Edsoma, a startup that developed an AI-powered reading, education and communication platform for children, raised $2.5 million in a seed round led by Shaquille O'Neal. The trick? Founder and CEO Kyle Wallgren didn't ask the NBA superstar and philanthropist for money.
Edsoma raised the $2.5 million from more than a dozen individual investors — or family and friends, as Wallgren put it — with a post-funding valuation of $14 million. This is O'Neal's first edtech investment. He did not disclose the amount.
O'Neal said that Wallgren understood his passion for helping children and his influence. But it was trying the product that had him convinced.
"When he talked about it, I didn't believe it. And then when he showed me, I believed it, O'Neal said.
Wallgren agreed, noting, "I've learned that it's better to show somebody what you can do first and then put a value on it."
Edsoma is an app that uses an AI reading assistant to help people learn or improve their reading and communication. The app, which is available on the Google Play store and Apple App Store, has a free version that allows for one child user and up to three books. A monthly $9.99 version expands it to four users, unlimited books, group video calling and peer reading sessions. The startup also offers a $99.99 yearly membership that offers the same features as the monthly subscription.
Edsoma started with just 300 paid users, grew to 1,000 and by the second month had grown to 9,000 users by the second month, Wallgren said.
And he's already looking to scale, raise a Series A and someday even expand into other languages. Wallgren said he intends to kick off a Series A round in a couple of months and is eyeing between $10 million and $15 million.
"What he [O'Neal] said at the end of the meeting was, 'Do you think this can help us learn Spanish? And the data showed that we had been downloaded in 11 countries," Wallgren said. "So when we started looking into it, we're like, yeah, this can be used as an ESL tool."
Wallgren added that Edsoma may eventually expand to teaching reading in other languages such as Spanish. For now, the company is targeting users in grades kindergarten to fourth grade based on the content that it has today. Wallgren noted that Edsoma's technology will work right through into university and he has ambitions to become the No. 1 literacy resource in the United States.
"I think that we can catch up our competitors this year — I really do believe that," Wallgren said. "And I think by next year, we can be leading that space."