Sandbox takes majority stake in Brazil’s PlayKids in an equity-swap deal as edutech venture funding booms globally
Image: Courtesy

Sandbox takes majority stake in Brazil’s PlayKids in an equity-swap deal as edtech venture funding booms globally

PlayKids CEO and Leiturinha founder will take the helm of LatAm growth, and one of Movile’s directors of M&A, Silvia Motta, will become a board observer to help steer the edutainment powerhouse

PlayKids, one of the largest online edutainment platforms for children in Latin America, has been acquired by U.K.-based Sandbox & Co, in a stock-swap deal that gives majority owner Movile, a minority stake and a seat on the board. For Sandbox, it is part of an ambitious plan to expand into Latin American markets – and for Movile, a Prosus-backed investment group that manages one of the largest tech company ecosystems in LatAm – it provides a clear growth path to expand one of its most mature businesses with a synergistic business partner that has been on an acquisition spree since 2021.  

The value of the deal was not disclosed. PlayKids will add about 260 full-time staff to Sandbox’s operations, and it will spearhead the U.K.-based company’s plans to expand into LatAm and other global markets like the U.S. that have been served by PlayKids since its founding in 2013. The LatAm group will be led by PlayKids CEO Guilherme Martins, who is also the founder of Leiturinha, one of Latin America’s largest monthly book-subscription clubs for kids aged 2-6 with more than 200,000 monthly subscribers that was acquired by PlayKids in 2016.

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Sandbox has seen rapid growth over the last few years and its portfolio now includes the PlayKids app’s user base of more than four million users and brand licenses with the likes of Hello Kitty, Bita World, Lottie Dottie Chicken, Monica’s Gang. It now consists of 17 brands with a peak monthly audience of more than 60 million kids, families, and teachers, per Sandbox. Its properties include Code Kingdoms, which provides online coding courses for kids, Hopster, an award-winning preschool edutainment platform, and recently acquired Spanish companies Edujoy and Tellmewow.

This latest edutainment acquisition by Sandbox follows a record year for venture capital funding in edtechs around the globe that surpassed $20 billion last year, led by massive surges in the U.S. and the U.K., according to new data from Holon IQ. That level of investment was three times higher compared to pre-pandemic investment levels. 

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The social distancing and lockdowns during the last two years have caused challenges for kids’ quality of education and mental wellbeing due to remote learning, periods of isolation, and fewer opportunities for them to be physically active and socialized. Research from multiple sources – including this McKinsey & Co. report – finds there is a high cost for children/families with rising rates of depression, anxiety, and the loss of student learning – especially for students of color.

With so many people stuck at home, there’s been a surge in downloaded and streamed content with some ISPs reporting a 60 percent spike in data usage, and an overall figure of 30% more data consumed. Growth projections are a whopping 26.9 percent growth per year, per PwC’s Global Entertainment and Media Outlook 2021-2025.

PlayKids CEO Guilherme Martins will lead LatAm for Sandbox. Photo: PlayKids/Courtesy 

“It’s taken us two years to find a partner that can help us grow three or five times faster,” said Martins. “There is a lot of synergy between our products and services, and those that Sandbox offers, such as the educational tools provided to teachers.”

Martins expects growth in LatAm educational markets to be fueled by further acquisitions but also by strong organic growth. “For example, our products have tested very well in Mexico.”

READ ALSO: Edtech giants are poised for ascension

Late last year PlayKids spun out its game software developer division Afterverse, to make it easier to find companies that were mostly interested in its core, mainstream products. 

Afterverse – which was born inside PlayKids and spun off into its own division in late 2020 became its own standalone company in the fall of 2021. It will remain as a majority-owned Movile investment. Afterverse’s global hit PK XD, a virtual world platform a.k.a. a “metaverse” game, has grown from about 25 million users at the end of December 2020 to more than 55 million users in just one year.

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“Afterverse was spun out because it is still capital intensive and also we’re experimenting with new ideas,” said Sylvia Motta, Strategy and M&A Director at Movile. “The rest of Playkids is mature, with large established audiences in many countries. And these audiences are middle-class and education-oriented — a good match for Sandbox.”

Movile’s director of M&A and Strategy will become a Sandbox board observer. Photo: Movile/Courtesy

Motta will become a Sandbox board observer to provide Movile with insight into the future acquisition pipeline and with it the possibility to co-invest in startups. 

Movile recently raised about $200 million from its main financial backer Prosus – Europe’s largest internet investment company. Motta says that the money is already accounted for: to expand Movile’s other portfolio companies, the largest being iFood, the largest foodtech/delivery company in LatAm.

READ ALSO: Venture capital volume towards edtechs reached a new record in 2021, says HolonIQ

Movile and Sandbox have similar strategies in terms of building an ecosystem of leading startups that can combine their technologies and talent to speed up growth. 

PlayKids is one of Movile’s earliest investments and its explosive growth helped establish Movile’s reputation as a savvy investment group with the ability to accelerate growth in its portfolio companies through a bold management philosophy it calls “The Movile Way.”