For most of its four-year history, Seattle-based Livemocha has built its international language-learning business through the online equivalent of hand-to-hand combat: Amassing individual consumers into a big user base and earning money through advertising or premium services.
It’s worked pretty well, with about $14 million in venture funding raised and more than 6 million members as of last fall. But when Livemocha started taking its service to big businesses and government clients, things really got interesting.
“The fastest-growing segment for us by far, both in the U.S. and abroad, is the enterprise business where we have created language-learning solutions for organizations,” CEO Michael Schutzler says. “That’s been a huge shift for us, just in the last six months or so.”
That shift has helped keep Livemocha’s revenue growing in the triple digits over the past three quarters and pushed its membership past 11 million, Schutzler says. Combine that ability to provide large-scale services with a significant global footprint, and it’s easy to see why Livemocha was able to land a new partnership in Brazil with education company Abril Educacao.
As part of the deal, Abril has taken a 5.9 percent ownership stake in Livemocha, leading a $5 million investment round (reported in July, without much detail at the time) with participation from previous investors August Capital and Maveron.
Abril will take on sales and marketing in Brazil, while Livemocha uses the growth capital to beef up its product and technology to supply the new partnership. Brazil is seeing higher demand for English learning ahead of the country’s hosting of the 2014 World Cup and 2016 Summer Olympics, two blockbuster events that showcase the country’s quest to position itself as the fifth global power.
Brazil already had been a significant market for Livemocha, accounting for about 2.5 million users, and consistently supplying between 20-25 percent of the company’s global user base. The Abril deal should throw some fuel on that fire: “I would be really, really disappointed if we didn’t grow that by a factor of 10x over the next few years,” Schutzler says.
And even though that seems like a good chunk to bite off for a 42-person Seattle company—Schutzler says the Brazilian language-learning market could be worth $35 billion—Livemocha doesn’t want to stop there.
“Brazil, hopefully, in a way becomes for us a template that we can use and say, ‘OK, that worked well for us in Brazil. Let’s do that in Japan now,’ or ‘Let’s do that in France now,’ or other countries,” Schutzler says.
