From busuu to Babbel, language-learning startups adapt to thrive

Language learning is big business. Each year, students coming to study English in the UK contribute £2bn to the economy. It’s also a market suited to the flexibility of mobile learning and, sure enough, language learning apps are seeking to fill the gaps – more than 350 are listed on the Apple App Store alone.

But language tech isn’t an easy space in which to succeed. Rapid changes in technology have meant that its startups have had to adapt to survive, as Bernhard Niesner, co-founder of busuu, can attest.

Originally from Austria, Niesner had always loved languages: he learned Spanish and travelled in Latin America before undertaking an MBA at the IE Business School in Madrid. There he met Adrian Hilti, originally from Switzerland. It was 2008, Facebook was expanding rapidly, and the two wondered if they could combine technology and learning a language with social media.

So busuu, named after a Cameroonian language, was born, teaching users with interactive courses coupled with a social network of native speakers. “It was the worst possible time in history besides 2000-02 to launch a [tech] startup,” says Niesner. “We were lucky enough to have our own savings and some family money – a few hundred thousand euros – [but] we didn’t take salaries for two years.”

Busuu began as a website before launching an app in 2010. Now 80% of users access it on mobile devices. Its founders have proved adept at fundraising. In 2010 the business received $400,000 (£326,600) from angel investors then an undisclosed amount in 2011. This was followed by a 2012 series A round of $4.7m (£3.8m), and a 2015 series B round of $6.7m (£5.4m) from McGraw Hill Education.

There are free and premium versions of busuu, the latter costing £5-6 per month. The app has more than 65 million registered users, which is growing, on average, by 25,000 a day. Demand is high in China and Brazil, and among Hispanic people in the US – 50% of revenues come from English courses, followed by Spanish. Niesner believes demand for language learning in the UK will increase with Brexit, as more UK businesses need to seek custom in new markets: busuu already sells to academic and corporate clients.

Indeed, Baroness Coussins, co-chair of the all-party group on modern languages, told the House of Lords in a recent debate on Brexit that the UK’s lack of language skills costs the economy £48bn a year, or 3.5% of GDP, in lost business opportunities. Coussins says: “Now, more than ever, we need to ensure a home-grown supply of language skills, to help our businesses and give our young people the best possible chances of employability in a global labour market.”

One language startup inspired by the global market is UK-based Memrise, which offers courses based around the latest language learning techniques. Ed Cooke and Ben Whately, Memrise’s co-founders, met at the University of Oxford, after which Whately went to live in China to learn the language through total immersion. He initially taught English, then set up businesses with Chinese partners. He used his experiences to formulate ideas around learning.

Cooke, meanwhile, became a grandmaster of memory and wrote a book on memory techniques. They kept in touch and, in 2010, when they were both back in the UK, they founded Memrise. Initially a website and now an app, it’s a science-based system designed to make learning a language fun by turning it into a game – each word begins life as a “seed” that will blossom in your “garden of memory”.

Not finding any suitable investors in the UK, in 2011 they took the project to Techstars in Boston, US, winning an initial $20,000 (£16,308). This helped them to attract further investment of around $1m (£815,000) from Boston-based angel investors, including WordPress creator Matt Mullenweg. Three years ago, another funding round raised around $6m (£4.9m) and the company is now profitable.

Memrise began as a web-based business and soon attracted a cult following of “fellow geeks and polyglots,” says Cooke. The challenge was to take its techniques to mass market. In 2014 chief technology officer Daniel Zohar and head of product Kristina Narusk joined. They were instrumental in the development and launch of the app in 2015. Since then Memrise has expanded from 1 million users to 20 million. There are free and paid-for versions with the latter costing around $60 (£48) per year.

But you don’t need to be a polyglot to launch a language learning app. Arnd Aschentrup, founder of Tandem, which partners up language learners for video conversations, says he’s always struggled to learn them. You do, however, need to rapidly realise what customers want. Tandem is a classic pivot. Having already launched two tech businesses, including a mobile community, Aschentrup and his co-founders created Vive in 2012. They dubbed it the anti-Chatroulette: a mobile video community enabling users to talk to like-minded people around the world. “But we quickly found that what users really wanted from the community was language practice,” says Aschentrup.

The founders built the first version of Tandem from their own funds. They then raised €600,000 (£518,000) from high-profile angel investors including Christophe Maire at Atlantic Labs, and German language magnate Florian Langenscheidt. A further round in 2016 raised another €2m (£1.7m). They are now at 1.75m downloads with consistent month-by-month growth of 15-20%. While the app is free, the company is monetising it by offering it as a platform for professional language tutors, taking a 20% cut of fees for each lesson. It’s also working on a new range of in-app purchases.

Even established platforms face challenges when entering new markets. Julie Hansen is the US CEO of Babbel, which was founded in 2007 but has only focused on a US platform since 2015. She says that Babbel’s US challenge is that Americans whose native tongue is English don’t see an economic motivation for learning another language. “It’s more of an aspirational choice,” she says. Instead, Babbel US is focusing on the Hispanic community who want to learn, or improve, their English.

Back in the UK, as the country awaits Brexit, bosses are quick to admit the value of languages in business. Ryan Green, CEO at bespoke glass and solar specialists Romag, says language skills have been vital in securing new business worldwide – his technical director is fluent in German and uses it at many international trade shows.

“We’ve frequently had delegates who don’t speak English visit our stands, so his language skills have been invaluable in securing international business,” says Green. “Effective communication with clients across the globe is key to our international expansion plans, and makes us more competitive across the market.”

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