How Kiwi edtech Kami gained six million users without any advertising and secured a $1.4 million investment
Monday, January 21, 2019/
Kiwi edtech Kami has raised $NZ1.5 million ($1.4 million) in its seed round, led by Aussie VC Right Click Capital, and with six million users already, it’s setting out to disrupt classrooms all across the world.
Founded in 2013 by then-students Hengjie Wang, Jordan Thoms and Alliv Samson, Kami is a cloud-based app allowing students and teachers to annotate, view, edit and collaborate on digital documents.
“We started off building software for ourselves when we were at university,” Wang tells StartupSmart.
The theory was “if you can produce a set of notes collaboratively that are better than what you could produce yourself, you could study smarter and better”, he adds.
The team soon found the app could also improve the classroom experience, allowing learning to be more collaborative and thereby improving engagement.
Now, the startup has some six million users in 130 countries, and has increased its revenues four-fold in the past 12 months.
Having only previously received friends-and-family funding, plus some angel investment, Kami will use the $1.4 million to accelerate its growth on a global scale.
The startup will focus on growing its team, and on business and product development.
This latest funding will also be put towards Kami’s first real marketing drive. So far, its six million users have been generated purely through word-of-mouth.
While the founders knew they were addressing a pain point, they didn’t quite anticipate the reaction they got, Wang says.
“We’ve got a really huge audience who are very passionate about what we’re doing,” he says.
Although many schools now use digital tools such as laptops and tablets, they’re not integrated into the systems, or in use every day.
“[Schools] are still printing paper, and teachers aren’t trained. When our software comes in, immediately there’s a massive transformation to actually go digital,” Wang explains.
Speaking to StartupSmart, Garry Visontay, partner at Right Click Capital, notes there’s a “very strong viral component to the product”.
Once the technology enters a school, “it’s very easy for a lot of students to begin using it,” he says.
Students who are early adopters will show other students, and teachers tell their peers at other schools. If the product solves a real pain point, that can be enough to fuel significant growth.
“It has grown very quickly by itself,” Visontay says.
“Capital, funding and smarts”
This virality it part of what made Kami an attractive investment for Right Click Capital, Visontay says. There’s a clear product-market fit, with user metrics that “confirm its something users want”.
Right Click Capital has been following the startup’s progress since a VC trip to New Zealand in August 2017, he says, and its recent growth spurt “confirmed they knew how to scale their business”.
“We’re very confident they can continue that.”
However, the investors were also impressed by the “very strong founding team”, which boasts both technical and marketing expertise.
“That’s a really strong combination,” Visontay says.
From Kami’s perspective, securing investment from an Aussie firm was an important step towards achieving its growth ambitions.
“Our vision is to take the transformation we’re able to see now, and bring it to a much bigger audience, to really bring it to mainstream,” Wang says.
“To do that we need capital, funding and smarts.”
In New Zealand, while there are several angel groups and some small VC funds and family offices, when it comes to startup investment options there’s “nothing as sophisticated or as big as what you typically see overseas”, Wang says.
“You have to go and look for money elsewhere,” he adds.
Australia is close by, and so made sense as the first port of call. However, there is also an active ecosystem for a growing startup to learn from. And Right Click Capital provides the experience and expertise Kami needs, Wang says.
“We really needed someone who has that sort of level of experience to help us grow.”
Disruption in the classroom
Kami is not the only startup — not even the only Kiwi startup — striving to revolutionise the education space.
In December, Wellington-based startup LearnCoach announced it had closed its NZ$1.5 million seed round to scale its online education program.
Founded by 2018 Young New Zealander of the Year David Cameron, along with his wife Deborah Lambie and brother Mark Cameron, LearnCoach creates video tutorials for students who can’t attend a physical classroom.
The videos are currently viewed more than one million times each year by about 150,000 New Zealand students.
In Australia, virtual reality edtech Academy Xi raised $3 million in Series B funding in December, after seeing 250% revenue growth, year-on-year.
Maths Pathway, founded by two former teachers, also raised $2.1 million last year to expand the reach of its technology, helping kids learn maths more efficiently and effectively.
According to Visontay, edtech is “certainly one of the strong growth areas for startups, globally”.
It’s a traditional industry, but we’re starting to see disruption at every level, from kindergarten up to university levels.
“There’s a large number of startups now trying to disrupt the education space, and displacing a lot of the traditional tools,” Visontay says.
“There’s a combination of systems for admin and running the institution, and around enhancing learning,” he adds.
Wang admits it’s not a “typically sexy” area of tech, and suggests people may have historically viewed it as a tough space to get into.
However, there’s a demand for new tools here, and when the Kami founders saw people benefiting from their tech, “it made us truly believe in what we wanted to do”, Wang says.
Part of the reason more and more founders are developing edtech is that “more and more people are starting to realise the impact you can have”, he adds.
Setting up for success
Wang’s advice for other Kiwi and Australian startup founders — in the edtech space or otherwise — is to think globally from day one.
“It’s important to build businesses that can scale,” he says.
Expanding into other regions forces founders to consider different markets and competitive landscapes, he explains.
“If you can learn early on to operate at that level, you’re setting yourself up for success,” he says.
Equally, starting out with a global mindset has helped Kami to get the traction it has, Wang says.
“It appeals to a lot of investors and people you want to partner with,” including helping the startup to get great talent on board.
Finally, if you want to make a change to an industry, “the level of impact you can get at a global level is substantially higher”, Wang says.
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