Earlier this month LinguaLeo, a service used by millions of web and mobile users in Russia, Brazil and Turkey to learn English, finally received a $500,000 capital injection from Social Discovery Ventures (SD Ventures) and existing investor Runa Capital.
In May, after failing to raise funds, he startup had cut 30% of its staff and reduced the salaries of a few executives in a bid to reach break-even, as reported by Russian tech blog Rusbase.
Founded in 2009, LinguaLeo was considered as one of the most promising Russian startups. After monetization started in mid-2010, LinguaLeo secured a $200,000 investment from business angels Egor Rudi, Igor Ryabenkiy and Sergey Kuznetsov. Full recognition on the Russian innovation scene came in 2011, when LinguaLeo won the prestigious BIT Contest.
In 2013, the startup secured $3 million from Runa Capital, a major Moscow-based venture fund. Fulfilling its “American dream,” as founder Ainur Abdulnasyrov said, LinguaLeo started international expansion, claiming trademarks for 22 countries.
The startup, which was close to profitability, seemed on its way to be the next Russian success on the global high tech map.
In 2014, however, things did not go as well as planned. “We had built up a strong team, started an ambitious product development program across multiple platforms, and launched the service in Turkey,” LinguaLeo CEO Dmitry Stavisky told East-West Digital News.
“We got good early traction in Turkey, and our major product update in December 2014 was a success. We were investing heavily and planned to raise another funding round to speed up our growth. This proved to be a mistake, as the new geopolitical situation made it very hard to raise VC funding for a non-profitable company with its revenue generated essentially in Russia,” Stavisky added.
As a result, the startup had to change strategy: “We decided that we need to reach profitability and to move forward using our own resources. We had to focus on highest-priority projects and reduce our costs, letting a number of good people leave the company.”
An ex-Vice President of International at Evernote, Stavisky joined LinguaLeo in 2014. Before Evernote, he held various senior positions in US startups since the 1990s.
