South Korean edutech startup Riiid said it has secured $18 million in Series C funding, tapping into Asian countries’ demand for robotic tutors that makers claims are faster and cheaper than humans.
Riiid focuses on the English language test TOEIC, and says its algorithm helps learners with multiple-choice questions by analyzing their answers and recommending tailored practice. With the new cash, led by Korean venture fund Premier Partners, Riiid will expand to include the Korean civil service exam and SAT.
Investors are backing AI tutoring despite recent failures. After raising more than $180 million, New York-based Knewton failed to deliver its promise of a “mind-reading robo tutor.”
“If it has a big enough dataset to train AI, eventually there will be breakthroughs in this area,” Jason Palmer, general partner of New Market Venture Partners, told Karma in an interview. “As a venture investor you have to be open to the possibility that AI keeps getting better and better.”
The Asian edutech market is expanding rapidly as judged by spate of large fundings recently, while the U.S. market has by comparison been quiet. India’s Byju became the world’s largest private edutech firm after a $150 million fund-raising boosted its valuation to $5.5 billion this month. Chinese tech giants Tencent and ByteDance are also betting on the market expanding, with Tencent backing Yuanfudao, valued at $3 billion, and ByteDance betting on English learning platform Gogokid. Insurer Ping An joined the competition by acquiring iTutor Group.
- Riiid’s AI data solution, which can be applied to any multiple-choice test, may drive down the cost of private tutoring. “AI in the long run will enable human tutors to tutor more students much more effectively,” Troy Williams, managing director at edutech investor University Ventures, told Karma in an interview.
- Asian demand for test preparation is burgeoning. The Chinese market is estimated to reach $29 billion in 2019; the Indian online education market is projected to grow to $1.96 billion in 2021.
- U.S. edutech companies raised $1.45 billion across 112 deals in 2018, a 20% increase in dollar amount from 2017, according to data from Edsurge.
- AI tutors may be seen as a better bet than massive online open courses. Once a hot spot of edutech, they are criticized for low completion rates — only 15% of students complete the courses.
- Karma Takeaway: With the potential to reduce the cost of private tutoring, AI education products to meet high demand in Asian countries are attracting investors.
