«The Investor Couldn’t Meet Their Commitments». CodiPlay Founder Explains Why He Never Received the Promised $20 Million and What’s Happening With the Project Now

Last year was a busy one for EdTech platform CodiPlay, which teaches children coding and digital skills through IoT-based learning kits. In January, the startup announced a $9 million investment at a $100 million valuation. In March, it entered the African market, and in July, it presented Kazakhstan’s first AI textbook, AI Kitap, to President Kassym-Jomart Tokayev. Then, in September, CodiPlay founder Zhanadil Taldybayev announced that he was stepping down as CEO and starting a new venture, Paradigm Shift, which develops AI solutions for the public sector.

In an interview for the joint Digital Business and Astana Hub project “100 Startup Stories from Central Eurasia”, Zhanadil spoke about why he chose to step down as CodiPlay’s CEO and how involved he remains in the company today. We also discussed the company’s internal pivot in response to the rapid growth of AI, its new scaling strategy, the $20 million funding round that never happened, and what comes next.

“We decided to make an internal pivot after getting feedback from schools”

– Zhanadil, what made you decide to step down as CEO of CodiPlay?

– There was never really a plan for me to step down. What changed everything was the pace of AI development. It was moving much faster than we had expected, and we needed to react quickly. So we started building AI products for education within CodiPlay.

But pretty quickly, we realized that AI needed a completely different tech stack, a separate team, and a much faster way of working. Trying to develop it within CodiPlay at the same time just wasn’t effective. It required much deeper development and, of course, more specialists. At the same time, CodiPlay is already a large company with its own culture. We didn’t want to change its DNA. So we made a difficult but ultimately logical decision: to create a separate project with its own team, purpose, and mission. That’s how Paradigm Shift came about. (We’ll tell you more about the project in the second part of our interview with Zhanadil — Digital Business.) That was also when I decided to hand over CodiPlay’s day-to-day operations to someone else and step down as CEO.

CodiPlay, meanwhile, is moving further into Physical AI. Our kits, essentially the hardware side of the product, are a big part of what we do, so it makes sense to move towards AI-first hardware that works hand in hand with our software.

I’m still involved in the company and responsible for strategic decisions. My main focus is making sure CodiPlay finds the right place in the AI wave. That’s not easy, because AI has put the very existence of EdTech companies under pressure. A lot of what they spent the last three to five years building can now be recreated by AI in a matter of hours. Many companies have had to shut down, but our hardware has helped us stay in the game because it’s much harder to replicate. Now the challenge is to integrate AI into CodiPlay in the right way, so the platform stays relevant.

– So what does CodiPlay’s core product look like today?

– They’re kits with built-in AI that let kids build different types of robots. On the software side, we’re focusing on teaching children vibe coding, the basics of computer vision, speech-to-text technology, and more. Put together, all of this gives students the tools to build fully fledged AI assistants.

We decided to make that internal pivot after hearing the same feedback from schools again and again: teaching kids traditional programming was no longer as appealing. AI skills were suddenly in demand everywhere. Whether we were talking to schools in Kazakhstan, Saudi Arabia, South Korea, or the UK, they all wanted us to add training on how to work with AI tools.

– How easy was it for the company to make that shift?

– It turned out to be much harder than we expected. We basically had to rebuild the kits from scratch, with a new computing module and new boards. The problem was that solutions like this, hardware platforms designed from the start to run AI models locally, simply didn’t exist in education at the time. So after a lot of trial and error, we eventually came up with a product that the market needed.

That said, for a number of reasons, development took much longer than we had expected. We originally thought we’d be able to launch the product in 2025. In fact, that’s why we stopped actively distributing the old solution at the end of 2024. But things didn’t quite go to plan. As a result, we’ll only start rolling out the new product to schools in September this year.

“We’re focusing on Kazakhstan and Uzbekistan, where school education is a major government priority”

– By the end of last year, CodiPlay was being used in 1,200 schools across 13 countries. Has the pivot changed your scaling strategy in any way?

– Our focus has shifted, though that has more to do with changes inside the company than with the product itself. Over the past year and a half, we grew quickly and entered Southeast Asia and Africa. But we weren’t trying to expand everywhere at once. We were really testing the waters to see which markets made the most sense for us. Once we had enough feedback, we decided to focus on Central Asia and the MENA region. That’s where we’ll be taking the new product first.

– Why are you focusing on these markets?

– Let me answer that from the other side. Southeast Asia and Europe are much tougher markets for us. Despite growing quickly there, we were mostly operating at a loss. It comes down to how mature those markets are. Countries like the UK and South Korea require far more attention than we’re realistically able to give them. To succeed in markets like that, you really have to go all in, and it’s difficult to do that while also growing in other countries.

As for Central Asia, this is our home market and one we understand well. We’re focusing on Kazakhstan and Uzbekistan, where governments place a lot of emphasis on school education and are very open to bringing technology into the classroom. In Kazakhstan, for example, most of our customers are public schools.

Regional education authorities often come to us directly asking to connect their schools to CodiPlay. We’re also Astana Hub residents, which comes with certain benefits, including exemptions from corporate income tax, VAT, and personal income tax on employee salaries. For a company that invests heavily in product development, that makes a real difference. At our stage, it means that money that would otherwise go towards taxes in another jurisdiction can instead be invested in R&D and hardware development.

We also feel very confident in the MENA region, especially in Saudi Arabia and Qatar, which together generate more than 40% of our MRR. That said, the company is currently seeing some stagnation because of the political situation in the Middle East. Central Asia accounts for just under 30%.

Looking at these numbers, we realized that what matters most for us right now is building a strong position in a few key regions, rather than trying to be present in as many countries as possible. That’s the only way we can generate the capital we need to keep investing in both the product itself and the quality of the education we provide.

– What helped you achieve these results in Saudi Arabia and Qatar? Many of the people we’ve spoken to who know these markets well say it can be quite difficult for foreign companies to close deals and make sales there.

– Local companies tend to be quite sceptical of foreign startups, and we faced the same kind of caution at first. The reason is that a number of Western companies had previously entered both Saudi Arabia and Qatar with impressive presentations and big promises, received funding upfront, and then failed to deliver a quality product. That happened more than once, so foreign projects are now scrutinized very closely. These days, you usually have to start with a pilot, naturally free of charge, and prove your value in practice. Only after that can you move on to a contract and actual cooperation.

One thing I’d add is that business relationships are absolutely crucial in MENA. Having a good product is essential, but it’s not enough on its own. Partnerships here are built on reputation and personal connections. What really helped us was raising money from local investors. They introduced us to the right people, opened doors for us, and helped us understand how to navigate the market.

But for all the challenges, Qatar and Saudi Arabia have one major advantage. Because the EdTech market is still taking shape, there aren’t many strict regulations around bringing new technology into schools. On top of that, schools generally have solid budgets and can choose for themselves which products they want to use.

“We were chasing scale when we should have been focusing on profit and stability”

– Let’s talk about funding. In January 2025, you announced that you had raised $9 million from investors in Saudi Arabia and Qatar. A few months later, you said in an interview that you were planning to close another $20 million round soon, but there hasn’t been any news about the deal since. Where do things stand with external funding now?

– Fundraising gets much harder once you reach a $100 million valuation, simply because the pool of investors able to back a company at that level becomes much smaller. At the same time, the EdTech market itself has cooled down. Where companies could once expect multiples of 10 to 20, by 2025 they had fallen to around 4 to 5. And in our case, there’s another challenge: we’re building a hardware product, which is always harder to raise money for because your costs increase immediately as you scale.

Despite all that, we did find an investor. We got a soft commitment from a well-known angel investor who said he would put $20 million into CodiPlay. At that point, we had only received part of the $9 million we’d raised earlier. We turned down the rest because we were counting on the $20 million, which would have covered everything we needed. And we started scaling fast. I expanded the team several times over and placed large orders for kits with our suppliers on deferred payment terms.

We thought we had everything under control, but the investor wasn’t able to follow through on his commitment. He ran into some difficulties of his own. So we ended up turning down part of the $9 million round, never received the promised $20 million, and had already taken on new commitments in the meantime. At the same time, sales started falling because of the rise of AI. For many schools, our product was no longer as relevant as it had been. We found ourselves in a very difficult financial situation, with cash flow gaps and delays in paying salaries. That went on for several months.

– How did you manage to get through it?

– Our early investors stepped in to support us financially, and we also started taking on more debt. We’d actually used debt financing quite a bit before, since we’ve always had capex expenses (spending on long-term assets and their upgrades — Digital Business). But the most important thing was that we managed to keep the core team together. That helped us get through the crisis, rebuild the product, and keep moving forward.

I took away a lot of valuable lessons from that experience. One of the biggest was this: until the money actually hits your account, any investment is just a piece of paper. I understood that before, at least in theory, but now I’ve learned it firsthand. Even if someone has a big name and plenty of money, it still doesn’t mean the deal is certain.

I also realized that fast growth isn’t always a good thing. We were chasing scale, when we should have been focusing on profitability and stability. That’s why we changed our strategy and decided to concentrate on two key markets.

But the biggest lesson for me was that I don’t want the business to depend on outside funding. Now the focus is fully on organic growth and building something stable. CodiPlay had actually been profitable before, but we were reinvesting everything we made into bringing schools on board in new markets. In a way, we simply bit off more than we could chew globally. Looking back, that was one of our biggest mistakes.

– You said you don’t want to rely on external funding anymore. Does that mean CodiPlay is done with venture capital?

– We most likely won’t raise funding just for the sake of growth anymore. But we would consider entrepreneurs who are interested in buying a stake in a stable, sustainable business.