Baring Vostok has invested an undisclosed amount in online education platform Skyeng, with specializes in English teaching. Confirming the deal, a Baring Vostok representative told Russian business daily Kommersant that the fund acquired a minority stake.
Skyeng, a Moscow-based startup launched in 2012, claims to have generated 725 million rubles (around $12.5 million) in revenue last year, and that its current valuation amounts to $100 million — a record on the Russian edtech scene.
With more than 2,000 teachers, the platform controls some 45% of the domestic market of online language courses, or 3.5% of the entire Russian edtech market. (The online segment accounts for just a few percent of Russia’s foreign language teaching market, however.)
Last year Skyleng entered the US and Latin American markets with subtitle translator Subtly and English learning app Aword.
Skyeng previously raised a few hundred thousand dollars from individual investors.
Baring Vostok is among the most established Russian PE funds, having invested some $2.4 billion in nearly 70 projects in total across Russia and other former Soviet republics since 1994. In the Internet field, Baring Vostok invested in Yandex, the Russian search giant, and Ozon, a leading online retailer, at very early stages. Recently the PE firm participated in funding deals for 2GIS, an ambitious online mapping service from Siberia; Doc+, an in-house-call doctor service; Busfor, a Russian-Ukrainian bus ticketing platform; and French unicorn Blablacar.
An embryonic market
This investment marks the first substantial venture deal on the Russian edtch scene for years. After some significant moves in 2011-14, venture investors withdrew from this market, with the notable exception of IIDF (FRII), a giant early stage Internet investment fund supporting Russia’s digital transformation policies.
Thus, in 2014-16 classic venture funds and accelerators took part in just 13 deals, while corporations supported seven startups. Total volumes never reached $10 million in total per year (taking into account only identified deals with disclosed amounts), with a low point in 2016.
Russian edtech investment volume per year (in thousand US dollars)
Source: EWDN research based on data from Rusbase, IIDF (FRII) and own sources. These numbers include all types of investment deals, excepted investment by Russian funds in foreign startups. The actual volume is significantly higher, taking into account undisclosed or unidentified deals. For example, the value of GeekBrains’s acquisition by Mail.ru Group in 2016 has not been disclosed.
After years of passivity, however, corporations entered the market in 2016. That year saw the acquisition or GeekBrains by Mail.ru Group and the announcement of an investment of several dozens of millions of US dollars by publishing giant Prosveshenie.
Confirming the trend, Severgroup, a group of companies controlled by steel magnate Alexey Mordashov, invested some $20 million in Netology Group at a $50-$60 million valuation. The deal took place in August 2017 with previous investors, the Russian funds Buran Venture Capital and InVenture Partners, fully exiting the company. Netology was founded in 2009 to provide online courses in the fields of Internet projects, web development and e-commerce.
