Why did we invest in Lalilo.
When joining Citizen Capital earlier in the year to manage our first early-stage fund, I took great comfort in how simple it was to pitch our thesis. “Venture for impact”. Three words are short enough to be remembered. Venture and impact investing are well-documented investment strategies. Founders are well read, they will know where they “meet”.
Nine months into the team, there is not a day where we don’t reflect on the importance of explaining our view of this intersection between venture capital and impact investing so that Citizen continues to attract talented and like-minded entrepreneurs who share our vision of businesses’ role in society and how venture-backed mission-driven businesses can fast-track the resolution of urgent social and environmental needs.
We’re thrilled to share today our investment in Lalilo’s 5M€ series A, alongside Partech and Educapital. Lalilo is the first investment of Citizen Capital’s early stage fund launched last April with the support of Allianz. Of all investments a fund makes, if one should help understand the fund’s strategy, it is the first one. Education is a pillar in our thesis and here’s why we decided to join the founders on their mission to boost literacy.
Lalilo provides primary school classes with a literacy platform to ensure all children build in their early years the skills they require to be best prepared for their future. Reading is the most fundamental of all those skills and the state of literacy unfortunately isn’t quite what one would think it is.
65% of children in the US aren’t proficient readers in K-5. In France, 20% of children have reading difficulties entering into middle school.
The implications are numerous and socially devastating. A student who can’t read, can’t learn. Reading difficulties in primary schools translate into burdening gaps in middle school. At best they limit a child’s academic prospects. If not remedied before the adult age, illiteracy turns into a lifelong trap. Illiterate people have a harder access to information, fewer opportunities for employment and are excluded from making choices about their rights or political preferences through voting. Literacy is freedom.
Amine, Benjamin and Laurent are a strong team of bright founders. But it is their six-month experience teaching K-1 and witnessing first-hand the challenges that teachers face in class that truly sealed the deal for us. It was apparent that the team was on a mission and that it’d be a compass to guide future hiring, product, distribution and, by large, strategic decisions.
Time spent in class undeniably helped them understand what teachers needed to manage larger groups of students with levels more spread-out than ever, and build a vision of how education should be tailored to meet the needs of learners.
On Lalilo children’s learning path constantly adjusts to their past responses and how they progress. Lalilo’s AI navigates thousands of exercises designed with specialists to find the best exercise and optimize both learning outcomes and confidence.
Close to 120.000 children are using Lalilo every month. That’s 2x last June figure. At the time, metrics already spoke for themselves and teachers’ feedback confirmed it all. Kids love Lalilo and teachers love Lalilo for that: it helps them group students by level, work with a few while the rest of them keep learning on Lalilo.
“My students aren’t hanging by the lights now” said Terri, from Yardville Elementary School.
Lalilo doesn’t replace teachers, it supports them in providing more high-quality learning opportunities in class.
Evaluating Lalilo’s efficiency was made easy when speaking with Sandy who teaches near New York to students with learning disorders. They are aged 8 to 15, and they too love Lalilo because “the visuals aren’t juvenil and they feel positive about their progress”. If Lalilo’s adaptive learning method works with them, presumably it works for all, including children from non-native or disadvantaged backgrounds.
The company’s freemium model also provides great room for impact. Any teacher teaching in French or English can onboard its class for free and boost its students’ reading skills. Lalilo offers additional paying features to help teachers keep an eye on their students’ progress, anticipate dropouts and use the company’s speech recognition tool to evaluate reading proficiency.
The stakes around literacy are high, and looking on the bright side, the market looks more ready than ever. In France, Lalilo was selected by the Ministry of Education in September as one of the few solutions to develop and deploy AI solutions in public primary schools. In the United States circa 90% of schools are equipped with tablets and PCs. The market is more fragmented there, with close to 100,000 potential buyers at the district or school level, but the experience purchasing Edtech solutions locally is now high. And as teachers now have a growing say in those decisions, the teams’ product vision for students and teachers looks all the more convincing.
Lalilo is Citizen Capital’s early stage fund first investment. We couldn’t find a better fit to illustrate our vision of venture for impact and how mission-driven founders, building best-in-class products, with a strong alignment between business and impact can create major value. We are now looking forward to more children using Lalilo and to supporting the team in their mission to solve the literacy challenge for good.
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Thank you to Frederic Oru, Baptiste Frelot, Ashley, Kelianne, Maggie, Marleah, Theresa, Melissa, Wendy, Zahira for your help, insights and feedbacks!
Working with Citizen Capital.
Citizen Capital backs mission-driven founders tackling major social and environmental concerns. We look for projects which have the potential to reshape our way of living, consuming or producing and fast track our transition towards a society which factors the needs of all within the limits of one planet.
If you’re an entrepreneur or an investor and believe there’s value in addressing what’s going wrong today, please reach out. We’d love to discuss.
