Educational App Maker Mindshapes Picks Up $4M Round Led By Index; Adds Big 5 Publishers To Magic Town

Another funding announcement that underscores what big business kids’ and educational apps can be. Mindshapes, a UK-based developer of interactive learning apps, has picked up a $4 million round of funding led by Index Ventures, with Richmond Park Partners and existing investors also participating.

The news caps off an eventful couple of weeks for Mindshapes. Earlier in the month, it had launched a flagship app, Magic Town, which Mindshapes calls the first virtual world based on picture book characters. Magic Town, a highly visual app, incorporates content licensed from Hachette Group, Simon & Schuster and Penguin Group, among others, into e-learning tasks. Mindshapes is ramping up content on Magic Town quickly: it currently contains content from 70 popular picture books but aims to have 200 titles in there by year’s end.

What is perhaps most interesting about Mindshapes is how it is trying to make education more engaging by being visually-appealing and, frankly, fun. “We are trying to make learning as accessible as possible,” its CEO David Begg told me when he first showed me the app.

Mindshapes is definitely on to something. Research from Nielsen (Feb 2011) shows that tablets, and specifically Apple’s iPad, are a big hit with the younger crowd. Its researchers found that in households that have iPads, seven out of 10 children under the age of 12 use them regularly.

But Nielsen’s research also revealed that there is an opportunity to create more engaging quality content for youngsters — if only to assuage parental guilt at letting their kids play on tablets for hours on end: 77 percent of kids played games, with only 55 percent using educational apps.

Mindshapes, which has published nine other apps in the app store since opening for business in 2010, will be trying this formula also with content for older users, too: it is gearing up for the launch of another immersive series of apps, Language City, which offers language learning in the form of a game that incorporates elements of social networking. Language City will be aimed at 16-30 year-olds, the company says, and will roll out in different versions covering different languages (and cities), with London first in line.

The funding being announced today brings the total invested in the company to-date to $9 million, after Mindshapes raised $5 million back in November 2011 from a group of angel investors and the five founders of the company: chairman Shukri Shammas; CEO David Begg; CTO Sami Lababidi; chief commercial officer Christian Dorffer; and CFO Tareq Naqib.

That list of founders also points to some of the pedigree and experience going into Mindshapes. Shammas and Lababidi were co-founders of the gaming company Playfish (Naqib was its CFO), which was sold to Electronic Arts for $400 million in 2009. Begg founded and sold a company to Priceline. And Dorffer had been a product executive working Nokia and WPP, among others.