Auckland-based education technology firm Kami has made its first acquisition, buying UK company Book Creator, which boasts 20 million users, for an undisclosed sum.
Kami founder and chief executive Hengjie Wang said the deal takes the number of teachers and students using his company’s products to 70 million.
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Bristol-based Book Creator was founded in 2011.
Like its new owner Kami, it offers a mix of free and paid products and has enjoyed outsized success in the US.
It’s designed to turn content like school projects into an e-book.
“While Book Creator has AI [artificial intelligence] baked in, we give teachers the ability to turn it on or off. It’s not gimmicky AI. It’s safe and intentional,” Wang said.
It lets students express themselves and display they have “an authentic, genuine understanding of the curriculum”, he said.
Wang hinted that more deals were in the offing.
“As the edtech market consolidates, particularly in the US, educators are seeking simpler, more versatile platforms. This partnership positions Kami to meet that growing demand and unlocks huge potential for us in the US and beyond.”
His firm was itself recently the subject of a buyout.
Late last year, US private equity firm Boston Ventures took a controlling stake in a deal that valued the Kiwi start-up at $289 million, according to an Overseas Investment Office filing, with the founders maintaining a chunky 29% stake.
It was the second-largest deal of its type after US private equity giant KKR took majority control of Dunedin’s Education Perfect in a mid-2021 transaction that valued the Kiwi firm at $455m.
Kami’s eponymous product was developed when Wang, Alliv Samson and Jordan Thoms were studying engineering at Auckland University in the 2010s and wanted a better solution for taking and sharing notes. It later expanded with tools to help teachers manage assignments.
During the Covid lockdowns, Kami exploded in popularity to some 30 million users worldwide (it had 40 million by the time of its sale). Wang marked the milestone by giving all 53 staff a $10,000 bonus.
Designate adult Veteran tech executive Bob Drummond, who came on board as chairman and chief revenue officer, told the Herald: “Our ARR [annual recurring revenue] grew 1000% over the past 12 months. It was now in the $20m to $50m range. (Wang wouldn’t comment on the company’s financials today, only saying that, like Kami – which has always washed its own face – Book Creator is profitable.)
In 2022, Kami made Time magazine’s list of the 100 most influential companies globally.
How is life under a private equity owner?
“They’ve brought on a new set of skills, more experience and better access to capital markets,” Wang said.
“We’re still hiring heavily here in New Zealand, but it’s also brought together an expanded, more global leadership team, a more global leadership team with more experience, particularly around things like M and A [mergers and acquisitions]. We’ve accomplished a lot within less than a year and become a far more global business.”
The Book Creator acquisition takes staff numbers from 110 to 150, Wang said, with a number of software development roles in Auckland and sales positions in the US being advertised.
Wang, who now divides his time between San Francisco and Auckland, sees himself heading Kami for decades. He and Drummond have seats on the board. Samson is chief of staff and strategy. Chief technology officer Thoms has left for a “career break to travel”.
Americans with grunty CVs have filled several new executive roles. Toby Hall, formerly vice-president of education sales for Workday, has joined as chief revenue officer. And Gregg Clevenger, formerly with PowerSchool – described on his Kami CV as “one of the most active M&A players in edtech globally” – has become chief financial officer.
Additionally, former Rocket Lab global HR director Estelle Curd was recently named Kami’s chief people officer (she remains in Auckland).
Book Creator - headed by CEO Lainey Franks - currently maintains its own go-to-market team, with “opportunities to collaborate” being looked at this year and next year
Wang added that Kami had always had to answer to shareholders, although previously they had been minority owners.
For the six years before its sale, the firm was able to sustain itself from sales. Before that, in 2018, it staged a $2.5m seed round at a $20m valuation.
Early backers included Global From Day One and the Crown-backed New Zealand Growth Capital Partners (NZGCP), which cleared $37m profit on the Boston Ventures sale – chief investment officer James Pinner said that was a 70-times gain on the NZGCP’s original investment.
Today, 90% of classrooms in the US are using Kami. Wang’s aim is one billion students and teachers worldwide.
During the pandemic, Kami made its product free for New Zealand schools.
At the time of the Boston Ventures sale, Wang reiterated that arrangement. And today it’s still in place, he said.
“As founders, we have benefited from the New Zealand education system. We want to continue to give back to New Zealand and the next generation of students.
“I think it’s even more important to underscore that now, particularly because I’ve got kids now that are 3 and 5 so, yes, Kami will always be free for New Zealand schools.”
More could take advantage. “My wish has always been for more pick-up of these best-in-class pieces of tech,” Wang said.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.