When we wrote about gaming startup Kahoot passing significant milestones of 70 million users on 51 million educational quizzes in January, we mentioned that the Oslo, Norway-based startup was closing another round of funding. Now, that has come to pass: Kahoot has announced that it has raised $17 million, at a valuation that sources close to the company confirm to us is $100 million.
The funding comes after a change in leadership and strategic direction for the company: its American CEO Erik Harrell has stepped away from the role while remaining on the board of the company, and has been replaced by Asmund Furuseth, one of the original co-founders, after Harrell and the board disagreed on the strategic direction for the company.
Harrell was keen to expand Kahoot’s business lines — in an interview with TechCrunch he described ambitions to partner with big media brands like Disney and educational publishers to create quizzes complementary to their textbooks and learning plans. The board, however, was more focused on getting the company to being cash-flow positive faster through paid tiers on the products they are already offering today, on the back of already establishing paying customers in 100 countries.
And that is what the company is doing. Led by Datum Invest AS, Northzone, Creandum, Microsoft Ventures and Kahoot! Chairman Eilert Hanoa, the company said it will be using this latest round of funding — which brings the total raised to $43 million — to further develop its premium subscription services with the aim to getting cash-flow positive by 2019.
“We are thrilled to secure additional funding from new and existing investors, so that we can accelerate development of the Kahoot! platform and extend premium subscription services to all our users,” said Åsmund Furuseth, CEO of Kahoot, in a statement.
The company plans to continue to offer the basic Kahoot app free to students and teachers in the K-12 range, while generating income from a few areas. These include a premium tier that lets companies build and offer games to their users — a service that has already picked up business from Facebook, Uber and PwC, with companies using it for things like HR and sales training.
Kahoot has also described interest in developing sponsorships related to extra content for the K-12 sector. “There are corprorate sponsors we are in dialogue with now, many who want to support education, and sponsoring content on Kahoot is a great way to do that,” Harrell had said in January.
And there is also a subscription service for regular users. “We also believe in a subscription service. We have already found that there are many who are willing to pay subscribe, school districts that want to enable teachers and also parents,” Harrell said earlier this year.
You can see why Kahoot may have decided to put the brakes on building too much, too fast: there have been a number of examples of gaming companies waxing and waning all too fast. Looking at another Nordic game sensation, Rovio, the company also found itself growing rapidly after finding wild success with Angry Birds. It used that boost to expand aggressively into a number of adjacent areas (it regularly described an ambition to become the next Disney). But when the popularity of Angry Birds waned, the bottom fell out of its bigger business. Even through a big restructuring and an IPO, the company has continued to search for a sustained return to significant growth.
That’s not to compare Kahoot to Rovio, but to give some context to why the former might be interested in pursuing a slightly more conservative path for the more immediate future.