Researchers estimate that 85 to 90 percent of a child’s brain is developed by the age of five. But studies suggest that less than 4 percent of public education investments go to programs serving children during this critical period.
That disconnect—between the importance of those early years, and the shortage of capital available for supporting programs—was part of what drove Neal Shenoy to launch BEGiN, an early-education media company, in 2012. In other words, he says, “there’s a gap between the most important part of a child’s life, and where we spend the dollars.”
As a result, parents often chip in—to the tune of $42 billion a year, per a recent estimate from the Economic Policy Institute.
Some of that spending has likely helped grow Shenoy’s business, though right now capital isn’t a concern—thanks to a $50 million Series C investment from some of the biggest players in the children’s media business. Among them: LEGO Ventures (the investment arm of the toy company), Gymboree Play & Music and Sesame Workshop, the nonprofit education and research group behind Sesame Street.
Other investors include 3One4 Capital, Trustbridge Partners and Interlock Partners. To date, the New York-based company has raised $93 million.
BEGiN is best known for offering a pair of early-education apps: Learn & Grow, which offers digital reading activities for kids ages 2 to 8, and Learn & Play, which provides games, stories and songs that introduce foundational skills to children up to age 3. Both are sold under the brand name Homer, acquired by BEGiN in 2017.
Those apps have climbed the ranks of app charts, and today the company boasts “hundreds of thousands of subscribers” who pay $60 to $120 per year, according to Shenoy, BEGiN’s CEO.
There is some research to support their popularity. A 2014 study of 95 children in Head Start classrooms by New York University professor Susan Neuman (a former U.S. Assistant Secretary of Education) saw gains in phonological awareness, letter sounds and other literacy skills through using Homer for 15 minutes a day.
Still, despite currently generating “tens of millions” in revenue, the company of 130 staff is not expected to turn a profit until the end of next year, Shenoy shared.
Its path to profitability is ambitious. First, the BEGiN will expand Homer’s digital curriculum beyond reading to cover math, critical thinking and social-emotional learning. Then, based on data that it captures from how children interact with the apps, the company plans to send kits of activities to homes that are tailored to a child’s interests, so that parents and their children can reinforce concepts through physical play.
It doesn’t end there. Gymboree, which operates a global franchise of over 700 play centers for young children, will offer small-group classes based on the Homer program. The idea is to provide children with additional opportunities to learn and practice Homer-designed curricular activities through interacting with their peers and other adults. “The in-class instruction will also offer cues into the areas that kids can reinforce at home through our digital program, or through talking with their parents,” he adds.
Those plans are currently up in the air, of course, due to the pandemic.
To Shenoy, all the different mediums through which the Homer program is offered—the apps, the play kits and the learning centers—are part of a “feedback loop” that continually captures and shares data with families about their child’s development.
“The learning journey might begin with a digital experience, which prompts a physical play-based experience, which brings children into the classroom for an experiential opportunity, and then back to the parents where they learn dialogically” through conversations, he describes.
It’s an audacious vision, one which Shenoy acknowledges will require the right partners to turn into a reality. “Every one of our investors invested with an intention to play an integral role, whether that’s through curriculum design, branding, promotion or product development,” he says. LEGO, for instance, offers plenty of experience and expertise when it comes to building toys and physical manipulatives.
Joining the company’s board of directors are Steve Youngwood (president of media and education and chief operating officer of Sesame Workshop), Jyoti Parikh (head of brand, insights and communication at LEGO Education), Xinkai Chen (group senior vice president of Gymboree Global Education Group) and Michael Cohn (partner at GSV).
Separate from the Series C fundraise, BEGiN also secured an additional $25 million in the form of a lending facility from Liquidity Capital. It is effectively credit that the company can tap into and repay later, with interest.
This $50 million deal marks one of the biggest investments in a U.S.-based provider of early-childhood educational services. On a panel at SXSW EDU last March, Maia Sharpley, a partner at edtech investment firm Learn Capital, noted that early-childhood startups accounted for just 3.6 percent of all venture capital invested in the edtech industry in 2016.
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