Online learning looks likely to be a key beneficiary of the social distancing and quarantine measures that are being applied around the world as countries grapple with the COVID-19 pandemic.
In turn, this looks set to buoy some relative veterans of the space. To wit: Preply, a 2013-founded tutoring marketplace, is today announcing a $10 million Series A. It said the funding will be used to scale the business and beef up its focus on the US market, where it plans to open an office by the end of the year.
The Series A is led by London-based Hoxton Ventures, with European VC funds Point Nine Capital, All Iron Ventures, The Family, EduCapital, and Diligent Capital also participating.
Preply’s press release also notes a number of individual angel investors jumped aboard this round: Arthur Kosten of Booking.com; Gary Swart, former CEO of Upwork; David Helgason, founder of Unity Technologies; and Daniel Hoffer, founder of Couchsurfing.
The startup said it has seen a record number of daily hours booked on its platform this week. It also reports a spike in the number of tutors registering in markets including the U.S., U.K., Germany, France, Italy and Spain — which are among the regions where schools have been closed as a coronavirus response measure.
Also this week Preply said some countries have seen the number of tutor registrations triple vs the same period in February, while it also reports a doubling of the number of hours students are booking on the platform in some markets.
The former Techstars Berlin alum closed a $1.3M seed back in 2016 to expand its marketplace in Europe, when it said it had 25,000 “registered” tutors — and was generating revenue from more than 130 countries.
The new funding will be used to help scale mainly in North America, France, Germany, Spain, Italy and the UK, it said today.
Another core intent for the funding is to grow Preply’s current network of 10,000 “verified” tutors, who it says are teaching 50 languages to students in 190 countries around the world. So tackling the level of tutor churn it has evidently experienced over the years — by getting more of those who sign up to stick around teaching for a longer haul — looks to be one of the priorities now it’s flush with Series A cash.
It also plans to spend on building additional data-driven tools — including for assessments and homework.
The aim is to increase the platform’s utility by adding more features for tutors to track students’ progress and better support them to hit learning goals. “Preply wants to engage and enable tutors to develop alongside the platform, giving them the opportunity to explore training and lessons plans so they can streamline their income and maximize their classes,” it said in a press release.
Another area of focus on the product dev front is mobile. Here, Preply said it will be spending to boost the efficiency and improve the UX of its Android and iOS apps.
“The new funding allows us to bring a more in-depth, immersive and convenient experience to both tutors and learners all over the world. Today, we are laser focused on language learning, but ultimately, I envision a future where anyone can learn anything using Preply,” said Kirill Bigai, CEO of Preply, in a statement.
Asked about growth during the coronavirus crisis, he also told us: “Italy has been one of the countries where we’ve seen the most traction. We started seeing growth around 3 weeks ago with a 2.5x spike in new students joining the platform, and tutor registrations tripled in Italy last week, compared to the same week in February. It therefore looks like there may be a lag effect with countries that have been on lockdown for longer, exploring platforms like ours more actively now.
“Saying that, we’re certainly already seeing a clear surge in other markets. In France, for example, we’ve witnessed a 2.5x spike in new students vs. two weeks ago, new students to the platform doubled in the U.S. last week, and we’re seeing a 30% growth in demand for the U.K.”
“We closed this round in January, before the effects of Coronavirus on our business were really evident. The current circumstances have heightened traction we were already seeing,” he added. “I think online businesses — whether it’s video conferencing broadly, online video and audio streaming, or online learning platforms such as Preply will continue to see growth. Longer term, we’re all proving to ourselves how much really can be done remotely.”
“Getting to know Kirill and the team at Preply we were most impressed with their tremendous growth already in the US market as well as the size of the global market in online language tutoring. We believe the team has vast opportunity ahead of it, especially in the English-learning segment of the market where Preply already demonstrates market leadership,” added Hoxton Ventures’ Rob Kniaz in another supporting statement.
To date, Preply says some two million classes have been taken with teachers of 160 nationalities, via its marketplace. The platform maintains a strong focused on language learning (it says this is 95% of its business), although topic-based lessons are also offered — such as maths and physics.
The business model entails taking a lead generation fee — in the form of the entire fee for the first lesson — after which it takes a revenue share of any lessons booked thereafter. The average price of a lesson on the platform is $15 to $20 per hour, per Preply, with tutors having leeway to set prices (within some fixed bounds, such as a minimum per lesson price).
The company currently employs 125 staff, based out of Kyiv (Ukraine) and Barcelona (Spain) and says its revenues have grown tenfold in the last three years.
A core tech component of the marketplace is a machine-learning matching system which it uses to increase the efficiency of pairing tutors with learners — touting this as a way to make “smarter connections” that “crack the code of effective language learning”.
In plainer language, it’s using automated decision-making to help users find a relevant teacher without having to do lots of search legwork themselves, while the platform can use AI-matching to drive bookings by managing the experience of tutor discovery in a way that also avoids students being overwhelmed by too much choice.
“Prior to 2017 we remained true to a pure open marketplace model with a primary objective of providing a space where any tutor could market their services. However, as our business matured so did the demands of our student market who sought a highly curated experience to pair them with the most effective tutors on the market. So in 2017, in addition to imposing stiffer tutor requirements such as video introductions and photo quality, we levelled up our tutor performance review process to ensure a quality experience on the platform. These tutor pipeline controls are now an essential part of our machine learning that facilitates our current pairing process,” Bigai added.
This report was updated with additional comment
