Kahoot: faltering edtech investment sends SoftBank to back of the class

Upon revealing SoftBank’s record losses last quarter, a sullen Masayoshi Son promised to learn from Ieyasu Tokugawa. The 17th-century Japanese warlord suffered a disastrous defeat simply because he feared losing face

Son has kept his vow to cut the losses of his Japanese tech investment group. SoftBank recently sold a 15 per cent stake in the online education provider Kahoot to US private equity firm General Atlantic.

Kahoot, which provides educational games and quizzes for schools, families and businesses, earned SoftBank another fail grade. Plans to help the Norwegian start-up crack the Asian market came up short.

Asia’s edtech scene is congested. Expansion in China has been limited due to Beijing’s ban on companies profiting from teaching school curriculum subjects. That is a side-effect of Xi Jinping’s “common prosperity” crusade.

The broader problem is that online education has failed to transcend its status as a mere adjunct to face-to-face learning. The pandemic, with its haphazard online schooling, reinforced rather than challenged that well-established view.

But executives at SoftBank’s Northstar unit never cared a hoot for received wisdom. That may be one reason SoftBank is winding down the internal hedge fund after it chalked up almost $6bn in losses in just 18 months. In July it terminated an option and collaboration agreement with the cash-burning, protein powder-churning UK ecommerce company THG.

Northstar boss Akshay Naheta left earlier this year. The former Deutsche Bank trader earned notoriety for spearheading SoftBank’s bet on fraudulent payments company Wirecard.

Investors appear confident that General Atlantic will be better for Kahoot. The shares surged more than 20 per cent after the deal was announced last week, before dropping back amid Fed-induced tech gloom. Kahoot’s stock traded at more than NKr70 on the Oslo Stock Exchange one year ago, compared with NKr18 on Friday.

Weathering the tech sell-off amid the return to classroom learning will be tricky. SoftBank, which is reportedly considering a third Vision Fund, is not the only tech optimist ignoring red flags.