General Atlantic’s wager on Duolingo is paying off after its big IPO. Now, the private equity firm’s key tech dealmaker wants to ‘press its advantage’ in the booming edtech sector.

• Duolingo’s IPO snared $521 million last week. The stock has soared, valuing it near $5 billion.
• Covid-19 was a tailwind for edtech as user rates spike during the pandemic.
• General Atlantic’s Tanzeen Syed spoke about its strategy on edtech and its beginnings with Duolingo.

General Atlantic’s Tanzeen Syed is convinced edtech is here to stay. Whether it’s folks that leaned into their inner polyglot while sheltering at home, or students pivoting to digital materials since the pandemic interrupted in-person classes, the ceiling is high for online education resources.

Mobile language app Duolingo raised $521 million in an IPO on the Nasdaq after pricing its shares at $102 apiece last week. This swelled to $143.8 on Monday, giving the company a roughly $5 billion market cap.

“Covid was somewhat of a tailwind,” Syed, a managing director focused on tech investments at General Atlantic, told Insider. “Folks gravitated toward Duolingo to learn new languages to try better themselves, or practice languages they already knew.”

General Atlantic, which holds about 4.5% of Duolingo’s stock, has long been a fan. It injected $10 million into Duolingo in March last year, and committed $35 million alongside private-equity firm Durable Capital in November.

Based on its stock price, General Atlantic’s stake in Duolingo is now worth more than $200 million.

The firm also helped Duolingo determine which Wall Street bank would lead the IPO, a role that fell to Goldman Sachs, and General Atlantic assisted with the size of the share sale and company valuation, Syed said.

Syed, who’s polished his French and Spanish via the app, said the IPO was a “great marker” for Duolingo, but also a harbinger for what’s ahead in edtech.

General Atlantic has invested in Indian school-learning app Byju’s and Brazil’s Hotmart, which teaches users how to start a digital business, among others.

“The biggest appeal is access… to bring education to people all over the world,” Syed said.

Edtech has benefited from a global, digital user base and General Atlantic wants to “press its advantage” in the sector, having already invested in several edtech unicorns

“We think this is a secular generational trend. And we’ve seen a massive shift toward digital adoption,” Syed said.

Duolingo’s daily average user count spiked to 8.2 million last year from 5.2 million in 2019, and jumped to 9.5 million at the end of March, according to a filing with the US Securities and Exchange Commission.

It’s not the only one to leverage white-hot investor demand for edtech. The day after Duolingo’s IPO, education software provider PowerSchool raised $711 million in an IPO. Earlier in June, edtech Instructure raised $250 million in a share sale.

“It’s hard to remain anonymous when you have the numbers they do”

Unlike most tech darlings clustered on the west coast, Duolingo is in Pittsburgh, Pennsylvania, where its co-founder and CEO Luis von Ahn studied.

“Pittsburgh isn’t the hotbed that Silicon Valley is, but it’s hard to remain anonymous when you have the numbers they do in users and growth,” he said.

It also took years to convince von Ahn to bring General Atlantic on board.

Guatemalan-born von Ahn opted for funding rounds from repeat investors including Union Square Ventures, CapitalG, and Kleiner Perkins, among others, and seldom strayed from that core investor group.

Syed said the relationship, which started over three years ago, began in an advisory capacity, rather than a need for capital. But as Duolingo grew, it required investors with a deeper understanding of edtech, and General Atlantic’s multi-jurisdictional experience across the sector was a unique sell.

“Frankly, it took us a long time to convince Luis that he should take our capital,” Syed said. “Now, we’re not considering this an exit event, we think we’re just starting.”

Duolingo’s next steps go beyond languages. Other educational segments, be it math or science, are in its sights.

As the world opens up, Duolingo could bleed users as consumers spend less time indoors, Syed concedes. Conversely, however, travelers wanting to learn the basics of a foreign language before a vacation are ripe for Duolingo.

“It’s something the investment community would consider a risk,” he said of users spending less time indoors and on their phones. “But the key reason for using Duolingo is for brushing up on a language as they visit other countries.”