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.
Pro forma implied enterprise value of the combined company is
approximately $1.4 billion.
iLearningEngines (“iLearningEngines” or “the Company”), a leader
in AI-powered learning automation and information intelligence for
corporate and educational use, announced today that it has entered
into a merger agreement with Arrowroot Acquisition Corp.
(NASDAQ:ARRW), 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.
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.”
“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.
Additional information about the proposed transaction, including
a copy of the merger agreement and investor presentation, will be
provided in a Current Report on Form 8-K and in Arrowroot
Acquisition Corp.’s registration statement on Form S-4, which will
include a document that serves as a prospectus and proxy statement
of Arrowroot Acquisition Corp., referred to as a proxy
statement/prospectus, each of which will be filed by Arrowroot
Acquisition Corp. with the Securities and Exchange Commission
(“SEC”) and available at www.sec.gov.
Advisors
Cooley LLC is serving as legal counsel to iLearningEngines and
Goodwin Procter LLP is serving as legal counsel to Arrowroot
Acquisition Corp.
About iLearningEngines
iLearningEngines is the market leader in cloud-based, AI driven
mission critical training for enterprises. iLearningEngines has
consistently ranked as one of the fastest growing companies in
North America on the Deloitte Technology Fast 500.
iLearningEngines’ AI and Learning Automation platform is used by
enterprises to productize their enterprise knowledge for
consumption throughout the enterprise. The intense demand for
scalable outcome-based training has led to deployments in some of
the most regulated and detail-oriented vertical markets, including
Healthcare, Education, Insurance, Retail, Oil & Gas / Energy,
Manufacturing and Government. iLearningEngines was founded by
Harish Chidambaran in 2010, with headquarters in Bethesda, MD and
offices in Dubai, UAE, Sydney, Australia, and India.
About Arrowroot Acquisition Corp.
Arrowroot Acquisition Corp. is a special purpose acquisition
company formed for the purpose to effect a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses. The
company is sponsored by Arrowroot Capital, a leading investor in
enterprise software. Arrowroot Acquisition Corp. was founded on
November 5, 2020 and is headquartered in Marina Del Rey, CA.
Important Information About the Proposed Transaction and
Where to Find It
A full description of the terms of the transaction will be
provided in a registration statement on Form S-4 to be filed with
the SEC by Arrowroot Acquisition Corp. that will include a
prospectus with respect to the combined company’s securities to be
issued in connection with the business combination and a proxy
statement with respect to the shareholder meeting of Arrowroot
Acquisition Corp. to vote on the business combination. Arrowroot
Acquisition Corp. urges its investors, shareholders and
other interested persons to read, when available, the preliminary
proxy statement/ prospectus as well as other documents filed with
the SEC because these documents will contain important information
about Arrowroot Acquisition Corp., iLearningEngines and the
transaction. After the registration statement is declared
effective, the definitive proxy statement/prospectus to be included
in the registration statement will be mailed to shareholders of
Arrowroot Acquisition Corp. as of a record date to be established
for voting on the proposed business combination. Once available,
shareholders will also be able to obtain a copy of the S-4,
including the proxy statement/prospectus, and other documents filed
with the SEC without charge, by directing a request to: Arrowroot
Acquisition Corp., address. The preliminary and definitive proxy
statement/prospectus to be included in the registration statement,
once available, can also be obtained, without charge, at the SEC’s
website (www.sec.gov).
Forward-Looking Statements
This press release contains forward-looking statements that are
based on beliefs and assumptions and on information currently
available. In some cases, you can identify forward-looking
statements by the following words: “may,” “will,” “could,”
“expect,” “intend,” “plan,” “believe,” “estimate,” “continue” or
the negative of these terms or other comparable terminology,
although not all forward-looking statements contain these words.
These statements involve risks, uncertainties and other factors
that may cause actual results, levels of activity, performance or
achievements to be materially different from the information
expressed or implied by these forward-looking statements. We
caution you that these statements are based on a combination of
facts and factors currently known by us and our projections of the
future, which are subject to a number of risks. Forward-looking
statements in this press release include, but are not limited to,
statements regarding the proposed business combination, including
the timing and structure of the transaction, the listing of the
combined company’s shares, the amount and use of the proceeds of
the transaction, iLearningEngines’ future growth and innovations,
the initial market capitalization of the combined company, the
amount of funds available in the trust account as a result of
stockholder redemptions or otherwise and the benefits of the
transaction, the total addressable market for global e-Learning and
global AI systems, and the existence of, as well as the potential
value and duration of, any return on investment for customers of
the combined company. In addition, iLearningEngines’ 2022 revenue
is a preliminary estimate, which is subject to the completion of
iLearningEngines’ quarter end close procedures and further
financial review. Actual results may differ as a result of the
completion of iLearningEngines’ quarter end closing procedures,
review adjustments and other developments that may arise between
now and the time such financial information for the period is
finalized. Such differences may be material. As a result, those
estimates are preliminary, may change and constitute
forward-looking information and, as a result, are subject to risks
and uncertainties. Neither iLearningEngines’ nor Arrowroot
Acquisition Corp.’s registered accounting firm has audited,
reviewed or compiled, examined or performed any procedures with
respect to the preliminary results, nor have they expressed any
opinion or any other form of assurance on the preliminary financial
information. We cannot assure you that the forward-looking
statements in this press release will prove to be accurate. These
forward looking statements are subject to a number of risks and
uncertainties, including, among others, changes in domestic and
foreign business, market, financial, political, and legal
conditions the ability of existing investors to redeem the ability
to complete the business combination due to the failure to obtain
approval from Arrowroot Acquisition Corp.’s shareholders, the
failure to satisfy other closing conditions in the business
combination agreement or otherwise, the occurrence of any event
that could give rise to the termination of the business combination
agreement, the failure to consummate the transactions contemplated
by the forward purchase agreements, the ability to recognize the
anticipated benefits of the business combination, risks relating to
the uncertainty of the projected financial information with respect
to iLearningEngines; risks related to the rollout of
iLearningEngines’ business and the timing of expected business
milestones; the effects of competition on iLearningEngines’
business, and other risks and uncertainties, including those to be
included under the header “Risk Factors” in the registration
statement on Form S-4 to be filed by Arrowroot Acquisition Corp.
with the SEC and those included under the header “Risk Factors” in
the final prospectus of Arrowroot Acquisition Corp. related to its
initial public offering. Furthermore, if the forward-looking
statements prove to be inaccurate, the inaccuracy may be material.
In addition, you are cautioned that past performance may not be
indicative of future results. In light of the significant
uncertainties in these forward-looking statements, you should not
rely on these statements in making an investment decision or regard
these statements as a representation or warranty by us or any other
person that we will achieve our objectives and plans in any
specified time frame, or at all. The forward-looking statements in
this press release represent our views as of the date of this press
release. We anticipate that subsequent events and developments will
cause our views to change. However, while we may elect to update
these forward-looking statements at some point in the future, we
have no current intention of doing so except to the extent required
by applicable law. You should, therefore, not rely on these
forward-looking statements as representing our views as of any date
subsequent to the date of this press release.
No Offer or Solicitation
This communication is for informational purposes only and does
not constitute an offer or invitation for the sale or purchase of
securities, assets or the business described herein or a commitment
to the Company or iLearningEngines, nor is it a solicitation of any
vote, consent or approval in any jurisdiction pursuant to or in
connection with the business combination or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law.
Participants in Solicitation
Arrowroot Acquisition Corp. and iLearningEngines, and their
respective directors and executive officers, may be deemed
participants in the solicitation of proxies of Arrowroot
Acquisition Corp.’s stockholders in respect of the business
combination. Information about the directors and executive officers
of Arrowroot Acquisition Corp. is set forth in the Arrowroot
Acquisition Corp.’s filings with the SEC. Information about the
directors and executive officers of iLearningEngines and more
detailed information regarding the identity of all potential
participants, and their direct and indirect interests by security
holdings or otherwise, will be set forth in the definitive proxy
statement/prospectus for the business combination when available.
Additional information regarding the identity of all potential
participants in the solicitation of proxies to Arrowroot
Acquisition Corp.’s stockholders in connection with the proposed
Business Combination and other matters to be voted upon at the
special meeting, and their direct and indirect interests, by
security holdings or otherwise, will be included in the definitive
proxy statement/prospectus, when it becomes available.
1 Sources Technavio Global e-Learning Marketplace and IDC
MaturityScape: Artificial Intelligence 2.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005966/en/
For iLearningEngines: Investor Contact: Kevin Hunt
iLearningEnginesIR@icrinc.com
Media Contact: For Arrowroot Acquisition Corp.: Jessica Schmitt
jschmitt@arrowrootcapital.com 310-566-5967
For iLearningEngines: Kevin McLaughlin ICR Inc.
iLearningPR@icrinc.com
Arrowroot Acquisition (NASDAQ:ARRW)
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