iLearningEngines, a leader in AI-Powered Learning Automation, to List on NASDAQ via Merger with Arrowroot Acquisition Corp.
The transaction has a minimum cash condition of $100 million, including funds from the Arrowroot Acquisition SPAC trust, a private convert with participation from Arrowroot Capital Management and other institutional investors that brings immediate capital into the company, and additional sources of capital that are currently being negotiated.
iLearningEngines (“iLearningEngines” or “the Company”), a leader in AI-powered learning automation and information intelligence for corporate and educational use, announced that it has entered into a merger agreement with Arrowroot Acquisition Corp. a publicly traded special purpose acquisition company sponsored by Arrowroot Capital, a 10 year old private equity firm specializing in enterprise software. Upon closing of the transaction, the combined company will be named iLearningEngines, Inc., and is expected to remain listed on the NASDAQ under the new ticker symbol, ‘AILE’. The combined company will continue to be led by iLearningEngines’ existing CEO and founder, Harish Chidambaran.
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“Arrowroot is in our 10th year; investing globally and specifically in growing enterprise software companies. We explored dozens of candidates for our first SPAC investment, searching for the next category killer, a $1 billion plus business that could be the next $10 billion company”
In a globally distributed work environment, productizing enterprise knowledge has significant impact on business success, and remains a fundamental challenge given the sheer volumes of content and data. This is the problem that iLearningEngines solves. Uniquely positioned at the intersection of two massive, rapidly growing global markets – global e-Learning and global AI systems, each with an estimated total addressable market of greater than $200 billion by 2025 according to Technavio and IDC MaturityScape1 – iLearningEngines leverages its AI and machine learning to build Intelligent “Knowledge Clouds” from an organization’s internal and external content and data, creating a central repository of all enterprise intellectual property, and then distributes knowledge into enterprise workflows to drive autonomous learning, intelligent decision making , and process automation. iLearningEngines currently serves 12 core verticals, including industrials, oil & gas, education, healthcare and insurance.
Founded in 2010, iLearningEngines has grown rapidly since its initial product launch with customers across a diverse set of industries and geographic regions. Key business and company highlights include:
- Powering over 1000 end-customers with over 3.2 million users
- $309 million in revenue in 2022, up 42% year over year, and positive adjusted EBITDA the past 3 years
- Net dollar retention of 119% with typical customer contract length of 3-5 years
- Proprietary AI platform and highly specialized learning and engagement data sets
- Over 100,000 research and development hours
- Top 20 in Deloitte Fast 500 for four years in a row, including #5 in 2019
- Rule of 40 software business consistently for the past 5 years
Under Mr. Chidambaran, iLearningEngines has built a profitable $300+ million annual revenue business while being very capital efficient. “As an early pioneer in enterprise AI and its application in learning and process automation, we believe iLearningEngines is in a category of one – owning a unique space with first mover advantage and significant moats built around specialized learning and engagement data sets,” said Mr. Chidambaran. “We are excited to be partnering with Arrowroot given their expertise in growing enterprise software businesses. We believe the capital raised in this transaction will allow us to accelerate growth, capitalizing on the massive market opportunity in front of us.”
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“Arrowroot is in our 10th year; investing globally and specifically in growing enterprise software companies. We explored dozens of candidates for our first SPAC investment, searching for the next category killer, a $1 billion plus business that could be the next $10 billion company,” said Arrowroot CEO Matthew Safaii. “We believe we found that in iLearningEngines. This is a company with over 100,000 engineering research and development hours invested in creating one of the biggest independent AI focused software platform companies in the world. iLearningEngines is in an enviable software metric position. The company is at scale and posts high revenue growth along with profitability. Furthermore, we believe their large enterprise customer base is extremely sticky. We see iLearningEngines as not just a disruptor in enterprise grade AI, but as a public company that can overtake this burgeoning market space – with a huge opportunity for both organic growth and accretive M&A opportunities. Arrowroot Capital is in this for the long-term and is demonstrating this commitment by leading an investment directly into the company today. We have also priced the deal at 3.3x estimated 2023 revenue, a significant discount to a group of publicly traded peers, which we view as a very attractive entry point, especially for a company with top tier metrics.”
“We were early investors in iLearningEngines, and have been impressed with the management team’s ability to deliver consistent growth and profitability in this high growth AI segment,” said Rudy Ruano, Investment Partner with Western Technology Investment (WTI). iLearningEngines has been backed by WTI, a multi-stage venture finance firm that specializes in investments into leading technology companies. Founded in 1980, WTI has partnered with more than 1,400 companies across major innovation sectors. The firm was an early institutional investor in iconic technology companies like Google, Facebook, and Palantir among others.
Transaction Overview
The transaction has been unanimously approved by the Board of Directors of Arrowroot Acquisition Corp., as well as the Board of Directors of iLearningEngines, and is subject to the satisfaction of customary closing conditions, including the approval of the stockholders of Arrowroot Acquisition Corp.
The agreement includes a minimum cash requirement of $100 million that will be funded through several sources. The combined entity will receive approximately $43 million from Arrowroot Acquisition Corp.’s trust account, assuming no redemptions by Arrowroot Acquisition Corp.’s public stockholders. iLearningEngines will receive proceeds of a private convertible offering with participation from Arrowroot Capital and other institutional investors at the time the transaction is announced. iLearningEngines is also in discussions to raise additional capital via institutional investors. The intended use of cash is primarily for M&A and growth.
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