- Preply said it bagged $70 million in fresh funding from Horizon Capital, a Ukraine-focused venture fund, Reach Capital and Hoxton Ventures.
- The company plans to use the funds to assist its rapid expansion into AI, having launched new teaching assistants to enhance language learning.
- It comes as tech investors have been racing to jump into AI, with many companies in the space raising seismic sums at sky-high valuations.
Preply, a language learning platform connecting people with tutors, raised $70 million of fresh capital to ramp up its use of artificial intelligence, the company told CNBC exclusively.
The firm, founded in Ukraine but based in the U.S., said it bagged the funds by issuing new equity and debt. Preply's founders include Ukrainian entrepreneurs Kirill Bigai, Dmytro Voloshyn, and Serge Lukianov.
The equity portion was led by Horizon Capital, a venture capital firm focused on investing in emerging entrepreneurs, particularly Ukrainians. It was also backed by Reach Capital, Hoxton Ventures and others.
The funding adds to a $50 million Series C funding round Preply raised last year, and takes its total funding raised to over $170 million.
Preply is a marketplace platform that connects people with human tutors to help them learn new languages. Each teacher on Preply shares a profile that tutees can view, and sets an hourly rate for lessons. Preply gets a cut of the hourly rates tutors charge.
Preply also sells to large enterprises such as Datadog, GroupM and Bain, which use it to improve their teams' foreign language skills. The company is not yet profitable, although revenues grew tenfold in the last three years.
Kirill Bigai, Preply's co-founder and CEO, said the company would use the funds to "extend our leadership in the [online language learning] category through AI-powered human tutors, providing a learning experience which is quickly becoming a game changer."
"Though the team today is truly global, as a Ukrainian founded company with significant R&D in Ukraine, this is a milestone to be celebrated. One that echoes the resilience and determination of the Ukrainian tech sector and all Ukrainians," he added.
The funding comes at a time of tighter fundraising conditions for startups, which are struggling to raise money quite as easily as they did in the 2020 and 2021 boom years of technology triggered by Covid-19 lockdowns and monetary easing.
AI has been a notable exception to that rule, thanks to the popularity of OpenAI's ChatGPT and tools like it. Many startups are raising seismic sums of cash as venture capitalists try to find the companies that will win from the upswell of demand for AI tools.
Preply said it already uses machine learning to better match learners and tutors. Now, it's incorporating more AI into its offering, having launched an AI assistant to help tutors come up with exercises, grammar explanations, and conversations starters.
It comes as Duolingo, a competitor to Preply, has been incorporating OpenAI's GPT language processing software to enhance its app's personalization to users. Shares of Duolingo have more than doubled in price so far this year. Other rivals to Preply include Babbel and Busuu.
It also highlights ongoing interest from tech investors in Ukraine, which has been battered by Russia since Moscow began an invasion of the country early last year. Horizon Capital raised $125 million for a startup fund aimed at backing Ukrainian founders.
Several founders of billion-dollar "unicorns" come from Ukraine, including Grammarly's Max Lytvyn and Alex Shevchenko, and GitLab's Dmitriy Zaporozhets. Google, Samsung and Amazon also have research and development centers in the country.