On Wednesday, Babbel, a language learning service startup has secured $22 million in Series C round of funding led by Scottish Equity Partners along with existing investors Reed Elsevier Ventures, Nokia Growth Partners and VC Fonds Technology Berlin.
Founded in 2007, Babbel offers language learning app for iOS, Android, the desktop and Apple Watch. The startup claims to make the language learning process more fun and makes it easy and accessible to everyone. Every course of the startup is created specifically for that language along with a team of educational experts, linguists and language teacher. Also, self-directed learners are encouraged to discover new language and learn it easily.
The Berlin and New York-based startup offers courses on 15 languages and has been running profitable since 2011. The phone app sees more than 120,000 downloads per day. On an average basis, customers use the service for more than 12 months, which is quite high engagement rate when compared to many other apps.
The company plans to use its new funds to expand further, mainly in USA, where the company has opened its first international office. ” The US is the focus for us now,” Babbel president and co-founder Thomas Holl, who recently moved to New York to head up the company’s office there. ” The U.S is already responsible for a double-digit number of our revenues, but we were not focused on that market yet.” Holl believes that US market is kind of different from the European home markets as the people in US are inclined to learn language for self-improvement whereas people in Europe try to learn a language for job purpose.
“Babbel sets the standard for online language learning, and its strong international footprint is a reflection of that,” said Stuart Paterson partner at Equity Partners. ” We see significant growth potential in this market and are delighted to support the company as it executed its expansion in the Americas.”
Contrast to many other competitors in this field like Duolingo who offer their services for free, Babbel charges its users $12.95 per month or falls to $6.95 per year if paid earlier. “We do not want to sell ad inventory. Then you have somebody else but the user as your customer and that’s terrible.” When the customers pay for the service, they effort they put in to learn the language is more, noted the company. He also added, ” The business we are in is partly about behavior change. Starting to learn a language is easy, but then people use it without commitment – and then we are also very motivated to keep people learning.” The startup gave it a try with the free model in the early days, but it did not work out. It said that it was poor fit for what they were trying to accomplish.