Edtech company MarcoPolo Learning is gearing up for growth having generated seven million downloads of its app and millions of funding through various sources. Here, CEO and co-founder Justin Hsu tells GrowthBusiness what comes next for his company.
What’s your background and what’s the reason for founding the company?
MarcoPolo Learning was founded in 2013, by myself and Nazar Yasin (executive chairman). Prior to MarcoPolo, I co-founded, and was president of PMG, a leading speciality retirement firm for K-12 teachers, which was latterly sold to Zurich Financial. In my time, I’ve also founded 10 Music Entertainment, and sat on the board of the Institute of Play.
Nazar is a former executive at Goldman Sachs and Tiger Global, as well as the former CEO of Forticom, a $1 billion social networking business, which was sold to mail.ru. Nazar also founded Kellogg Insight (Kellogg School of Management’s online business journal) and capital market firm Rise Capital. In 2017, Nazar was the recipient of Northwestern University’s distinguished entrepreneur award.
At the time, both of us had young children and were looking around for good educational content for our children, which we could not find. We soon realised that most digital content available to children is “junk food media” because most media companies are only interested in selling merchandise (toys etc). From this we set out to build a global media brand which really puts children’s education first.
MarcoPolo Learning is now growing rapidly; with over 7 million downloads of its existing products, it is already helping to educate children across the world.
How much initial investment did the company need to start and where did it come from?
We originally raised around $1 million from ourselves and close friends and contacts. This capital was used to develop MarcoPolo’s first product – MarcoPolo Ocean which went onto win numerous top awards and be downloaded millions of times globally. The next round was around $2.5 million which was used to develop the next 3 products: Arctic, Weather and Recall.
What was the source of the latest round of investment? How did it come about/what contacts were utilised?
In April 2017, we raised a $6.5 million Series A round, anchored by Boat Rocker Media (who are now also a production and distribution partner too). The round also attracted some of the most prominent tech investors and thought leaders in education and children’s media globally, including a former director in Fox Kids Europe and co-founder of Sky Scanner as well as Horizon Ventures.
What should companies be aware of when seeking an efficient fundraise?
I think there are four key steps any company needs to work through in the investment process. These are:
- Start by working out the strategy and funds required to execute that strategy efficiently and then “stress test” to make sure that you are raising adequate funds
- Decide on valuation, looking at your company and market data
- Gauge interest from existing investors
- Engage wider network to raise any remaining capital requirements
What exactly will the money be used for and how will you maximise control over your cost base moving forward?
We are about to launch a bridge funding round with Seedrs, with a target of £1 million. We already have around £600,000 verbally committed from our own network.
We plan to use the proceeds for the following:
- To continue developing and growing our core online virtual school platform (MarcoPolo World School), including releasing new content and features every week (for example a new classroom – Art Room etc
- To continue developing video content for digital networks, e.g. YouTube
- To continue marketing and building our brand and user base across the world
- To develop our China-focused product (in partnership with a major global media company)
Our cost base is fairly easy to control now, as most of it is for product and IP development, which is a continuation of what we are already developing, so the costs are well known now and can be increased/decreased depending on how much content we want/need to produce.
The estimated breakdown in costs are as follows:
What specific advice would you give to scale-up companies seeking to follow the same route of investment?
You normally always need to raise more money that you think you will need; therefore raise money when you can, not when you need to. I would also advise companies to start thinking about its next fundraise earlier than they need to. And to support that, always be looking to expand your investor and partnership network.