/

Softbank-backed China startup builds Facebook for kids

Bloomberg

A former Nokia Oyj engineer is building a private social network in China where children share art projects online with parents or grandparents. Japan’s phone and Internet giant Softbank Corp. is betting he’ll succeed.

SmarTots, Jesper Lodahl’s Beijing-based startup, began offering mobile education applications for kids from age 2 to 7 through Apple Inc.’s China iTunes store in June. Designed as a game center for app developers, this month it’s adding functions to allow parents to “like” or comment on projects in a layout similar to Facebook Inc.’s site, Lodahl said.

Softbank, which provided funding, and Lodahl expect growth in smartphones and tablets to drive demand for educational services. Parents’ desire to set their children apart from peers is likely to drive strong demand for any service in China that can offer an edge, said Duncan Clark, Beijing-based chairman of BDA China, which advises technology companies.

“People will pay a lot for their kid’s educations,” said Clark, who doesn’t work with SmarTots. “There is a lot of spending power around educational betterment.”

China smartphone shipments will more than double to 460 million units by 2017, researcher IDC forecast last month. The nation’s public expenditure on education reached 4 percent of its gross domestic product in 2012, according to data released at the National People’s Congress in March. Government spending on education has risen at an average annual rate of 22 percent in the past five years.

Started with $1 million in seed money in 2011, SmarTots in December won financing from Softbank’s Pan-Asia Fund, managed by Softbank Ventures Korea, a unit of Japan’s third-largest wireless carrier. The investment was about 2.15 billion won ($1.9 million), according to Mariko Osada, a spokeswoman for Tokyo-based Softbank.

Other SmarTots investors include Xu Xiaoping, cofounder of New Oriental Education and Technology Group; Angelvest; SOSVentures and ChinaRock Capital Management, Lodahl said.

SmarTots gives kids a way to “share to Mommy” the iPad creations that can be valuable memories, said Anna Lo, a partner who helps manage the $85 million Softbank Ventures Korea fund that backed SmarTots.

“Children are engaged with the devices and the content, but parents have no idea what they are doing,” Lo said on March 26. “In old traditional forms, there were photo books and scrapbooks. In today’s digital age, that is rapidly being replaced with mobile content stored on various digital devices.”

SmarTots offers 33 education programs for children and has recorded 1.4 million downloads of its software to date, Lodahl said at his office in Beijing. The company targets 6 million downloads by the end of this year, he said.

Lodahl, a cofounder of SmarTots and chief executive officer, spent more than seven years at Nokia, where he helped develop four phones and create patents used on more than 1 billion handsets globally, he said.