Babbel raises $10M to step up language-learning fight against Rosetta Stone

Lesson Nine, the German company behind online and app-based language-learning platform, has picked up a $10 million Series B funding round that it intends to use for international expansion.
Babbel’s strongest market is in its home country, but the plan now is to push into the Americas, the rest of Europe and emerging markets. The funding round was led by Reed Elsevier Ventures (see disclosure), Nokia Growth Partners and existing investors, including the Investitionsbank Berlin (IBB) and Kizoo Technology Capital.
“If we look at France or the UK or U.S., then our presence there is rather poor,” CEO Markus Witte told me. “What we need to get is a good reach and brand recognition.”

Going large

Marketing will be part of that, but so will be cooperation with various other players, such as platform providers (the company recently collaborated with Microsoft(s msft) on releasing apps for Windows 8 and Windows Phone), hardware manufacturers and media companies such as newspaper publishers, that might be diversifying and keen to get into the sale of language courses.
The mention of hardware manufacturers is interesting. Witte wouldn’t get into details there, but the sorts of tie-ins that phone makers could offer would extend to preloading the Babbel app or promoting it in an app store channel.
Just last week, Babbel also bought a small Silicon Valley language-learning app firm called PlaySay. Witte suggested to me that, while further acquisitions are possible, they’re not in the game plan right now. “In general we don’t feel the market is mature enough for a rollup strategy,” he noted.


So where does Babbel sit in the grand scheme of things? The big competitor is Rosetta Stone, a giant from the CD-ROM days that now offers its language courses by download, although the price still runs into the hundreds of dollars. Babbel charges monthly fees, starting at $7.45, and of course – being web-based — it hews to a continuous deployment model rather than the download-and-install model of old.
Then there are more community-based options such as Busuu and LiveMocha (which appears to be going more for the B2B market these days), as well as innovative new rivals such as DuoLingo, which combines language lessons with the translation of real-life web content. In short, there’s a lot of competition out there.
Still, Babbel has a fair amount of traction already. According to Tuesday’s release, the apps have been downloaded more than 8 million times and there are over 15 million users overall.
Disclosure: Reed Elsevier Ventures is also an investor in the parent company of GigaOM.