It may sound a tad obvious, but if you were to speak with anyone with a good head on their shoulders, they would credit it to the vast amount of reading they have accomplished. They probably started reading early and never looked back. But in our day and age TV is just so much more flashy and entertaining that unfortunately the child chooses the TV and learns to view reading as the activity that steals TV time. The good news is that Speakaboos is looking to change this trend. The interactive reading app designed to make reading an internally motivating activity is stirring a desire in our kids to read so that they will go to the shelf themselves and start reading.
AlleyWatch got in touch with founder and CEO Neal Shenoy to speak about how we can motivate the next generation to actually want to read, as well as catch up with them on their latest round of funding.
Who were your investors and how much did you raise?
We raised a $12.5M Series B-1 financing round led by Wellington Management, one of the top growth and late stage consumer internet & mobile investors. As a part of the round, Rami Rahal, Founding Partner at Blue Cloud Ventures, and recently named to Forbes’ 30 under 30 for Venture Capital, also joined the Board. Wellington joined current Speakaboos investors including Advancit Capital; Kyowon Group (the largest education company in Korea); Rick Segal, Managing Partner of ReThink Education; Deborah Quazzo, Founding Partner of GSV Advisors; Betty Cohen, Founding President of Cartoon Network; Gerald Hughes, Operating Partner at Castanea Partners and former President & COO of Houghton Mifflin Harcourt; Helena Wong, former President of International for Rosetta Stone; Scott Booth, Founder, Lead Edge Capital; and Dave Pottruck, Chairman of HighTower Advisors and former CEO of Charles Schwab.
Tell us about your product or service.
Speakaboos is an award-winning reading app for children 2-6 years old that features highly engaging and educational interactive stories delivered across web, mobile and tablet via subscription that connects schools and homes.
Our mission is to motivate children to become lifelong learners and that begins by inspiring a love of reading.
What inspired you to start the company?
When we address early childhood literacy we often singularly focus on learning to read. The result is that we overlook the critical importance of loving to read. Just because a child knows how to read does not mean that they want to read or choose to read. The result is that by third grade, 66% of children do not read at grade level due to a lack of interest and motivation.
The solution is to focus on intrinsic motivation. What if we could motivate young children, through a highly scientific process, to want to learn and to become lifelong learners? This begins with a love of reading. It begins with children choosing reading; and often choosing reading over games and videos.
We were inspired to build Speakaboos to motivate young children to become lifelong learners and that begins by inspiring a love of reading.
How is it different?
Speakaboos challenges the traditional model for reading: a) we provide curation for parents and educators within a child-first design that is used by children as young as two years old to find stories they love, b) we provide a large and growing catalog of classic and popular children’s stories that are delivered in a high engagement, interactive format that features multiple reading modes for young children, read along highlighted text, animation and interactivity all of which motivate children to read, c) we work across all devices including desktops in schools & libraries and d) we support a pricing model that provides access to hundreds of stories for the cost of a single app.
Speakaboos’ proprietary learning model is highly effective. Developed by Dr. Alice Wilder, Chief Content Officer, and previous Head of Research & Testing for Blue’s Clues and SuperWHY!, children choose to read on Speakaboos. We produce the highest engagement in the industry with children choosing to read 15+ sessions per month and spending 22+ minutes reading per session. Most importantly, children are spending 30%+ of their digital screen time reading on Speakaboos. They are choosing Speakaboos over video and games.
Speakaboos’ flexible content licensing, product and revenue model also enables us to secure profound distribution in both schools and homes – the most important determinant of success in the education technology market – across distributors such as Nabi (Kids OEM), Samsung (Android OEM), Overdrive (library platform), Fingerprint Digital (subscription platform), Kyowon (largest education company in Korea) and Donor’s Choose (education marketplace).
What market you are targeting and how big is it?
Our focus is on serving young children – ages 2 to 6 years old for reading – and ages 6 – 10 years old for language learning in schools, libraries and homes internatioanlly. There is currently $15BN spent on educational software and supporting materials in this market annually.
What’s your business model?
Speakaboos sells subscriptions to both parents at home and educators in schools and libraries and often connects the two. Our subscription currently costs $7.99 / month or $69.99 / year for at-home usage and is priced on a per student basis for educational institutions.
Is there any concern that children will go back to being disinterested when they are forced to read non-interactive books?
Given our dedication to intrinsic motivation and inspiring young children to become lifelong learners, Speakaboos is designed to spark reading and learning well beyond their engagement on our app. We often see children read a story on Speakaboos only to walk over to a bookshelf and choose a book on a similar topic to read or have read to them. The reason that Speakaboos is so effective at fostering a love of reading and learning is because we connect children to their interests, engage them in the joy of reading, focus on building comprehension and understanding, gently push them along their personal mastery curve and help them to be independent, self-directed learners. All children are natural learners and Speakaboos simply helps to unlock that using our app.
What was the funding process like?
We were very fortunate to strong support from existing investors both through their participation in the round and through sourcing an exceptional lead investor like Wellington. In this round, 100% of our investment was sourced by existing investors or advisors, which is testament to their faith in the business. We were also fortunate to add several new venture funds, strategists and industry executives who truly understand education, distribution and international markets to our family.
What are the biggest challenges that you faced while raising capital?
Education has only recently received a high level of attention from institutional and strategic investors and most investors like to invest in things that they understand and can motivate to success. We spent time with a number of investors that were genuinely interested in education and complimentary of Speakaboos, the team, our traction and the market opportunity but found it hard to “pull the trigger”. Our consolation is that these conversations serve as a nice foundation for a potential growth equity round in the future as we continue to grow the business (and correspondingly our valuation).
What factors about your business led your investors to write the check?
There are several things that each of our investors shared in their view of the business. First, they were convinced of the market opportunity in early childhood education globally. Second, they liked the team and appreciated our collective track record in education, publishing and digital media. Third, they loved the product (and most often were committed users of it with their own children). Fourth, they believed that we had a very strong go-to-market plan for our product, marketing and distribution, which was proven by our partnerships with major publishers and education companies.
What are the milestones you plan to achieve in the next six months?
We have a very clear view of our milestones over the next 6 months and beyond and it simply comes down to scaling our subscribers and revenues through profitable and scalable channels. We are doing that through a heavy investment in acquiring consumer subscribers (through investments into our marketing team and budget) and institutional subscribers (through investments into sales). In addition, we have tremendous traction in international markets as well through strategic partnerships. We’ve seen triple digit growth in subscribers and revenues since the close of our financing round and expect that to continue at an even steeper rate.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Whether you have a lot of money or a little money (and we’ve certainly been in both places) your execution playbook should not change: have a clear understanding of the milestones you must accomplish to grow as a business and attract more resources (in the form of revenues and capital), focus your team on driving those milestones on a day-to-day basis and engage your extended family of Board Members, Investors and Advisors early and often to help drive results and resourcing. Also it’s important to appreciate that there are an increasingly varied set of funding sources today beyond traditional venture capital including angels, family offices, strategics and venture debt funds.
Where do you see the company going now over the near term?
We have a simple mission: inspire children to read and spark a lifelong love of learning. Every day our goal is to serve and impact more and more children in homes, schools and libraries across the world and in doing so scale the type of impact we see everyday and correspondingly grow the value of our business. We can accomplish that by building a sustainable business in education. We’re going to dedicate every hour of every day that we work on Speakaboos to furthering this mission.
What’s your favorite restaurant in the city?
Tough question so I’ll suggest a few. If you love inventive, authentic and flavorful Japanese, nothing beats EN Brasserie in the West Village. If you have a truly special occasion and don’t mind breaking the bank I would always recommend Per Se. And if you are looking for great “street food” on a budget I would always stop by the stalls at Madison Eats.