School messaging app Remind (formerly Remind101) announced a $40 million Series C on Tuesday, bringing its total funding raised close to $60 million.
The round was a so called inside round with no new investors which can be interpreted in several ways. One option is that the startup has problems and investors need to inject more money to keep it afloat, another is that the startup aims for a higher valuation and needs more runway to achieve some milestones.
In Remind’s case the two main investors seem to be interested not to dilute their ownership by allowing others to chip in.
In the past Chris and I often shook our heads when edtech startups like Remind or edmodo for instance announced huge venture rounds and the promise to remain free forever without a having a working business model and I still don’t believe that this is a healthy approach. Nevertheless, looking at the growth of Remind I will admit that the Kopf brothers are the posterchild for the concept of grabbing market share by offering a service for free. Now the question remains whether they will they be able to “turn on revenue” once they have a sufficiently large user base which again will of course be crucial for an IPO.
Why IPO? Back in February, when he led Remind’s $15 million Series B, John Doerr stated that the startup will eventually make money by adding premium features and that other “liquidity events” (like an IPO) are also an option. With $60 million in funding, Remind’s valuation is probably too high for an acquisition.
Now leading the Series C, Doerr states in the press release that
“We [Kleiner Perkins Caufield & Byers] are thrilled to invest in their hyper growth.”
According to the New York Times, Doerr was especially impressed by Remind’s focus on education and metrics as well as its rapid growth among the teacher community. During this year’s back to school period, Remind saw around 350k new signups per day. This growth curve also attracted the attention of Chamath Palihapitiya, founder and managing partner at The Social+Capital Partnership.
Before being a VC, Palihapitiya was responsible for Facebook’s growth in the early days alongside founder Mark Zuckerberg. Remind’s adoption among teachers, students and parents has similar potential of reaching one billion users or more. In fact, Remind’s goal is to connect three billion people in the coming years.
“We were ecstatic about the opportunity to partner with John Doerr and lead an inside round at Remind. The company’s vision, if fully realized, will create the first complete graph in education (more than 3 billion people worldwide) and offer the education system a product that drives meaningful outcomes,”
states Palihapitiya in the press release. So it seems that both KPCB and Social+Capital want to own a big chunk of what Doerr and Palihapitiya see as the next big consumer app, leading to an inside Series C round with no new investors.
“This has the most credible chance to get to one billion users of any product I’ve seen since I left [Facebook].”
Palihapitiya told Forbes.
Looking at the development of Remind it is worth noting that the team did not need to pivot or adapt its core product in order to achieve growth and adoption. The attraction actually lies in the simplicity of Remind, focusing on and solving a simple yet persistent problem: communication between teachers, students and parents.
Because all parties involved need to communicate on a regular, sometimes daily, basis, Remind sees high retention and low dropout rates, making the app part of the daily routine similar to other consumer apps like Facebook, LinkedIn, Twitter or WhatsApp all of which took some time to introduce paid features or plan to remain free.
Today Remind has about 18 million users which is still far from one billion, let alone the target of three billion. In a next step the startup has to prove that it will achieve comparable growth in new markets like Europe and eventually if teachers, parents or schools see value in premium features.