Australian startup snapshot: ReadCloud
- 18 June, 2013 11:40
ReadCloud is a startup based in Melbourne that has created a social eBook platform for schools.
ReadCloud chairman Lars Lindstrom and co-founder Jeremy LeBard saw a problem in education: Students were carrying several kilos worth of books in addition to laptops with no books on them. In addition, there was no easy way for students to share their notes with each other.
The founders determined that bringing eBooks to the classroom could reduce the load, save students 30 per cent on the costs of textbooks and enable new Internet-fuelled learning.
“We just thought, if you were to reinvent the book, it would be crazy not to include the fact that the whole world is hyperconnected,” Lindstrom told Techworld Australia.
“You should somehow pull the Internet into the book.”
Social e-reading enables more collaboration, which has been shown to help students retain information better, he said. ReadCloud places the discussion about a book inside the book, he said.
Lindstrom spent the first 10 years of his career working as an investment banker in mergers and acquisitions. He left to pursue a startup designing a free newspaper delivered to homes across Denmark, but the business fell apart during the global financial crisis.
Lindstrom moved back to Australia in 2009 and met LeBard, who provided the initial idea for ReadCloud. Lindstrom used his own money to provide seed funding for building the prototype for ReadCloud, he said. “And then we went off and knocked on a lot of doors.”
The service was in development for nearly three years as the company built up its content, signing deal with the major six book publishers, Lindstrom said.
In January this year, the company raised Series A funding from five private investors, he said. The company is also making revenue, selling its first license to a school in February last year, he said.
ReadCloud has limited its scope to B2B for the education market. “Does everyone want to see everyone else’s notes? Probably not. Whereas for a school, that’s the sweet spot.”
ReadCloud has three big school customers and is talking to another 50 who want to use it for at least one year level starting in 2014. Schools pay to licence the ReadCloud platform and often pass charges on to students’ parents, he said.
The service is compatible with PCs and iPads. ReadCloud has a “basic reader” for Android that the company plans to make social like the other apps by Christmas, Lindstrom said. Supporting multiple platforms is important as more schools adopt bring-your-own-device (BYOD) strategies, he said.
While developing the product, ReadCloud decided to pivot and launched a white-label service for private booksellers in November 2011. The company had not intended to white-label the service, but received interest from the Australian Booksellers Association, Lindstrom said.
Now, booksellers can buy the white-label platform for “next to nothing” and get a commission if they sell it to a school. The move also helped ReadCloud ink content deals with book publishers, he said.
ReadCloud plans to keep its head office in Australia, but Lindstrom wants to expand into many other countries, including the UK, Singapore and Hong Kong.
Currently, all of ReadCloud’s paying school customers are based in Australia. However, the company has received interest from schools in India and Dubai, as well as bookstores in the UK seeking to use the white-label platform, he said.
Lindstrom said he can understand why some Australian startups decide to move abroad, and actually considered relocating the company to Singapore when the company was starting out because of the country’s startup funding program. Family ultimately kept Lindstrom in Australia, he said.
Venture capital funding in Australia remains elusive, Lindstrom said.
“We haven’t had much interaction with the so-called VC industry in Australia. There’s not a lot of it around.”
Lindstrom believes startups offering B2B services have an advantage in Australia, he said.
“I think that’s the next wave of some of the biggest startups you’ll see.
“B2C has been done to death. I mean, yes, there’s still some Angry Birds coming out once in a while, but it’s bloody hard.”
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