In the highly globalized economy of the 21st century, the labor market need for bilingual workers and graduates is soaring. 

Unfortunately, interest among students in pursuing foreign language studies has actually been decreasing over the same time period. In the US, registrations for foreign-language AP classes have been steadily declining. An increasing number of postsecondary education institutions are cutting foreign language course requirements, and in some cases, eliminating language departments entirely. 

The resulting chasm between the heavy market need for linguistically skilled workers, and the anemic supply of such workers, has led to a phenomenon sometimes termed “America’s foreign language deficit.” This shortfall even extends to workers who ought to have acquired substantial language abilities: 23% of the State Department’s overseas posts that require foreign language proficiency are filled by staff who lack the needed linguistic skills.

Linguistic specialists hypothesize that the dismal state of multilingual training in the US is largely due to unrealistic expectations around the ability of traditional classroom-based programs to impart real language skills. They point out that immersive experiences that allow students to apply their newly acquired vocabulary and grammar are necessary for meaningful levels of language skill to develop. 

Unfortunately, the practical reality is that those kinds of in-person immersion experiences are also prohibitive in terms of financial cost, time, and travel logistics.

Alelo provides a web-based language training system that uses avatars and realistic conversational scenarios to help language learners build their proficiency. 

Above all, the Alelo product emphasizes practical applications of language instruction. Alelo’s system offers interactive immersion scenarios that not only prompt students to practice using basic elements of the language being learned, but also enable them to develop a sense for how to use those elements. The scenarios provide guidance on what idioms and standard conversational patterns to employ; what intonation and wording to choose; what level of formality to adopt and more. 

The founders of Alelo believe that this approach constitutes the best of both worlds. It provides an immersion-style experience that allows participants to get a feel for how the language is actually used in real-world encounters.  It also precludes the need for physical travel or other cost-prohibitive forms of immersion training.

The technology that enables Alelo’s instructional capability is artificial intelligence. The company’s AI system draws upon a partial library of words and phrases – combining it with a trainable statistical natural language processing (NLP) engine. When students speak their responses into the microphone during a given scenario, Alelo’s NLP engine is able to assess both the intent of their spoken responses and the manner in which those responses were delivered. This enables Alelo to provide feedback to the student on whether their responses were suitable for the scenarios presented.

Alelo grew out of a series of award-winning language tools developed by the company’s founder for use by the US military. These tools were meant to ensure that members of the armed forces could communicate in a culturally sensitive way while deployed. Alelo has since grown into an established commercial entity with a significant client base across multiple diplomatic agencies and military branches of the US government.

Alelo’s founder, Lewis Johnson, is a computer scientist who earned his PhD at Yale and spent several decades as a research professor at University of Southern California. While at USC, he worked on the DARPA-funded language tools project mentioned above that eventually led to the genesis of Alelo as a commercial venture.

Alelo’s leadership also includes a Chief Revenue Officer with 30+ years of experience in the language products field, most recently as a VP of Sales at Pearson. Additionally, the Head of Production spent over a decade developing games and interactive experiences for Disney.

As Alelo’s CEO points out: unlike the typical investment opportunities offered on crowdfunding sites, Alelo is actually not a startup because it was founded in 2006. Since then, Alelo has built up a solid roster of customers in the public sector (including all four major branches of the US Armed Forces, several independent DoD agencies, and multiple civilian government clients at the federal and state levels). The company also has a robust customer footprint in the higher education sector.

The reason why Alelo is pursuing growth capital at this stage of its evolution is that the COVID-19 pandemic has created a substantial market opportunity. Employers of all types are clamoring for remote training and workforce development solutions. Alelo aims to use the capital from its current fundraise to move aggressively into the corporate training market. At the same time, the company intends to continue expanding its presence across government and higher education environments. That goal will be accomplished through its longstanding partnership with Laureate Education, an 800,000-student network of colleges across the Americas that recently shifted to 100%-online instruction. 

A Competitive Lead Due to Alelo’s AI Layer: Alelo’s use of AI to power its adaptive training scenarios is a deep differentiator that should inoculate the company against competitive threats. Rose Luckin, professor of education at University College London, has observed that Alelo’s AI layer enables the company to better tailor its training to each student’s particular skill level and areas that need improvement. This also allows the company to provide useful individualized feedback – not only to the students, but also to those responsible for managing the program of instruction.

A Proven Business Model: Alelo’s value proposition is based on personalized language training that accommodates repeated practice without incurring proportional cost increases. Their pricing structure is set up as a tiered SaaS based on the number of users. Judging from the company’s lengthy and diverse list of customers across all sectors of the economy, there’s every indication that Alelo’s model is resonating strongly with the market.

A Modest Valuation: Alelo’s offered valuation of $10.5M is reasonable in light of the fact that the company has an established brand, a strong roster of current and former clients across multiple sectors, and meaningful revenues ($1.85M in 2019, according to the company’s Form C). 

It’s important to note that the company’s financial performance was substantially in the red in 2019 – primarily due to high operating expenses, including outlays associated with development of the company’s new corporate training product. Even so, the offered valuation is not excessive, considering that the company has now sunk those resources into developing their corporate-focused product, just in time to meet the spike in demand from the corporate world due to COVID-19.

A shift has been underway for decades now, moving our universities, corporations, and government agencies away from in-person education and training, in favor of remote options. At times, that transition has proceeded slower than one might have predicted – particularly for specific fields such as language training, in which in-person immersion trips have historically been prized as apex experiences. 

However, the advent of the COVID-19 pandemic has rendered in-person delivery formats unworkable – which has, in turn, suddenly accelerated the push towards remote delivery of almost all types of training, including language instruction. 

In this environment, a company such as Alelo – with its award-winning, personalized, scalable AI-driven approach, and its readiness to serve government, corporate, and postsecondary clients alike – seems well-placed to capitalize on the profound changes underway. Alelo is enabling tomorrow’s students to acquire the language skills they need for the global economy, making this company a Deal to Watch.