About
Global Education Learning (“GEL”) is a platform company focused on capitalizing on the enormous opportunities in the early education market in China. Led by world-class entrepreneurs who have “been there, done that,” GEL has articulated a highly differentiated roll-up strategy across early education products, services, learning centers, and retail concepts. With a focus on owning distribution and having direct access to customers, GEL seeks to create THE trusted brand in early education while also enabling the Company to achieve rapid economic scale.
Thesis
Demand for education in emerging economies, particularly China, represents a massive global opportunity. Education is heavily emphasized as a cultural priority, and China’s one-child demographics enable a disproportionate share of the family budget to be spent on education. With no single, trusted brand in early education in China, GEL’s strategy to become the marketplace’s “Procter & Gamble” represents an exceptionally compelling opportunity to consolidate the emerging brands, products, services, and retail concepts in this space.
People
GEL is led by Chairman Tom Kalinske and CEO Anthony Chang. Tom has an exceptional background in developing educational and consumer concepts, including leadership roles at Leapfrog, Sega, and Mattel. Anthony has a very strong and diverse background comprising entrepreneurial, operating, strategic, and venture capital experience. In addition, the Company has created an excellent advisory board with strong experience in education, government relations, sales/marketing, operations, and new market entry.
Management Team
- Dr. Robert Calfee, Chief Education Officer
- Professor Emeritus at Stanford’s School of Education,; Prev. Chairman + Member of Leapfrog’s Education Advisory Board
- Desmond Chu, VP of Business Development and Acquisitions
- Prev. ran sales for eKong Ltd.; specializes in developing + executing strategies for start-up and multinational organizations seeking to enter Chinese market.
- Joseph Ho, Portfolio Support
- Prev. served as Greater China Country Manager for both Coca-Cola + PepsiCo
- Michael Sophie, CFO
- Former CFO + COO at UT Starcom; serves as director of several public companies, including NeoPhotonics, Pericom Semi, McData, BCD Semiconductor, Marvell
Product
Hello Booky, GEL's first investment, offers a monthly subscription service to 1-to-6 year-olds who get an activity book, reader, DVD, and CD that teaches language and math, among other subjects. Curriculum and product suite were created by FLTRP, the publishing arm of the Beijing Foreign Studies University ("BFSU"), which has 30% market share of the primary and secondary English textbook market. Through FLTRP and BFSU, Hello Booky has very strong brand recognition, selling through call centers, online outreach, third-party distributors, and retail locations. GEL has also identified over 50 different roll-up targets, including learning centers, content producers, and online platforms, and it intends to pursue licensing and distribution deals with product and content companies.
Potential
Education spending in China is the third largest consumer discretionary spend, representing over 11% of total spending, as compared to 3% in the U.S. There are over 150 million middle-class families in China with children between 2-7 years old, which significantly contributes to the country’s $80 billion private education market —a figure driven by strong and prevailing socioeconomic, cultural, and demographic tailwinds. The Company projects the children’s English-language learning market to increase at a CAGR of almost 30% from 2012 to 2016. Concurrently, there is a strong demand for new educational technologies across online, mobile, and tablet platforms, with over 420 million Internet-enabled homes in China.
Megatrends
- Knowledge
- Globalization
- Internet
- Consolidation
- Branding
- Demographics
How Big Can This Be?
GEL could become the “Procter & Gamble” of this marketplace by consolidating the emerging brands, products, services, and retail concepts in this space. With a focus on owning distribution and having direct access to customers, GEL could create the most trusted brand in early education.
Predictability
We are strong believers in management that has “been there, done that”—which applies in spades to Kalinske and Chang. The GEL team has deep experience in building education and technology businesses, as well as consolidating roll-up strategies and penetrating new markets. We believe the acquisition pipeline lends good visibility to GEL’s consolidation strategy. The team knows the market and acquisition landscape extremely well, including price points, strengths/weaknesses, and opportunities/threats. In addition, China’s early education market is propelled by very favorable megatrends and socioeconomic, cultural, and demographic tailwinds—all of which give GEL’s strategy additional visibility and, ultimately, predictability.
Risks
Competition from other established brands in the early education market, including Qiao Hu, Hello Babybear, and Only PandaQQ, could lead to a need for increased sales/marketing spend by GEL, which could negatively impact its profitability.
Penetration into a foreign market will require exceptional operational and sales/marketing expertise, and a company run by foreign nationals may be perceived as inferior or less desirable with which to do business.
The Company’s roll-up strategy will require significant additional capital, which may not be available on favorable terms to the Company at the time of the additional raise(s).
