A GTA online company that has turned math education into a video game for millions of children worldwide has raised $159-million from U.S. private-equity giant TPG and the Canadian Business Growth Fund (CBGF).
Oakville, Ont.-based Prodigy Education Inc, which had previously raised just $15-million in institutional capital from CBGF in 2019, said the new funds would fuel a hiring spree, with plans to double in size to 800 people this year. “We’re planning on growing very aggressively with this fundraise … and pursue our mission of helping every student in the world love learning,” co-chief executive officer Rohan Mahimker said in an interview.
Mr. Mahimker and co-CEO Alex Peters, both 32, began building the company as a school project a decade ago when they were students in the University of Waterloo’s mechatronics engineering program. “Our original idea was to create the world’s first emotionally responsive educational math game” using facial recognition software, and later biometric monitors to observe how children responded to the games, Mr. Peters said.
The idea was to “intensely personalize the learning experience” for students, he said. The pair later ditched the hardware to focus solely on software, but kept the core idea of personalizing games to help students succeed.
The company’s flagship offering is a free learning platform offered at schools and to parents that disguises math exercises as video games. “The supplementation to the school curriculum in math has been wonderful,” said CBGF CEO George Rossolatos, whose four children have used the platform. “The kids use it while they think they’re playing a video game, and it’s much more than that.”
Like other online video games, Prodigy generates revenues by selling extras such as personalized outfits, and hairstyles for the users’ online avatars. Access to paid features are typically unavailable at school; teachers use the program to track students and assign homework virtually. Prodigy has about nine million active monthly users and 100 million registered users globally, and is used widely in schools in English-speaking markets, including North America, Britain, India, Australia and New Zealand.
Prodigy’s user growth was disrupted by the pandemic as teachers weren’t able to offer its programs to students at school. But as parents turned to the internet to find educational online tools for their kids sheltering at home, many registered for Prodigy, including paid premium memberships, which “in turn drove higher level revenue growth,” Mr. Peters said. He added the company expects to see elevated use at home even after the crisis subsides.
The co-CEOs declined to provide financial details, but Prodigy was named by Deloitte and The Globe and Mail as one of Canada’s fastest-growing companies prior to the pandemic. It more than doubled revenues on average in each of the four years leading up to 2019, according to Deloitte, and increased revenues by 320 per cent over the three-year period ending last April in The Globe survey, reaching annual revenues of between $25-million and $50-million.
The company is believed to now generate revenues exceeding $50-million annually. Mr. Mahimker didn’t specify how much of the funding went to buy out existing investors, but did say a majority went to the company.
He added that Prodigy, which for years drew only on early funding from friends, family and the founders, handpicked TPG’s growth equity financing firm, TPG Growth, as a backer because of its track record helping some of the world’s leading internet businesses – including Uber, Airbnb and Spotify – expand into giants.
“Prodigy’s impressive growth is underpinned by a truly differentiated, game-based and adaptive platform that is well aligned with the core curriculum” of students in grades 1 through 8, TPG partner David Trujillo said in a statement. “Their commitment to their uses and to their educational purpose is inspiring.”
Investors have taken interest in Canadian education-tech companies during the pandemic, especially as classrooms shift to remote learning. Like Prodigy, many were born in the Waterloo, Ont., area. Kitchener’s Applyboard Inc. raised $100-million last May as its software platform for recruiting international students gained greater attention during the pandemic, helping schools keep revenue flowing even in remote-learning environments. Meanwhile, online learning provider D2L Corp., also of Kitchener, is considering going public after seeing higher growth last year.
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