodle will incorporate Meteor’s competency in skills-based training into their university-to-employer consulting services

• Meteor is Noodle’s 4th acquisition in the past 3 years - following the acquisitions of Hot Chalk, CCA, and Hubble Studios

ETCH Assessment

Bull Case:

Over the past 5 years, Noodle has arguably been one of the main drivers of the shifting dynamics in the Online Program Management (OPM) sector. The team has pushed the market towards fee-for-service work and lowered the cost of working with a third-party service provider for many universities.

However, with the OPM market in the crosshairs of the US Education Department, Noodle is wisely looking to diversify. Earlier this year, the company announced the acquisition of Hubble Studios in South Africa to help diversify internationally (as well as add to internal capabilities). Their acquisition of Meteor Learning helps the team expand their product portfolio outside of traditional OPM services.

Meteor provides Noodle with a ready-made strategy consulting offering and a set of senior client relationships. Growing this strategy consulting practice should provide Noodle with insight into the types of services universities plan to outsource/insource over the coming years. In turn, the non-consulting arm of Noodle can staff up and/or build technology to support these services.

Bear case:

It has been a tough couple of years for the OPM market after the pandemic’s highs. The two public flag-carriers for the market, 2U and Coursera, are down 70%+ market cap (as of 8/28/23) from Coursera’s IPO on April 1, 2021. We’ve also seen competitors like Zovio exit the market entirely.

These movements are caused by both the increased regulatory scrutiny from the Education Department (same link as above) and university leaders investing in more in-house capabilities. Noodle has actually made a business out of helping internal teams at universities build capacity, but does not yet have the sticky SAAS product or long-term contracts to grant immunity from the broader market downturn.

Noodle’s move into strategy services, through their acquisition of Meteor Learning, is a compelling but unproven plan to help the company diversify away from traditional OPM services.

In the company’s words:

Updated on 9/2/23: “Noodle’s acquisition of Meteor brings strong relationships with leading universities and Meteor’s excellent team. Noodle and Meteor share the perspective that online is not a strategy in and of itself and that successful institutions must incorporate rigorous strategies to drive sustainable, winning results. 

The acquisition of Meteor adds strategic capabilities that will support leading institutions to develop and implement strategies for growth. We expect that Bill Rieders’ and Donna Ritchie’s leadership of our consulting services, which have been heretofore been included in our respective relationships with schools, will help grow it exponentially. 

Finally, we were never a conventional OPM, but have completed a shift from next-generation OPM to tech-enabled service and strategy firm. Even as conventional OPMs are trying to replicate Noodle’s prior model, the new one is that much more flexible, transparent, and efficient.”

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: Fizz

Press Release: Techcrunch

Market (geography): US

Market (industry verticals): Higher Education

Customer demographic: College students

Leadership Team: Rakesh Mathur, Ashton Cofer, Teddy Solomon

Investors: Owl Ventures, New Enterprise Associates

Public business data:

• Serve 80 US campuses, with plans to serve 250 schools by end of year

• In 2022, over 95% of Stanford students had downloaded the app

• ~275K downloads as of 8/28/23, according to Data.ai (fka App Annie)

ETCH Assessment

Bull case:

Almost every social app of note starts out by serving an underserved community extremely well, often on a college campus. The origin stories of companies like Facebook, Instagram, and Snapchat are well-known, but this description also fits more recent successes like Handshake (college students were intimidated by LinkedIn) and Strava (competitive athletes). In Fizz’s case, an early positive indicator that they are filling a distinct need is the 95% penetration rate on the Stanford campus.

Furthermore, Fizz is led by a founder with 7 exits under his belt. The CEO’s leadership should help an otherwise young team stay focused on the most important metrics for building a venture-scale social app. It also is generally a very positive indicator when a company’s existing investors - in this case Owl and NEA - lead two consecutive investment rounds.

Bear case:

The recent history of startup social apps is not great. Much-heralded in the tech press, Clubhouse and BeReal now face serious concerns after positive initial adoption. (Comfortingly, Fizz seems more focused on building for its core user base rather than cultivating tech press beyond its funding announcements.)

Further, while Fizz’s CEO has a fantastic track record, he does not have much experience in social media specifically. Not unlike EdTech, the social media market has peculiarities that tend to favor teams with experience - the most recent example being the growth, and exit to Discord, of the Gas App team.

The company also openly admits it will be a winding journey to monetization. The long and established track records of the CEO and lead investors Owl and NEA should help the company manage this, but it is probably harder now that it has been in the past ~20 years to build a startup with a high burn rate.

In the company’s words:

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Fizz leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

Subscribe now

Company: Shaktimaan.ai

Press Release: StartupStory

Market (geography): India

Market (industry verticals): Test Prep

Customer demographic: HE students, Adults

Leadership Team: Vimal Rathore, Aseem Gupta

Investors: YCombinator, Fundersclub, Goodwater Capital

Public business data:

• Angel investors include Misbah Ashraf and Nishchay Ag, founders of Jar

• Avg. 219 unique website visitors per week (SimilarWeb via Pitchbook, as of 05-08-23)

• Aims to serve 100,000 students by December 2023 (no base provided)

ETCH Assessment

Bull case:

Private tutoring and test prep are the biggest categories in the developing India/South Asia EdTech market, as startups seek to compensate for uneven teaching in schools and colleges. The opportunity is huge: together, test prep and online certifications make up 88% of the total funding in Indian EdTech startups. More than 15M students prepare for competitive exams such as JEE, NEET, and UPSC, but the majority of test prep courses are expensive which means many students prepare by doing practice problems on their own. Shaktimaan.ai makes this approach affordable and accessible through generative AI, offering detailed evaluation and personalized feedback on students’ handwritten answers to prepare for UPSC, the civil service recruitment exam.

The funds raised will be used to build an LLM to enhance the platform’s capabilities. Swiggy, ixigo, and many other Indian EdTech startups are also competing with this strategy, so the key to Shaktimaan’s success will be developing a top-tier tech stack combined with high-quality proprietary training data and frictionless UX. This could give them the edge over the country’s existing 3,000+ test prep-providing entities.

Bear case:

The Indian EdTech sector saw rapid growth during the Covid-19 pandemic, and is now home to more than 11,000 startups with six unicorns: Byju’s, PhysicsWallah, Vedantu, Eruditus, upGrad and Unacademy (Shaktimaan’s close competitor for government exam prep). In 2021, the sector received $4.73 billion in funding, making it the most funded startup segment in India. But this fundraise comes at a time when the Indian startup ecosystem is going through a sharp contraction amid a 44% decline in funding last year. After laying off 2,500 employees last year, Byju’s cut another 1,500 jobs. While Byju’s wider struggles are well-documented by now, others are also reeling from the impact of the ongoing funding winter and mounting losses. Multiple EdTech startups like Udayy and Lido Learning have shut shop since last year; others have resorted to mass layoffs to cut costs. According to Inc42’s layoff tracker, Indian EdTech startups, including five of the seven unicorns, have laid off more than 9,800 employees since 2021. 

A host of EdTech firms are using LLMs to provide personalized learning experiences: most recently, Byju’s announced a suite of AI models for hyper-personalized learning; upGrad has built a GPT-powered chatbot for mock interviews, and is developing a coaching bot; SkillUp Online, which offers online IT certification, is using genAI to drive deeper engagement with learners and immersive teaching assistance. Google-backed Adda247, which also offers government test prep, is going a step further by utilizing AI for content creation (including regional languages) and streamlining doubt-clearing progress. It’s a tough climate.

In the company’s words

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Shaktimaan AI leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

Subscribe now

Company: Crossplag

Press Release: Inspera

Market (geography): Norway HQ, with clients in 160+ countries

Market (industry verticals): Assessment, Plagiarism checker

Customer demographic: HE institutions, K12 school operations

Leadership Team: Besart Kunushevci

Investors: Inspera

Public business data:

• Avg. 400,000 unique website visitors per month (SEMrush)

• Inspera is funded by private equity firm CGE Partners

ETCH Assessment

Bull case:

AI has swept into education like a whirlwind, and safeguarding academic integrity quickly emerged as a top priority. In the long run, this will prompt a fundamental rethink of assessment design and massive curriculum innovation. But with 1 in 5 college students saying they’ve used ChatGPT to complete assignments or exams, what’s needed in the short term is strong plagiarism detection software for AI-generated content.

Inspera is one of the market leaders in digital assessment solutions, used by institutions across 160 countries on five continents to digitally deliver standardized tests, open and closed-book exams, final exams, and coursework assessments on-site or in hybrid/remote environments. Crossplag’s big value-add is a tool to work across a large number of languages, including translations. This acquisition is at the heart of a new partnership with remote proctoring software Proctorio, to add Inspera’s new similarity and AI-generated text detection to Proctorio’s suite of solutions.

Bear case:

This is a crowded market with big incumbents: Turnitin launched its own AI detection tool ‘Originality’ in April, which it claims can detect 97% of writing generated by ChatGPT and GPT-3. Differentiation is tough to create and tougher to moat; the sheer pace of progress in AI tech quickly renders solutions obsolete. Any university still hoping that AI detection services will be the answer to plagiarism may be alarmed by Conch, an AI-powered subscription-based ‘writing tool’ aimed at students, which promises to ‘run your writing through our proprietary algorithm and have us rewrite it until it becomes detection free’. (Crossplag is trained on a fine-tuned model of RoBERTa using the Open AI dataset.)

As the dust settles, universities will look to embrace the positive impact that AI tools can have on learning. Instead of banning AI altogether, educators will reinvent traditional assessments and assignments to better incorporate AI-generated content, questions, and prompts in assessments. AI detectors and remote proctoring are not a solution; Rather, they are a temporary stopgap.

Beyond academic integrity, there are concerns about the inherent bias in AI models – one study found that AI plagiarism detectors tend to penalize non-native English speakers, for example – and privacy, although the data protection threat could well be greater to students from the AI chatbots that they are using to write their essays than from detection software.

In the company’s words

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Inspera leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

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Company: Kinjo

Press Release: Business Insider

Market (geography): Global

Market (industry verticals): Game-based learning, edutainment

Customer demographic: K12 students and parents

Leadership Team: Charles Thornburgh, Laura Malcolm

Investors: LiveOak Venture Partners, Roble Ventures, Breyer Capital, Silverton Partners

Public business data:

• Company post valuation $20.12M (Pitchbook)

• Currently has 20,000 players (company-provided)

• Users spend 3X time on games identified by education professionals as providing high cognitive challenges (company-provided)

• Monthly subscription for parents costs $12.50

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ETCH Assessment

Bull Case

The key to edtech success for children is engagement. Gamification has long been the buzzword here, where there are some big players: Kahoot! and GameDesk support educators to make their own gamified content, while popular gaming platforms like Microsoft (Minecraft Education), Epic (Fortnite Creator) and Roblox have all launched proprietary education divisions. Texas-based startup Kinjo has a unique approach: an app that ranks the educational value of games within Roblox, allowing kids to earn virtual currency (“Robux”) by playing higher-ranked learning games. Rather than building another gaming studio, then, Kinjo focuses on improving the value of kids’ ever-increasing screen time by helping kids and parents to select different learning games from within an existing platform.

The opportunity is huge: Roblox has 43.2M daily users, while 76% of kids in the US alone play video games every week. It’s smart to support learning in platforms where kids are already spending time, rather than trying to convince them to stop spending time on Roblox and start spending more time in structured learning environments (such as Kumon, IXL or Dreambox). This funding round will support the app’s development and expansion into Fortnite and Minecraft, as well as rating YouTube videos and creators.

Kinjo also aligns incentives for parents and educators. Video games area proven tool to push motivation and outcomes in both formal and informal learning, but adults struggle to find reliable signals of high-quality learning opportunities or insights into which specific cognitive skills the games are enhancing. Too many examples of gamification fall into the category of ‘nice-to-have’ rather than ‘must-have’: they are not effectively designed and marketed to rise above the noise in the consumer space, nor are they well-tuned to cover enough material or provide enough pedagogical value to replace a meaningful amount of classroom time. Kinjo’s rating system has credibility, determined by a team of education and gaming experts who have put together a research-based four-part skills framework, while the core team are serial edtech founders including the former CEO of edtech giant Civitas Learning.

Bear Case

As a third-party app, Kinjo should avoid many of the common pitfalls of gamified learning – game creation is more time-consuming, cost-intensive and requires more domain expertise than conventional instructional design, both to build and maintain. However, freemium can be a tough model to convert to paid users at scale and selling to multiple audiences (business-to-parent-to-child) is tricky to pull off. For instance: Kids can make their own recommendations to rank games more highly, but this risks diluting pedagogical credibility for parents; balancing the interests of all parties will be key to positioning this as a holistic family learning tool, but is by no means straightforward.

There is also some platform risk in that the game of choice right now happens to be world-building, but that may not always be the case. Further, it remains to be seen how Kinjo’s approach will translate to other forms of content, such as YouTube, or facilitate rewards for learning across multiple platforms. Initial GTM should be helped by Roblox’s catalog of 40M mini-games and advisors including the VP, Civility & Partnerships at Roblox, but the product roadmap beyond that will need to be clear.

In the company’s words

We wrote this post using the information publicly available to the ETCH team. If you are a member of the Kinjo leadership team, we welcome your feedback! We will update this post to include any commentary you feel appropriate in this section.

Email matt@etch.club for more information

ETCH Funding / M&A is a feed of information and analysis of the latest in Education and Future of Work funding rounds. It is a sister publication to ETCH Weekend Reading and the ETCH Weekly Update, which provide additional context and analysis of what is happening in the EdTech ecosystem. If you enjoyed this edition, we hope you will subscribe and/or forward it to your friends!

Subscribe now