Xero investor funds 10-month old start-up Go Vocab

Xero investor and serial entrepreneur Rowan Simpson has invested an undisclosed amount in New Zealand start-up Go Vocab, which plans to internationalise its online language platform.

Based in Wellington, Go Vocab was founded at the start of the year by Michael Dowse and Jeremy Geros, both in their early twenties, who quit their jobs to focus fulltime on the site.

The site enables language teachers to create classes, set goals for their students and track their students’ progress, namely via vocabulary games played against their classmates.

While it’s unknown how much money Simpson has invested in Go Vocab or what stake he will take in the company, Dowse says the funding will cover the company’s start-up costs for a year.

“We just hired our first fulltime employee… We’ll mostly be using the funding to pay salaries and a bit of marketing,” he says.

Simpson, who could not be reached for comment, founded flathunt.co.nz; an accommodation service later acquired by Trade Me, which was acquired by Fairfax in 2006 for NZ$750 million.

After leaving Trade Me, Simpson became an early investor in accounting software provider Xero. He worked for the company between 2007 and 2008, during which time it was listed on the New Zealand Exchange.

Simpson has also been involved as both an investor and advisor to a number of other early stage companies including Fishpond, Sonar6, SMX and Vend.

In 2010 Simpson co-founded Southgate Labs, a software studio specialising in web and mobile applications, with Michael Koziarski and Amnon Ben-Or.

As part of its investment in Go Vocab, Southgate Labs will provide technical guidance and advice on strategy and product design. Koziarski will serve as a director for the company.

According to Dowse, Go Vocab is used by just over 6,000 students from around 250 secondary schools, and is believed to be signing up between 50 and 100 new members every day.

“At the end of 2010, we went to various schools in Wellington and they agreed to try it. Most of them were interested,” Dowse says.

“In August we attended a languages conference, so that was our foray into the Australian market. We signed up schools in all the different states – about half our users now come from Australia.”

The company’s current focus is the Australasian market, with plans to launch in the United States and Canada later next year, in line with the start of their school year.

“We want to go global… [We currently cater for] English people learning a second language but we’d also like to get into the ESL (English as a Second Language) space,” Dowse says.

The company already has an iPhone app and will soon release an app for the Android.

Dowse says one of the drawcards of being backed by Simpson is the fact that he’s locally based, operating out of Wellington also, although Go Vocab is not averse to relocating in the future.

He says while it can be difficult for young entrepreneurs to make their mark in the business community, developing an educational platform worked in the company’s favour.

“In the tech industry it pays to be young but when you’re selling [your idea] for thousands of dollars, it’s a different ballgame,” he says.

“However, teachers are used to working with young people and the product speaks for itself.”

Based on his own experience, Dowse encourages other start-ups to simply “walk outside” and approach potential clients, as this is the only way to gauge the level of interest.

“It’s relatively easy to build a website but it’s difficult to build something that actually matches what they want,” he says.