Gamified e-learning platform Kahoot gets $1.7B acquisition offer from Goldman Sachs, Lego and more


person looking at mobile phone screen
Image Credits: Kahoot

Big moves ahead for Kahoot, the Oslo startup that’s built a popular platform for users to create, share and play education-focused “games”, played by billions of students and adults over the years. The company has announced that it’s received a bid to go fully private in an all-cash PE deal at 35 NOK per share, valuing Kahoot at $1.7 billion (17.2 billion Norwegian kroner) based on 492,836,049 shares issued and outstanding.

The private equity division of Goldman Sachs Assets Management is leading the bid, with existing Kahoot backers General Atlantic (currently its largest shareholder), LEGO Group’s KIRKBI Invest A/S (“KIRKBI”) and Glitrafjord (controlled by Kahoot CEO Eilert Hanoa) named as the other major shareholders in the deal. Unnamed other investors and management also will have stakes in Kahoot.

As with any public company acquisition, shareholders have to approve the deal for it to go through, and that is still in progress. The deal would represent a premium on Kahoot’s publicly traded shares as of yesterday — specifically 53.1% to the closing price on the Oslo Stock Exchange on 22nd May 2023 (when it was NOK 22.86).

However, it’s a major step down from the company’s highest valuation at the peak of the Covid-19 pandemic, and as such it represents one more example of how tech companies are struggling in the economic climate for financing even as they grow.

Kahoot was one of the wave of remote learning startups that saw its star rise as people stayed away from physical classrooms and office spaces, giving the company — which has separate divisions that serve K-12 students and adults/businesses — a lot of business, and attention from investors.

Kahoot says that to date it has hosted “hundreds of millions of learning sessions with 9 billion (non-unique) participants in more than 200 countries and regions,” and that it currently has more than 1 million paying users.

But in more recent times the company has, like other tech businesses, struggled in the public markets, with investors post-pandemic adjusting to a new reality: a world grappling with recession and inflation, and consumers and businesses using less of the digital services (like e-learning and e-commerce) that they heavily leaned on just a year before. Kahoot today released a set of financials that painted a mixed picture that speaks to this.

It today disclosed that in Q2 it made $41 million in revenues, up just 14% on last year; $40 million in “invoiced revenue” up 8%; Ebitda of $11 million up 60%; and operating cash flow up 90%, to $10 million.

But Kahoot — which over the years has collectively raised more than $500 million, also noted that it only had and cash equivalents of $96 million by the end of the second quarter.

At its height, in 2021, Kahoot was trading as high 109 NOK/share. That share price has fluctuated a lot over the years. A year ago in June 2022, it was trading at 17.92 NOK/share.

This acquisition would take some of that fluctuation off the table, and it caps off years of Kahoot taking a two-tier approach to its business finance.

Launching its first products in 2018, the company has been traded for years on the Merkur Market in Oslo — seen as a stepping stone between being a fully private startup and a publicly listed company. That route has helped it tap both private and public avenues for financing as it has scaled, leading it to take investments from traditional VCs like big regional players Northzone and Creandum; SoftBank at its peak of investing exuberance; and strategics like Microsoft and Disney.

(SoftBank’s 15% stake was sold in its entirety and at a loss to General Atlantic last year, as part of SoftBank’s efforts to simplify and rationalize its portfolio.)

Although Kahoot is most definitely not at its peak valuation, the PE group that’s formed to buy up the shares seem to have a belief that there is a longer term opportunity here, and are willing to bet their existing stakes on it.

“Kahoot! is unlocking learning potential for children, students and employees across the world. The company has a clear mission and value proposition and our investment will help to grow its impact and accelerate value for all stakeholders,” said Michael Bruun, global co-head of Private Equity at Goldman Sachs Asset Management, in a statement. “Through this transaction, we are pleased to partner with a fantastic leadership team and group of co-investors to expand a mission-critical learning and engagement platform and contribute to its further growth and innovation.”

“Since General Atlantic partnered with Kahoot! in September 2022, the company has maintained significant momentum across key strategic initiatives, including scaling its enterprise offering and global subscriber base while also extending its premium IP partnerships and delivering product innovation to leverage advances in generative AI,” said Chris Caulkin, MD and head of technology EMEA at General Atlantic, in a statement. “Through this transaction, we are pleased to deepen our commitment to support Kahoot!’s long-term growth in collaboration with the broader co-investor group. We look forward to our continued partnership with Eilert and the Kahoot! team in the years ahead.”

And it will be keeping an important strategic backer with this deal. “We are excited to invest alongside Goldman Sachs Asset Management, General Atlantic, and Kahoot!’s management team to accelerate the growth of Kahoot,” said Thomas Lau Schleicher, chief investment officer at KIRKBI. “We are impressed with the company’s journey, having developed an exciting range of products to interact with its users in a fun and engaging way. We support the company’s mission to empower learners and educators worldwide, which resonates with our core values and find the investment fits very well with KIRKBI’s long-term investment strategy.”

Indeed, it sounds like that leadership team is staying on with the deal.

“Kahoot!´s mission is to make learning awesome. Our portfolio of solutions drives billions of learning interactions every year, coming together through continuous product innovation and a team with ambition to put magic learning moments at everyone’s fingertips,” said Hanoa in a statement. “As the need for engaging learning, across home, school and work, continues to grow, I am excited about the opportunities this partnership represents for our users, our ecosystem of partners, and for the talented team across the Kahoot! Group, to advance education for hundreds of millions of learners everywhere.”

Updated to make clear that the deal is not yet closed; shareholders still have to approve it.

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