Duolingo raises $25M at a $700M valuation

Duolingo, the popular language learning service that was co-founded by reCAPTCHA founder Luis von Ahn, today announced that it has raised a $25 million Series E round led by Drive Capital. This brings Duolingo’s total funding to $108.3 million and the company says that its valuation in this last round was $700 million.

Gina Gotthilf, Duolingo’s VP of Growth and Marketing, told me that the company received a number of interesting funding offers but decided to work with Drive because the firm shared Duolingo’s belief in its mission (and because it made a good offer). She also noted that the company didn’t have to raise money at this point but decided to take Drive’s offer because it is, after all, always easier to raise when you don’t have to.

The company also says that it recently passed 200 million users. Gotthilf tells me that 25 million of these are monthly actives.

The five-year-old company plans to use the new funding to increase its headcount from about 80 today to 150 in 2018. Most of the hires will be engineers and designers. The company also plans to expand its product portfolio. Gotthilf specifically noted plans for launching new products that target intermediary users. The first of this is currently called Duolingo Stories and is meant to provide these more advanced users with more of a challenge than the current Duolingo experience, which is geared more toward beginners. As the name implies, Stories will focus on longer narratives, though the exact details of the product remain under wraps.

After launching its course for Japanese, its first course for an Asian language, Duolingo now also plans to launch courses for Korean and Chinese before the end of the year (though those dates could still move to early 2018).

Another area of focus going forward will be artificial intelligence. Duolingo already offers a chatbot that allows language learners to have basic conversations, but the company believes that it can still improve upon this.

Last year, von Ahn wrote that the company spent about $42,000 per day on its servers, salaries and related expenses. It’s no surprise then that the company is looking for new ways to monetize its service.

The original idea behind Duolingo was to use its army of language learners who use its free service to translate text for paying customers. That idea didn’t fully pan out, and over the course of the last year, the company started showing ads in its apps and then gave users the option to pay for removing those ads (on Android, with iOS support coming soon). In addition, Duolingo monetizes its service by charging for its English certification test, which competes against incumbents like the TOEFL and which is now accepted by a number of universities, businesses and government organizations around the world.

While Duolingo doesn’t share revenue numbers, Gotthilf told me the company’s new valuation is a sign of its growing income.