In 2014, Ivan Krukov moved his family from Serbia to the United States as his startup Cubic.AI prepared to launch a Kickstarter campaign for a smart speaker. A week before the campaign was scheduled to launch, Amazon launched its Echo smart speaker, effectively rendering Cubic.AI dysfunctional.
“It was a disaster,” Krukov told TechCrunch. “It just doesn’t make sense to compete with Amazon or Google. We ended up selling the company. [two years later]”
However, this experience was not completely wasted. Moving the family from Serbia to the United States meant sending her daughters, who were used to speaking Russian at home, to an English-speaking school. His eldest daughter started working with an online tutor, but when Krukov noticed that the tutor was reading scripted answers, the story behind his next and current startup, Buddy.ai. An idea was born.
“I just realized that if the lessons were scripted, I could probably create an AI character that would do the same thing,” Krukov said. “My daughter struggled. She was our first tester and our first user.”
Buddy.ai is an animated, multimodal, conversational character tutor aimed at helping children learn English as a second language. The company operates as a subscription app that consumers can download. The company has also started working with schools in countries such as Brazil.
Despite his background working in voice-based AI, Crewkov said it was difficult to get the business off the ground. When they started, they thought they could get the product to market within six months, a goal Krukov now calls “naive.” Instead, it took years.
Because the product is aimed at children, the company had to comply with the Children's Online Privacy Act (COPA) and similar laws in other countries. Moreover, it is a difficult problem to solve. The AI needed to be trained not only to understand human voices, but also to understand the voices of children speaking in languages it didn't fully know yet.
“We are trying to understand that a 4-year-old Brazilian girl who is trying to speak her first words in English is also a 4-year-old Arabian girl from Saudi Arabia,” Krukov said. said. “A completely different accent and a completely different language. We just started collecting data in countries that don't have strict regulations like COPA, and trained our first model on that data.”
But the company won, and now, seven years later, the company is approaching 55 million downloads and works with more than 22 million students a year.
Buddy.ai has raised $11 million in a seed round led by BITKRAFT Ventures with participation from One Way Ventures, J Ventures, Point72 Ventures and others.
Crewkov said raising money for Buddy.ai was difficult from the beginning, and despite growing interest in AI, this round remained a challenge. He said he spoke with 186 investors to close this seed round. BITKRAFT happened to be the second company they spoke to, and Crewkov said they were a perfect fit for what his company was doing.
“We were particularly interested in finding a fund with expertise in the gaming space, which is why we love BITKRAFT so much,” Crewkov said. “Kids treat Buddy as a game. The interesting fact is that most of the downloads were actually done by kids who just wanted to play with their friends.”
The company plans to invest the entire amount in product development. Krukov said that despite the company's age and traction, he believes its technology is fairly untapped so far. Buddy.ai plans to hire a head of game design and a head of UX design in this round.
Krukov added that a big push for the company is to add more languages and continue to build relationships with schools.
Buddy.ai isn't the only company using AI characters to help people practice new languages. Univerbal is another company that has raised $2 million in venture capital. Loora raised $21.3 million. Buddy.ai stands out because its approach focuses on children learning English as a second language.
“We believe in a hybrid future where AI tutors and AI agents can actually assist teachers,” Krukov said. “All you need is a lot of practice, daily practice. There will never be enough teachers to do that. This is a perfect application for AI.”