Winnipeg-based EdTech startup Hoot Reading has raised $3 million CAD in seed financing to fuel the expansion of its online tutoring platform, which focuses on advancing children’s reading skills.
“Parents are often shocked to learn that more than two thirds of kids are reading below grade level by the fourth grade,” said Maya Kotecha of Hoot Reading.
With the fresh capital, Hoot Reading plans to broaden its reach in new markets to address the needs of underserved kids and scale its new Hoot for Companies corporate benefit.
“Parents are often shocked to learn that more than two-thirds of kids are reading below grade level by the fourth grade – and the pandemic significantly exacerbated this issue,” said Maya Kotecha, co-founder and co-CEO of Hoot Reading. “With this funding in place, we can expand our team and scale our platform to meet the growing demand for our service.”
The startup’s round, which closed in September, was led by Spin Master Ventures (SMV), and supported by all of Hoot Reading’s initial angel investors, including Greg and Jeff Fettes of 24/7 InTouch and Neil Jaffe of BookNook. It brings Hoot Reading’s total funding to date to $3.9 million.
SMV is the newly established venture arm of Toronto toymaker Spin Master, which has allocated an initial $100 million USD towards the corporate fund. Through SMV, Spin Master aims to accelerate growth in its toys, entertainment, and digital games divisions by making minority investments in early-stage companies.
Spin Master, which trades on the Toronto Stock Exchange, is the global children’s entertainment company behind brands like Paw Patrol, Air Hogs, and Rubik’s Cube.
“Amid the growing cultural awareness and acceptance of virtual learning, or tutoring more specifically, Hoot Reading has experienced impressive traction and exponential growth,” said Frederic Gunnarson, Spin Master’s global head of mergers and acquisitions, who has been tasked with leading SMV’s digital games investments. “We will benefit from Hoot’s deep knowledge of childhood education as we build our digital games edutainment business and are delighted they are one of Spin Master Ventures’ first investments.”
Founded in 2017, Hoot Reading aims to “close the gap” on the 4th grade reading slump and help children develop a lifelong love of learning. The startup connects kids to teachers through its video chat platform for live, one-on-one reading help. Hoot Reading boasts a network of over 500 teachers, who deliver lessons based on a curated library of more than 2,000 texts for various reading levels.
The Winnipeg firm was initially incubated as a research project at the Nokia Research Lab, in partnership with Sesame Workshop, the non-profit educational organization behind Sesame Street, and the Joan Ganz Cooney Center.
Since its launch in early 2018, the company has delivered over 100,000 online lessons. During the pandemic, Hoot Reading claims to have seen 10x growth, amid the COVID-induced shift to online learning.
Hoot Reading is one of SMV’s first two strategic minority investments, as the fund has also invested in Nørdlight, a mobile game development company based in Stockholm. According to Spin Master, Nørdlight, which led the tech and art for digital game titles like Candy Crush Saga, will help accelerate the toymaker’s strategy of monetizing the intellectual property it owns in the digital games space.
Through SMV, Spin Master plans to invest in entrepreneurs and early-stage companies with “cutting-edge concepts and promising ideas that will shape the future of play in the ever-changing children’s entertainment space.”
SMV will make strategic minority investments in early-stage companies and provide growth capital to emerging businesses with product-market fit, with an eye towards medium and long-term trends including emerging technologies and pioneering services.
The fund will invest between $1 million and $5 million per deal. Its investment decisions will be overseen by Spin Master co-founders Anton Rabie and Ronnen Harary, the firm’s chairman. According to Spin Master, SMV’s geographic approach will eventually be global, but to start, it will focus on North American and European investment opportunities.
UPDATE (19/10/21): This story has been updated to include responses from Hoot Reading and SMV.
Feature image of Maya Kotecha and Carly Shuler, Hoot Reading’s co-founders and co-CEOs, courtesy of the company