Indonesian edtech startup Cakap raised $10 million in a funding round led by Singapore-based Heritas Capital and Centauri Fund, a fund backed by Telkom Indonesia’s MDI Ventures and Korean investment firm KB Investment.
Cakap aims to use the funds to improve its technology by exploring the use of machine learning and artificial intelligence that provides more personalized learning for users through adaptive learning. It also plans to expand its reach to second- and third-tier cities in Indonesia. “Technological advances will make Cakap able to offer a wider variety of learning opportunities for Indonesians,” says Kenneth Li, a partner at Centauri Fund. “It would be very helpful to have a wider impact on untapped potential markets.”
Cakap claimed to be profitable in the last two years and has 1.5 million students using its language learning app. Tomy Yunus, cofounder and CEO of Cakap, is upbeat on maintaining the company growth and aims to get a total of 2 million students by the end of this year. “We see that we can grow even bigger as there is still a surge of new students in the fourth quarter,” Yunus said at a press conference.
Cakap estimates that Indonesia’s education market for offline and online reached $80 billion this year with an annual growth rate of 10%, making it the third-largest education market after China and India. The market potential is still untapped as there is a total of 45 million offline students as of November according to Indonesia’s statistical bureau (BPS).
The potential for upskilling is also significant as they’re only around 13 million people, or 10% of the current workforce, with university degrees, as of August last year according to BPS. The proficiency for English in Indonesia is also still very low as it is ranked No. 75 from 100 countries in the EF English Proficiency Index last year. “There is a gap between the skill in the workforce has and what the market needs,” Yunus said.
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According to research by Google, Temasek, and Bain & Company, edtech is one of the two nascent sectors that have accelerated rapidly due to the Covid-19 pandemic. Currently, most edtech deals in Southeast Asia are still in the early stages with an average deal size of $5.5 million for Series B funding. The research notes that scaling the business will remain a core challenge for edtech companies as there is no one-size-fits-all approach that can be easily scaled across the region.
“We are building the technology to empower teachers so that they can create a bigger impact. In the future we can potentially enter the metaverse, but for the moment we are confident that the interaction in our app will motivate students to finish their studies,” said Yunus.
Cakap was founded seven years ago by Yunus and his partner, Yohan Limerta. The company offers a two-way learning program for several languages such as English, Mandarin Chinese and Japanese for students and also corporate clients. It has currently around 1,000 teachers from Indonesia and overseas. “The funding will also enable us to recruit more quality teachers in the future,” said Yunus.