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IBIS Capital | e-Learning

A European Perspective on eLearning

IBIS Capital | A European Perspective on e-Learning


Important Notice

The information in this report (“Report”), which does not purport to be comprehensive, has been prepared by IBIS Capital Ltd (“IBIS”) and has not been independently verified and may be subject to updating, completion, revision and amendment and such information may change materially. Although reasonable care has been taken to ensure that the facts stated in the Report are accurate and the opinions expressed are fair and reasonable, no representation or warranty, expressed or implied, is or will be made, and no responsibility or liability is or will be accepted by IBIS or by any of their respective shareholders, officers, employees or agents as to or in relation to the accuracy or completeness of the Report or any other written or oral information made available to any party and any liability therefore is hereby expressly disclaimed. The Report is being supplied to recipients solely for their information and may not be reproduced or redistributed, in whole or in part, to any other person, or published, in whole or in part, for any purpose without the prior consent of IBIS. Where source material has been reproduced the copyright remains the property of the copyright owner and material may not be reproduced in any form whatsoever without the owner’s prior consent. The distribution of the Report in certain jurisdictions may be restricted by law and therefore any person into whose possession the Report comes should inform himself about and observe any such restriction.

IBIS Capital | A European Perspective on e-Learning

2


Glossary Adult education: Self-learning and personal development Capital expenditure: Expenditure on assets that last longer than a year, including construction, renovation or major repairs to buildings as well to equipment, furniture and computers Current expenditure: Current expenditure covers goods and services bought and used during the year Corporate training: Professional training and learning and development programmes for firms EM: Emerging markets Higher Education (HE): Formal education post 18 years of age Instructor-Led Training (ILT): Usually refers to traditional classroom training, in which an instructor teaches a class of students. The term is used synonymously with on-site training and classroom training

ISCED 0: Pre-primary education: Pre-primary education is defined as the initial stage of organised instruction. It is school- or centre based and is designed for children aged at least 3 years ISCED 1: Primary education: This level begins between 5 and 7 years of age, is compulsory in all countries and generally lasts from four to six years ISCED 2: Lower secondary education: It continues the basic programmes of the primary level, although teaching is typically more subject focused. Usually, the end of this level coincides with the end of compulsory education ISCED 3: Upper secondary education: This level generally begins at the end of compulsory education. The entrance age is typically 15 or 16 years. Entrance qualifications (end of compulsory education) and other minimum entry requirements are usually needed. Instruction is often more subject-oriented than at ISCED level 2. The typical duration of ISCED level 3 varies from two to five years ISCED 4: Post-secondary non-tertiary education: These programmes straddle the boundary between upper secondary and tertiary education. They serve to broaden the knowledge of ISCED level 3 graduates. Typical examples are programmes designed to prepare pupils for studies at level 5 or programmes designed to prepare pupils for direct labour market entry ISCED 5: Tertiary education (first stage): Entry to these programmes normally requires the successful completion of ISCED level 3 or 4. This level includes tertiary programmes with academic orientation (type A) which are largely theoretically based and tertiary programmes with occupation orientation (type B) which are typically shorter than type A programmes and geared for entry into the labour market ISCED 6: Tertiary education (second stage): This level is reserved for tertiary studies that lead to an advanced research qualification (Ph.D. or doctorate) K-12: Formal education period up to 18 years of age Learning Management System (LMS): Software that automates the administration of learning/course delivery events. The LMS registers users, tracks courses in a catalogue, records data from learners and provides management reports. An LMS is typically designed to handle courses by multiple publishers and providers. It usually does not include its own authoring capabilities, instead, it focuses on managing courses created by a variety of other sources m-Education: Any form of e-Learning delivered to a mobile device, e.g. via smartphones or tablets Programme for International Student Assessment (PISA): International study that was launched by the OECD in 1997. It aims to evaluate education systems worldwide every three years by assessing 15-year-olds' competencies in the key subjects: reading, mathematics and science Rote Learning: A memorisation technique based on repetition RoE: Rest of Europe RoW: Rest of the world Shareable Content Object Reference Model (SCORM): A set of standards and specifications for e-Learning training materials Tin Can API: An e-learning software specification that allows learning content and learning systems to speak to each other in a manner that records and tracks all types of learning experiences Talent Management System (TMS): An integrated software suite that manages performance management, learning and development and other talent capital related tasks Virtual Learning Environment (VLE): A web-based education system that models traditional education in a virtual environment Web-based Training (WBT): Any instructional event that can be accessed via the Internet or the Web

IBIS Capital | A European Perspective on e-Learning

3


Table of Contents

5 – 20

The European e-Learning Market

21 – 27

Active European e-Learning Corporates

28 – 34

The European Education Market

35 – 38

The European Corporate Learning Market

39 – 44

General European Investment Trends

45 – 46

The European EdTech 20

47 – 57

Appendix ─ A Closer Look at the European Education Market

IBIS Capital | A European Perspective on e-Learning

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IBIS Capital | A European Perspective on e-Learning

The European eLearning Market

IBIS Capital | A European Perspective on e-Learning


The European e-Learning Overview

1

Significant Market Size

2

A Highly Fragmented Market

3

Limited Invested Capital to Date

Of the $4.1tn trillion spent on education and training, approximately 25% is in Europe, making it the 2nd largest market to North America. In the schools market, Europe boasts 27% more teachers than the US, with 4.6m teachers as compared to 3.6m in the US

The European e-Learning market is a highly fragmented market comprising up to 3,000 predominantly small entrepreneurial companies. The fragmentation represents in part the early stage nature of the industry and the market difference within Europe

Although the relative difference in the size of markets between the US and Europe is not significant yet there is a big difference in the volume of venture deals in e-Learning. Since 2007, 60% of global venture investments in e-Learning have been in the US. Europe only accounts for 6% over the same period

IBIS Capital | A European Perspective on e-Learning

4

Split Between Corporate & Academic

5

European M&A still Nascent

6

IBIS Capital’s View on Europe

The spend on academic education and learning outweighs the spend on corporate training by about 18x. There is also a regional split between northern and southern Europe where for example in the Nordics workers are 4x more likely to be receiving training than in southern Europe

The level of activity within e-Learning M&A in Europe is currently limited, with very few deals over $20m. The market remains in development. The increase in venture investment is expected to fuel expansion and in due course increase strategic activity

The evidence of increased investment in Europe in the sector and anecdotal support that companies are experience an upsurge in activity points to a market on the turn. We expect the e-Learning market to be characterised over the next 3 years by a significant increase in investment in the sector as well as a level of consolidation as companies seek scale

Source: McKinsey, Eurostat, Capital IQ, OECD, Eurypedia, National Statistic Offices, Ministries of Education

6


The EdTech Hype Cycle Years to Adoption 0-2 years 2-5 years

Expectations

5-10 years >10 years Adaptive Learning BYOD Strategy

Digital Preservation of Research Data

Gamification

MOOC

Web-based Office Productivity Suites Social Media in Education Social Learning Platform for Education

Self-publishing

ePortfolios

Big Data Open Source Portals

Mobile Learning

Personal Learning Networks Learning Record Store

ITIL E-textbooks

“Tin Can” Initiative

Cloud email for staff and faculty

Game Consoles as Media Hubs Web-based tools for education SaaS Administration Applications Media Tablets

Virtual Environments Learning Repositories

Lecture Capture and Retrieval Tools

Time Technology Trigger

Peak of Inflated Expectations

IBIS Capital | A European Perspective on e-Learning

Trough of Disillusionment Source: IBIS Capital, Gartner

Slope of Enlightenment

Plateau of Productivity

7


Global Education and Corporate Learning Expenditure 2011A Global Education Expenditure by Geography Key Points Pre-K-12

($bn)

K-12

Post-K-12

Vocational

1,500

1,266

Emerging AsiaPacific 17%

Developed AsiaPacific 14%

Europe 25%

966

1,000 668 500

Latin America 8%

558

319

Middle East & Africa 3%

126 0 Middle East & Africa

Latin Emerging Developed America Asia-PacificAsia-Pacific

Europe

North America

 Similar to other regions, K-12 represents the largest segment nominally within the European education sector North America 33%

2011A Global Corporate Learning Expenditure by Geography ($bn) 71

75

50

74

25 14 2

6

0

Middle East & Africa

Latin America

Emerging Developed AsiaAsiaPacific Pacific

Europe

IBIS Capital | A European Perspective on e-Learning

North America

 From a global perspective, Europe’s contribution is largest within the PreK-12 segment Breakdown of 2011 Total Expenditure

Developed AsiaPacific 19%

Europe 34%

Emerging AsiaPacific 7%

40

 In 2011, global education expenditure was $3.9tn with global corporate learning expenditure amounting to $207bn

Latin America 3% Middle East & Africa 1%

K-12 58.6% Pre-K-12 6.6% Corporate 5.0%

North America 36%

Vocational 4.8%

Source: McKinsey Note: K-12 is used as a synonym for formal education from kindergarten to 18 years of age

Post-K-12 25.0%

8


Growing Education Market Driven by Growth of e-Learning Global Education Expenditure Forecast by Subsectors

Key Points

($bn) 10,000

For profit 6,334

8,000

Test preparation / tutoring market

5,482

6,000

Global language learning

Serious gaming

4,435

Child care 4,000

 Global education expenditure market is projected to grow at 7.4% until 2017

 e-Learning expenditure projected to grow at 23.0% p.a. to $256bn from 2012P-2017P which comprises:

Social learning / communities Corporate & government learning

2,000

Post secondary

‒ K-12 CAGR of 34.0% ‒ Higher Education CAGR of 28.0% ‒ Corporate market CAGR of 13.0%

K-12

0 2012P

2015P

2017P

e-Learning Expenditure Forecast by Subsectors ($bn) 300

256

Corporate education Higher education

200

100

K-12

167 91

0 2012p

2015P

2017P

IBIS Capital | A European Perspective on e-Learning

Source: IBIS Capital estimates, GSV education report, Ambient Insight research

9


Government Expenditure is Vital to Education Education Expenditures as a % of GDP (2000 vs. 2008)

Key Points

2008 2000

10%

 Targeted government spending is an important stimulus for enhancing the skills within the labour force. In turn, investment in skills needed to drive economic prosperity

8% 6% 4% 2% Brazil

Slovak Republic

Hungary

Czech Republic

Italy

Ireland

Spain

Germany

Japan

United Kingdom

Australia

Mexico

Netherlands

Austria

Portugal

Poland

Finland

Switzerland

Canada

Belgium

Korea

Sweden

France

Chile

Denmark

Norway

United States

Israel

Iceland

OECD Average

0%

 State of the labour market impacts demand for vocational training: ‒ changes to the economic base result in changes to the skills requirement ‒ unemployed seek to re-train in order to return to the labour market

Proportions of Educational Expenditure from Public and Private Sources (ISCED 0-6) Public funding 13% 13% 8% 15% 5% 6% n/a

20%

14% 6%

40%

13% 10% 9% 17% 10% 10% n/a n/a 5% 16% 9% 13% 10% 0% 12% 18% 3% 3% 31% 9% n/a 2% 10% 8% 0%

Private funding

0% 20% 40% 60% 80% EU BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK IS LI NO CH HR TR

100%

IBIS Capital | A European Perspective on e-Learning

Source: Eurostat, UOE, World bank

10


Investment Trends: Academic and Corporate e-Learning Increased Focus on the Academic Market Direct Investments in the Academic e-Learning Market

Key Points

(1)

48%

2008-2012 Est. CAGR (%) (1)

($m) 750 600

 Direct investments in the academic eLearning market have recovered from the lows of 2002 to 2004  Since 2004, there has been a significant increase in funding within the academic e-Learning market

450 300 150 0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Direct Investments in the Corporate e-Learning Market

2009

2010

2011

2012

 Investment trends in corporate eLearning are correlate to the general economic environment, most likely as a consequence of the fluctuations of corporate spend on training during the economic cycle

(1)

 Since 1999, direct investments in the corporate e-Learning market hit an alltime low of $45m in 2010

($m) 750 600 450 300 (29%)

150 0 1999

2000

2001

2002

2003

2004

2005

2006

IBIS Capital | A European Perspective on e-Learning

2007

2008

2009

2010

2011

2012

Source: Ambient Insight (1) Estimated based on Ambient Insight’s report titled “The 2012 Boom in Learning Technology Investment ”. The scope of the data includes angel, venture capital, and private equity investments

11


The Rise of Consumer-Facing e-Learning Direct Investments By Type of Target Customer

(1)

Key Points Deal Volume

Deal Value

(Volume)

($m)

80

2010

2011

2012

60

2010

600

2011

 Investment in consumer-facing eLearning companies has increased nearly threefold year-on-year

2012

450

40

300

20 0

750

Major themes in 2012:

 By contrast investment in corporatefacing e-Learning companies fell

150 (2)

Direct Investments in Consumer-Facing e-Learning Companies (1)

0

(2)

Direct Investments by Emerging Product Type (1)

($m)

($m)

750

300

600

250

77%

19%

 Mobile-based e-Learning continues to receive

2010-12 CAGR (%)

200

450

224%

 Social learning has attracted significant interest from the investment community with an annual growth rate in new investment over the last 3 years of 224%

150 300

100 50

0

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

150

Cognitive Learning

Social Learning Mobile Learning 2010

IBIS Capital | A European Perspective on e-Learning

2011

2012

Source: Ambient Insight (1) Estimated based on Ambient Insight’s report titled “The 2012 Boom in Learning Technology Investment ”. The scope of the data includes angel, venture capital, and private equity investments (2) Refers to higher education

12


Significant m-Education Growth and App Downloads m-Education Market by Region(1) Key Points ($bn) 40.0

37.8 28.3

30.0

Developied Asia-Pacific: 23%

16.2

10.0 3.4

4.4

5.6

7.3

9.5

North America: 31% Europe: 29%

21.4 20.0

2011-2020 CAGR

12.4

Emerging Asia-Pacific: 54% Latin America: 54% Middle East & Africa: 50%

0.0 2011A 2012P 2013P 2014P 2015P 2016P 2017P 2018P 2019P 2020P

Free Education App Downloads(2) 2009-2011 CAGR (%) News Travel Education Healthcare & Fitness Lifestyle Social Networking Books & Reference Music Business Sports Entertainment Games Overall average

Paid For Education App Downloads(2) 2009-2011 CAGR (%) 342

270 239 234 232 223 226 226 193 177 175 145 188

Business Healthcare & Fitness Music Social Networking Books & Reference News Entertainment Education Sports Lifestyle Games Travel Overall average

IBIS Capital | A European Perspective on e-Learning

221 213 212 206 201

 The investment in m-Education is estimated to have grown annually by approximately 19% for the last 3 years, according to Ambient Insight  The Serious Gaming & Gamification sector is forecasted to grow from $2.0bn in 2012 to $7.4bn in 2015  Games and simulation based tools are expected to grow at a 37% CAGR to 2020  Education app downloads are greater than the overall average in both free and paid for downloads

175 185 180 174 171 156 136 178

Source: McKinsey, Research reports (1) m-Education includes all internet connected devices, such as smartphones or tablets (2) List of categories not exhaustive

13


Global e-Learning Fundraising Summary Direct Investment and Deal Volume Since 2007(1) ($m) 2,500

3

5

3

4

Key Points 6

10

2

2,024

Total Capital Raised (Global)

2,000 1,500

1,436

Total Capital Raised (Europe)

1,192

928

1,000

1,063

Volume (Europe)(3)

857

 Since 2007, Europe accounted for 6.0% of global deal volume

430

500 107

30

31

23

21

42

45

0 2007

2008

2009

2010

India

China

Europe

RoW

2011

Canada

2012

2013 YTD

Global Education Fundraising Volume by Sector Since 2012

4.9% 4.6% 2.9% 2.0%

6.0%

8.4%

11.3%

59.8%

Global Education Fundraising Volume by Geography Since 2007

US

 The US is the most active global fundraising market for e-Learning, accounting for 59.7% of total deals, with high-growth markets, India and China, trailing with 11.3% and 8.4% respectively(2)

Australia

…With Europe accounting for 6.0% of global e-Learning fundraising since 2007 and the UK accounting for 2.0%

IBIS Capital | A European Perspective on e-Learning

Management Systems 17% UK

Distribution 74%

Content 9%

 As consumer-faced e-Learning companies are on the rise, the distribution sector has been attracting an increasing volume of capital  The two largest fundraisings in 2013 were lynda.com (Accel, MeriTech, Spectrum investing $103m) and Open English (Insight, Redpoint, TCV investing $65m) − The lynda.com investment was the first major round for the company since being founded in 1995 − The investment represents the largest single US venture financing round on record for an online education company − Open English previously raised a $43m round in May 2012 from Flybridge, Insight, Kaszek and Redpoint bringing it’s total capital raised to $120m

Source: Capital IQ as at 9 Jun 2013 (1) Refers to global equity investments where transaction values are disclosed and are above $1m (2) Refers to transactions since 2007 (3) Refers to transactions where the target was headquartered in Europe

14


US M&A and Investment More Active than Europe e-Learning’s Most Active Corporate Acquirers & Investors By Number of Acquisitions and Investments (2010-2013)(1) Company

Headquarters

Key Points

Acquirer / Investor (Public / Private)

# of Acquisitions

# of Investments

Total

Public

12

3

15

Private

7

0

7

Private

4

3

7

Public

1

4

5

Public

2

3

5

Private

4

0

4

Private

3

0

3

Public

2

1

3

Public

3

0

3

Public

2

0

2

Top Global e-Learning Fundraisings in 2012 (US vs. Europe) (2)

$43m

1

$6.5m

2

$32m

2

$5.1m

3

$31m

3

$5.0m

4

$26m

4

$5.0m

5

$25m

5

$4.6m

1

IBIS Capital | A European Perspective on e-Learning

 Pearson has been the most acquisitive eLearning buyer with recent acquisitions of Learning Catalytics, Exam Design, IndiaCan Education and TutorVista  Private equity-backed Blackboard (Providence Equity) has been the most acquisitive private company in the sector. The most recent acquisition (Mar 2012) were Moodlerooms and Netspot, two providers of open source online learning technology  Macmillan is primarily active through its two digital venture arms - Macmillan New Ventures and Macmillan Digital Education  The size of investments in US companies for the top 5 deals in 2012 were on average 8x larger than those in Europe, despite Europe being a larger market

Source: CB Insights as at 16 May 2013 (1) Refers to acquisitions and equity investments in private e-Learning companies. The list excludes financial investors (2) Based in Florida despite headquarters in Panama

15


Recent e-Learning Fundraising Across Europe & the US Europe Date of Last Round

Capital Raised ($m)

Jun-13

Total Capital Raised To Date ($m)

Investors

Company Overview

Year Founded

35.0

Bill Gates, Benchmark Capital, Dragoneer Investment Group, Tenaya Capital, The Founders Fund, Thrive Capital

Offers a social, crowdsourced platform designed for researchers

2008

35.0

Mar-13

10.0

IBB Beteiligungsgesellschaft, Kizoo Technology Capital, Nokia Growth Partners, Reed Elsevier Ventures, VC Fonds Technologie Berlin

Creates online and mobile-based language learning courses

2007

10.8

Dec-12

5.0

Beringea

Provides open source and agile training programmes and events for software professionals

2003

5.0

Nov-12

5.1

Undisclosed

Online community that teaches people languages through crowdsourcing

2010

6.3

Oct-12

4.6

PROfounders Capital

Free online community for learning languages

2008

9.4

Investors

Company Overview

Year Founded

Target

Domicile

United States Date of Last Round

Capital Raised ($m)

Jun-13

30.0

Bessemer Venture Partners, EPIC Ventures, OpenView Venture Partners, TomorrowVentures

Best known for its Canvas learning management platform, which was launched in 2011 and now counts over 6 million 2008 users in over 425 K-12 and HE(1) institutions

50.0

May-13

2.0

Capricorn Investment Group, Expansion VC, Learn Capital

Learning marketplace that lets students connect with experts in one-on-one video chats

2012

2.5

May-13

6.5

Mainsail Partners

Cloud-based talent management software specifically developed for K-12 educational organisations

2001

6.5

May-13

4.0

American Public Education (NasdaqGS:APEI)

Accredited military transition college

2011

6.5

May-13

7.5

Redpoint Ventures, Bill Campbell (Former Marketplace that aims to help students and teachers Chairman of Apple), Jesse Rogers connect around a range of subjects

2011

7.5

Target

IBIS Capital | A European Perspective on e-Learning

Source: Capital IQ, TechCrunch, press releases, as at 9 Jun 2013 (1) Refers to higher education

Domicile

Total Capital Raised To Date ($m)

16


Global e-Learning M&A Activity Total Deal Value and Volume of Global and European e-Learning M&A Transactions Since 2007 and above $20m(1) ($m)

(2)

40%

NR

17%

20%

(2)

24%

NR

33%

14,000 12,000

25 11,482

10,000

17 15

8,000 6,000

6

1,841

0 2007

1,015 1

2008

3,026

546

6 287

389

2010

2011

Strategic Acquirer % of Global Volume

 Fragmented market has meant a range of smaller acquisitions from private equity backed companies:

100% (2) NR

5

248 130

− − − −

PlaySay / Babbel lynda.com / video2brain Desire2learn / Wiggio + Degree Compass Echo360 / ThinkBinder + LectureTools

67% 17%

2012

2013 YTD

Eur Deal Value ($m) Europe % of Global Volume

Volume (Global)

50% 40%

 Limited European M&A opportunities above $20m

0 2009

Global e-Learning Deal Value ($m)

% of Total Deal Value: North America Europe

15

 North America continues to dominate activity by value and number of deals above $20m

10

290

% of Total Volume: North America Europe

8,039

10

4,000 2,000

20

20

9,955

Key Points

67% 20%

47% 24%

95% (2) NR

Global e-Learning M&A Volume by Sector Since 2007 17% 33%

83% 16%

100%(2) NR

32% 54%

78% 10%

87% 4%

99% (2) NR

16% 52%

40%

100%

83%

47%

71%

70%

83%

IBIS Capital | A European Perspective on e-Learning

Management Systems 36% Distribution 49%

Source: Press releases, SEC filings, Capital IQ as at 9 Jun 2013 (1) European data refers to M&A transactions whereby the target’s headquarters were in Europe (2) Refers to not relevant as there is no data

Content 15%

17


2013: Select Global M&A Transactions 3 of the 21 Private M&A Transactions in 2013 Involved European Targets(1) Offer Date

Target

Acquirer

Target / Buyer HQ

Company Overview

Target Metrics

Deal Rationale

Transaction Value ($m)

Apr-13

ThinkBinder

Echo360

US / US

Social collaboration tool that enables peer-topeer functionality within centralized online study groups

"Tens of thousands of users"

Adds online collaboration tools to its distance learning platform

Undisclosed

Apr-13

Tribal Nova

Houghton Mifflin Harcourt

Canada / US

Develops and publishes educational programs, games and apps for pre-K audiences

NA

Increases adaptive digital content for the pre-K market

Undisclosed

Apr-13

Mendeley

Reed Elsevier

UK / Netherlands

Cloud-based research management and social collaboration platform

 2.3m users  Over 340m documents  206k research groups

 Expands researcher workflow offerings and builds greater engagement with its users  Allows for content to be collaborative and open

c. $69-100m

Apr-13

Livemocha

Rosetta Stone

US / US

Online service for language-learning communities

Over 16m members from c. 196 countries

Allows Rosetta Stone to offer its language packages online via Livemocha’s cloud platform

c. $8.5m

Mar-13

PlaySay

Babbel

US / Germany

Develops language learning mobile software products and applications

 Entry into US market 100k users within a month of  Applies PlaySay’s learnings around gameplay to launching its iOS-based Babbel's wider portfolio of services service in May 2012  Strengthens mobile-based offering

Mar-13

Lore

Noodle Education

US / US

Socially integrated LMS focused on higher education

Used by professors on more than 600 campuses

 Technology acquisition  Used to build another business model around Noodle Launch

Undisclosed

Mar-13

Wiggio

Desire2Learn

US / Canada

Online free toolkit that enables users to work in  1.1m users  100k collaboration groups groups

 Expand presence in US higher education market  Opens up office in Boston, a large hub for e-Learning

Undisclosed

Mar-13

Root-1

Edmodo

US / US

Developed OpenMinds, a free platform that allows teachers to instantly customize education apps

5 apps

 "acqui-hire" plus adds 5 apps  Supports Edmodo’s goal of being a distribution channel for classroom content

Undisclosed

Feb-13

TutorVista

Pearson

India / UK

Online tutoring and test preparation provider

35 schools with intention to grow to 100 within a year

 Allows entry into fast-growing Indian education sector  Supports Pearson's inorganic expansion plan within India

$25.7m

Feb-13

video2brain

lynda.com

Austria / US

Online video training company offering courses  1,700 video courses  400k subscribers in English, German, French and Spanish

 Adds multi-lingual educational content  Putting cash to work post $103m fundraising

Undisclosed

Jan-13

Degree Compass

Desire2Learn

US / Canada

Course recommendation engine that helps students complete their degrees on time

Used by 3 universities

 Broadens suite of learning, e-portfolio and analytics tools  Growing demand for data-driven tools

Undisclosed

Jan-13

Area9

McGraw-Hill Education

Provides software technologies that help Denmark / US content providers to develop personalized educational and training solutions

LearnSmart: Over 300 titles, 1.5m students and has delivered over 1bn questions to students

 Strengthens McGraw-Hill Education's leadership in adaptive learning  Technology behind McGraw-Hill’s LearnSmart and SmartBook series

Undisclosed

Jan-13

Tutor.com

IAC

US / US

 c. 3k tutors  c. 8.8 million online tutoring sessions to-date

 Large untapped growth potential

c. $40m (3)

Online tutoring and homework help services

IBIS Capital | A European Perspective on e-Learning

Source: EdSurge, Capital IQ, TechCrunch, press releases as at 9 Jun 2013 (1) The highlighted deals above are select examples of the 21 private M&A transactions taking place in 2013 (2) According to TechCrunch (3) According to The Next Web

(2)

(2)

Undisclosed

18


Venture Capital Funding: Europe vs. US

Total Venture Capital Deal Value By Year 27.2

($bn)

38.1

40 Difference between US & Eur. VC Funding ($bn)

11.6

9.1

Europe

9.6

20.9

10.9

9.3

10

22.4

18.6 9.5

7.2

4.9

22.3

20.5

30.8

30.5

14.0

18.3

23.3

22.4

US

30 20

Key Points

12.8

28.4

26.6 22.9 21.7

19.7

26.5

23.3

15.8 8.5

10.1 5.7

5.0

5.1

4.1 2012

0 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Europe (yoy growth%)

-40%

-15%

2%

35%

24%

37%

-61%

19%

-43%

-13%

3%

-20%

US (yoy growth%)

-62%

-45%

-11%

20%

3%

16%

16%

-1%

-35%

18%

22%

-7%

Breakdown of Venture Capital Deal Volume by Investment Stage (1980-2011) By % of Total Volume 60% 50%

Europe

40%

39%

33%

25%

30% 20%

56%

US

15% 17%

10%

1%

3%

3%

4%

0% Startup

Product Production in Generating Development Beta Test Revenue

0% 0.2%

Profitable

Restart

0%

4%

 Early stage investments are more common in the US, whereas European VCs invest more in revenue generating and profitable businesses − Revenue generating and profitable businesses represent 59% of all firsttime investments in Europe and 43% in the US (1)  The amounts invested in venture capital and the associated valuations are higher in the US than in Europe − Across all stages, average amount invested in the US is $5.7m and $3.1m in Europe (1) − Across all stages, average postmoney valuation in the US is $18m and $11m in Europe (1)

NA

Avg. 1st VC Investment Size ($m) (2)

2.4/2.8

3.3/6.2

3.1/4.3

3.1/6.5

4.0/10.1

1.4/3.8

NA/3.3

Avg. Valuation @ 1st VC Investment ($m) (2)

7.1/7.8

9.1/15.3

10.0/13.3

12.1/23.2

26.9/36.7

5.4/6.9

NA/12.8

IBIS Capital | A European Perspective on e-Learning

 The venture market in the US is significantly larger than in Europe; $26.5bn in the US in 2012 compared to $4.1bn in Europe

Source: BVCA – European Venture Capital: Myths and Facts (1) Refers to deals between 1980-2011 (2) In 2005 equivalent USD

19


European e-Learning: Identifying the Key Trends

Proof: Precedent Fundraisings & Acquisitions (1)

Trend

1

2

3

4

“Tower of Babel” ELT and Language Training

Online Tutoring

m-Learning & Serious Gaming

Social Collaboration + Content Management

Target

Buyer / Investor (2)

Overview (Target)

Babbel

Reed Elsevier

Online learning system for foreign languages

LinguaLeo

Runa Capital

Cloud-based language tutorial service with focus on teaching English to Russian speakers

Busuu

ProFounders

Language learning community

tolingo

Acton Capital

Online translation platform

Memrise

Undisclosed

Supplemental flashcard game for language learning

SofaTutor

Acton Capital

Online tutoring platform

Tutoria

Macmillan

Online solution for sourcing offline private tutoring and accessing trusted pedagogic advice in Germany

Maths Doctor

Macmillan

Mathematics tuition service, offering home visits and online instruction

HeyTutor

Macmillan

Online tutoring platform

Quipper

Benesse

MangaHigh

PROfounders, Revolution Learning

Moshi Monsters

Accel

MindShapes

Index, Richmond

Babbel

Reed Elsevier

Online learning system for foreign languages

Mendeley

Reed Elseiver

Cloud-based research management and social collaboration platform

ResearchGate

Benchmark, Tenaya, Accel, Bill Gates

Leading social network for scientists

IBIS Capital | A European Perspective on e-Learning

Through a Q&A format, helps people learn things in a game-like feel Provides middle and high school-level math education using casual games Online game where users can adopt their own pet monster and go on adventures together Develops a series of educational apps targeted at children ages 2 -12

Select European Companies

Other Geographies (3)      

Livemocha / Rosetta Stone EnglishUp / Macmillan GlobalEnglish / Pearson Open English / Insight VP MindSnacks / Sequoia PlaySay / Babbel

   

TutorVista / Pearson tutor.com / IAC Tutorspree / Sequoia OnlineTutorSolutions.com / Credo

Fingerprint Digital / Corus Entertainment, Reed Elsevier Ventures Duck Duck Moose / Sequoia, LVP Kidaptive / Menlo Ventures LocoMotive Labs / NewSchools

  

    

Scoot & Doodle / Pearson Grockit / Benchmark, Discovery Piazza / BVP Sokikom / Undisclosed Lore / Noodle

Source: Company websites, press releases, TechCrunch (1) Refers to historical fundraisings and acquisitions of targets headquartered in Europe (2) Where relevant it only includes select investors (3) Refers to transactions whereby the target is domiciled outside of Europe and only includes select investors

20


IBIS Capital | A European Perspective on e-Learning

Active European e-Learning Corporates

IBIS Capital | A European Perspective on e-Learning


e-Learning: Active European Corporates Pearson

 From 2002-2012, Pearson has spent £3.4bn on education acquisitions Offer Date

Target

Mar-13

Acquisition / Investment

40% 34% 37% 29% 31%

2012 Revenue by Geography (%)

50%

Asia

RoW

6%

45%

 Apr-13: Acquires Learning Catalytics  Mar-13: Invests in Scoot & Doodle  Mar-13: Pearson VUE acquires Exam Design

 Feb-13: Announces launch of EdTech incubator, Pearson Catalyst  Jan-13: Announces plans to exit UK vocational market

North America 06'

07'

08'

09'

10'

11'

Europe

12'

2012 Education Revenue

2012 Revenue by Segment (%)

by Segment (%) 8.4% 34.0%

NA Education

(1)

Int'l Education

£4.6bn (2)

7%

 Since 2007, Pearson has acquired 18 companies; 14 of them were acquired after 2010 and all were digital-based / eLearning businesses

 Apr-12: Buys-out Educomp's shareholding in IndiaCan

(% Sales)

17%

 North American Education is Pearson’s largest business, with 2012 revenue of £2.7bn and operating profit of £536m

Digital & Services Revenue

59%

 Operates through 3 business segments: Education, FT Group and Penguin

 May-13: Camfed and Pearson launch partnership for girls' education

76%

 Headquartered in London (UK), founded in 1894 and employs c. 32,300 personnel

Financial Summary

13%

Relevant News

22%

Company Snapshot

Professional

57.6%

Education

Penguin

FT Group

Target HQ

Founded

Company Overview

Sector

Deal Rationale

Transaction Value ($m)

Scoot & Doodle Investment

US

2012

Operates a real time and social creativity platform

Social Collaboration

Supports Pearson’s focus on social collaboration within the education market

$2.5m

Apr-13

Learning Catalytics

Acquisition

US

2011

Cloud-based learning analytics and assessment system

Student Response System (Analytics & Assessment)

Supports “flipped classrooms” and digital learning analytics

Undisclosed (3)

Apr-13

IndiaCan Education

Acquisition

India

2008

Provides vocational education and training for educating and employing the youth in India

Vocational Training

Together with the TutorVista buyout, it confirms Pearson's inorganic expansion plan within India

$22.0m

Mar-13

Exam Design

Acquisition

US

2007

Provider of examination development software used in high-stakes testing

Testing (Assessment)

Pearson VUE publishes exams created through ExamDeveloper

Undisclosed

Feb-13

TutorVista

Acquisition

India

2005

Online tutoring and test preparation provider

Tutoring

Supports Pearson's acquisition expansion plan within India

$25.7m

Oct-12

Embanet Compass

Acquisition

US

1993

Provides technology-enabled services to traditional non-profit postsecondary educational institutions

Online Learning (Higher Education)

Caters to fast-growing demand for online learning in higher education

$650.0m

May-12

Global English

Acquisition

US

1997

Business English software for global enterprises

English Language Training (ELT)

Supports two major themes of Pearson: ELT and a strong focus on emerging markets

$90.0m

Oct-11

Knewton

Investment

US

2008

Adaptive learning platform that customizes educational content based on student needs

Adaptive Learning

Pearson uses Knewton’s software to power its online reading, writing and math courses

$33.0m

IBIS Capital | A European Perspective on e-Learning

Source: Pearson 2012 annual report, company filings, press releases, TechCrunch (1) Refers to North America (2) Refers to 2012 total revenue (3) Rumoured to be well above $10m

22


e-Learning: Active European Corporates Reed Elsevier Financial Summary

 M&A is generally done through the operating group and investments are held through Reed Elsevier Ventures  Reed Elsevier Ventures key focus areas; Healthcare IT, large scale data / analytics, media

North America RoW Netherlands

7% 3%

52%

RoE UK

11%

34%

2012 Revenue by Segment (%) 14%

15% 22%

15% 21% 64%

63%

27%

14% 25% 61%

33% 17%

14% 59%

12%

20%

50%

13%

 Currently operates across 4 professional segments: (1) Scientific, Technical & Medical (2) Risk Solutions & Business Information (3) Legal (4) Exhibitions

37%

51%

40%

60%

48%

52%

 Reed wanted to focus on the growing digital opportunities in its Scientific & Medical, Legal and Business divisions

37%

80%

35%

 Reed’s education business, Harcourt Education, was largely acquired in July 2001 as part of its acquisition of Harcourt General. In July 2007, Reed sold its education business for $5bn to Houghton Mifflin Company

15%

100%

 Primary listing on the LSE with a market cap of c. $13.7bn (1)

19%

2012 Revenue by Geography (%) 19%

Revenue by Format (%)

15%

 Headquartered in London (UK), founded in 1844 and employs c. 30.4k personnel throughout 70+ countries

26%

Company Snapshot

0%

Digital

F2F

(2)

Print

Scientific, Technical & Medical Legal Risk Solutions Exhibitions Business Information

Recent e-Learning M&A and Fundraising Activity

Apr 2013

Mar 2013

Sep 2011

 Elsevier, Reed Elsevier’s scientific, technical and medical information division, acquired 100% of Mendeley from Access Industries, Ambient Sound, Andurance Ventures and Passion Capital

 Reed Elsevier’s corporate venture arm, Reed Elsevier Ventures, lead a Series B investment of $10m in Babbel.com

 Reed Elsevier Ventures participated in a $1.4m seed round in Fingerprint Digital

 Based in the UK, Mendeley is a cloud-based research management and social collaboration platform

 Other investors included IBB Beteiligungsgesellschaft, Kizoo Technology Capital, Nokia Growth Partners and VC Fonds Technologie Berlin

 Other investors included K2 Media, THQ and Suffolk Ventures

 Mendeley claims 2.3m users, over 340m documents and c. 206k research groups  Deal rationale: (1) allows for research content to be collaborative and open (2) expands researcher workflow offerings and builds greater engagement with its users

 Based in Germany, Babbel creates online and mobile-based language learning courses  Babbel employs 18o personnel and claims c. 15m users and 8m downloads

 Fingerprint Digital creates mobile learning apps for kids (3-8 years old) and grown ups (the childrens’ parents)

 Transaction value was rumoured to be between $69-100m (3)

IBIS Capital | A European Perspective on e-Learning

Source: Reed Elsevier 2012 annual report, company filings, TechCrunch (1) As at 12-Jun-13 (2) Refers to face-to-face (3) As per TechCrunch

23


e-Learning: Active European Corporates Holtzbrinck Publishing Group Company Snapshot

Holtzbrinck's Investment Vehicles

 Headquartered in Stuttgart (Germany), founded in 1971 and employs c. 13.8 k employees

Strong focus on e-Learning

 Georg von Holtzbrinck is a family-owned publishing group

Location

Year Founded

Focus

# of Portfolio Companies

NYC

2012

Stage: Late stage deals Sector: US HE

5

London

2012

Stage: Venture deals Sector: Global consumer education with focus on EM

8

Munich

2000

Internet (B2B & B2C)

19

Munich

2000

Internet (B2B & B2C)

55

 Holtzbrinck Publishing Group operates through three global divisions: −

Global Trade (Consumer books)

Global Science & Education

Holtzbrinck Digital Information & Services

 Takes advantage of e-Learning opportunities primarily through the following entities: Macmillan New Ventures (MNV), Macmillan Digital Education and Macmillan Education  In Jan and Jul 2012, Macmillan launched MNV and Macmillan Digital Education, respectively to both serve as corporate venture arms −

MNV is a $100m venture fund and is slated to add 10-15 companies to its portfolio by 2015

Select Holtzbrinck e-Learning Investments & Acquisitions

Relevant News

Digital Education

Late Nite Labs

Produces virtual online simulations for science education

Veduca

Online video platform that aggregates and curates publicly available educational content

PrepU

Focused on adaptive assessment in HE and advanced placement courses (2)

easyaula

Online educational marketplace that makes it easy for people to learn anything from anyone

EBI

Empowers college educators to positively impact student retention, success, learning and satisfaction

tutoria

Tutoring service for individual tutoring at students’ homes

iClicker

Enables active learning and formative assessment in classrooms

Maths Doctor

Provides live one-to-one home tutoring via the internet, plus worksheets and tutoring videos

 Feb:13: Macmillan Education announces plans to expand within the UAE

Sapling Learning

Provides interactive homework and instruction materials covering HE and (2) high school topics

English Up

Cloud-based English learning platform for busy adults and young professionals

 Feb-13: Macmillan Digital Education invests in Brazilian startups, Veduca and Easyaula

Cramlr

Provides tools and learning algorithms for teachers in order to create effective online courses

 Nov-12: MNV acquires Sapling Learning

IBIS Capital | A European Perspective on e-Learning

Macmillan Education

 Jun-13: Macmillan Science & Education launches Chinese head office in Shanghai

Macmillan New Ventures

bettermarks

Online math learning system

 May-13: Digital Science introduces Projects for scientific researchers – a new technology tool to organise their data

 May-13: Macmillan Education teams up with Knewton to bring adaptive learning beyond K-12 and HE  Mar-13: MNV acquires Late Nite Labs

Source: Company websites, TechCrunch (1) 1971 refers to the year that Verlagsgruppe Georg von Holtzbrinck GmbH holding company was founded. In 1948, Georg von Holtzbrinck launched Die Stuttgarter Hausbuecherei together with a small publishing list

24


e-Learning: Active European Corporates Bertelsmann Company Snapshot

Company Structure

 Headquartered in Gutersloh (Germany), founded in 1835 and employs c. 104.3k personnel

Overview #1 European broadcaster

 Engages in the production, servicing, and marketing of media worldwide  Core divisions encompass television, book publishing, magazine publishing and services in more than 50 countries

World's largest book-publishing group

 Berteslmann takes advantage of e-Learning opportunities primarily through the following entities: −

Bertelsmann Digital Media Investments (BDMI): $63m corporate venture fund launched in 2006 and based out of NYC

Bertelsmann AG: Parent company

University Ventures: $100m fund launched in Jan 2012, of which Bertelsmann committed $50m. The other major investor is the University of Texas Investment Management Company. The fund is focused on global higher education and is based out of NYC

Provides outsourcing services

Select Bertelsmann e-Learning Investments BDMI (Current & Exited Portfolio Companies)

Bertelsmann AG

Europe's biggest magazine publisher

University Ventures

Produces magazines, catalogues, brochures, books and calendars

Relevant News  Jan-13: Bertelsmann announces $4m investment in WizIQ and merges authorSTREAM into WizIQ

Flatworld Knowledge

Largest publisher of open college textbooks for students worldwide

WizIQ

Offers tools to help teachers around the world run virtual classrooms

Synergis Education

Partners with non-profit, traditional colleges and universities to help expand their student base to include the “21st Century Student”

 Dec-12: University Ventures announces the launch of UV Labs, a company that will partner with schools to build new online learning products

Learnship Interactive

High quality foreign language training via the Internet

author STREAM

Online platform for PowerPoint users around the world to share and collaborate on presentations

University Now

Network of online and on-campus schools devoted to making postsecondary education affordable and accessible

 Oct-12: BDMI announces investment in Learnship Interactive

Provides e-books to a wide range of sectors

Ameritas College

Offers degree programs targeting Hispanic Americans

Standardized test preparation and admissions consulting company

UV Labs

Self publishing and print ondemand

EDEX

Ebrary

(1)

The Princeton (1) Review

Xlibris

(1)

IBIS Capital | A European Perspective on e-Learning

Works with postsecondary institutions to build products to solve issues of accessibility, affordability, quality and accountability facing HE Leading higher education company in the EU (portfolio includes University of Nicosia, Intercollege, Global Training)

Source: Company websites, press releases, TechCrunch (1) Refers to exited portfolio companies

 Oct-12: Pearson and Bertelsmann announce an agreement to create the world’s leading consumer publishing organization by combining Penguin and Random House (Bertelsmann will own 53% and Pearson will own 47%)  May-12: University Ventures announces investment in Ameritas College

25


e-Learning: Active European Corporates Sanoma Financial Summary

 In Jun 2012, Malmberg acquired Bureau ICE, a testing and examinations company

63%

News

Learning Other

Key e-Learning Developments in 2012

 In May 2010, Sanoma Learning acquired the remaining 50% of YDP. Sanoma originally acquired a stake in YDP in 1999 and increased its ownership in 2004

 Centralised learning platform development

 Sanoma Pro, Malmberg and Nowa Era accounted for c. 80% of Sanoma Learning’s total revenue in 2012

 Mobile learning content and tools introduced

# of Employees

Year of Group Inclusion

Company

Overview

HQ

Sanoma Pro

Provider of learning and competence development solutions

90m

211

1999

Finland

Malmberg

Educational publisher

90m

321

2004

Holland

Nowa Era

Educational publisher

70m

290

1999

Poland

122

2004

Belgium

65

2011

Sweden

Sanoma Utbildning

Primary and secondary textbook 30m publisher One of Sweden’s leading 25m educational publishers

NTK-Perfekt

Textbook publisher

20m

213

2006

Hungary

Young Digital Planet

Educational and language digital publisher

15m

290

1999

Poland

VAN IN

IBIS Capital | A European Perspective on e-Learning

Belgium

Other EU

RoW

2012 Revenue by Format (%)

 Piloting online tutoring  Digital learning methods grew double-digit

Overview of Sanoma’s Education Businesses Revenue (€m) (3)

Holland & Finland

4%

 Sanoma Learning operates in 6 European countries through 7 companies: Van In, Sanoma Pro, NTK-Perfekt, Malmberg, Young Digital Planet (YDP), Nowa Era, and Sanoma Utbildning

Media

11%

2012 Learning Revenue

4%

18% €312m

 Sanoma Learning, Sanoma’s education business, employs c. 1.8k personnel and generated €312.4m of revenue in 2012

13%

13% 6%

 Sanoma reports through 3 primary business units: Media, News and Learning (2)

2012 Revenue by Geography (%) 11%

2012 Revenue by Segment (%)

Print

Hybrid

30%

 Primary listing on the Helsinki Stock Exchange with a market cap of c. $1.3bn (1)

74%

 Headquartered in Helsinki (Finland), founded in 1999 and employs c. 13.7k personnel

53%

Company Snapshot

Pure Digital

Services

Relevant News

3.5m students are learning from Nowa Era’s textbooks

94% of Hungarian schools are using NTK methods

35k # of users of Sanoma Pro Teachers’ Online Service

50% of all pupils in primary schools use a textbook in English from Sanoma Utbildning

95% of Finnish schools use Sanoma Pro’s digital services

 23-Apr-13: Malmberg announces launch of new Arithmetic Test app  22-Apr-13: Sanoma Pro Online is renamed to Fokus and announces a new focus on team leading and supervising  16-Apr-13: Sanoma Pro introduces a new e-bookshelf service containing professionals books focused on the corporate market  12-Apr-13: NTK announces development of interactive ebook player  11-Apr-13: Sanoma Pro announces introduction of digital textbooks for upper secondary schools  22-Jan-13: Young Digital Planet announces launch of Nicole and Tommy, a course for children offered in 5 languages

Source: Annual reports, press releases, company website, Capital IQ (1) As at 12-Jun-13 (2) Excludes “other and eliminations”, which represented 6% of 2012 revenue (3) Refers to approximate revenue figures as per Sanoma Learning’s capital market day presentation dated 14-Jun-13

26


e-Learning: Active European Corporates Grupo Planeta & Lagardère Company Snapshot

Company Snapshot

 Headquartered in Barcleona (Spain) and founded in 1949

 Grupo Planeta is a leading family-owned Spanish publishing and communication group that offers a broad range of services

 Headquartered in Paris (France), restructured and renamed to Lagardère SCA in 1996 and employs c. 22.5k personnel  Primary listing on the Paris Euronext with a market cap of c. $3.5bn (1)

 Areas of activity include publishing, major works, bookstores and reading clubs, collectibles, media, cinema and audio-visual production, training and professional and internet

 Lagardère is a global media group that operates in c. 30 countries through four business units: Lagardère Publishing (Book and e-Publishing), Lagardère Active, Lagardère Services and Lagardère Unlimited

 Grupo Planeta offers a wide range of specialist educational & training courses from language learning to university studies and MBAs

Education operates within the Lagardère Publishing business, which generated €2.0bn of sales (28% of total group revenue) in 2012, of which education represented 18%

 The company’s educational & training courses are focused on the needs of the Spanish labour market in addition to incorporating new forms of distribution models via technology (e.g. – e-Learning, virtual campuses, video)

Lagardère is the world’s 2nd ranking publisher and the #1 book distributer in France

e-Books contribution to 2012 publishing revenue: Lagardère Publishing (8%), US Publishing (23%), UK Publishing (23%), France Publishing (2%)

Financial Summary & Overview of Education Brands

Overview Online educational tool that enriches classrooms with audiovisual and interactive tools and contents

Digital?

Lagardère’s Select Education Brands

Company

CEAC

Study centres in vocational training courses

Deusto Formacion

Training for technicians and middle managers

Deusto Salud

Specialist training for positions in the healthcare jobs market

✓ ✓ ✓

EAE Business School

Undergraduate and graduate business school with two Spanish campuses and international campuses

English Today

Online English learning platform

Home English

Personalised language teaching

Laudeo Oposiciones

Training programme for public sector entrance examinations First Spanish-language online business school

✓ ✓  ✓

Corporate training provider

Superpadres

Provides teaching projects to accompany parents during the process of educating their children

IBIS Capital | A European Perspective on e-Learning

Publishes works for classroom and home use

France

Leading educational publishers in France offering 2,500 different book titles Armand Leading HE publisher in the fields Collin of human and social sciences Publishes books and teaching tools Hatier tailored to the needs of teachers in International Africa and French overseas territories Publishes for schools, vocational, Hodder higher education and self-learning Education markets Dynamic Online teaching and learning Learning resource s Philip Allan Publishes a wide range of Updates educational resources Hatier

France

15% 18%

France

UK-AUS-NZ UK-AUS-NZ

General Literature Other

4%

€374m 2012 Education Revenue

France

Education 40% Illustrated Books Reference

23%

2012 Publishing Revenue by Geography (%)

UK-AUS-NZ

Anaya

Textbook publisher

Spain-LatAm

Hachette Antoine

Textbook publisher

Arab Speaking Countries

Source: Annual reports, press releases, company website, Capital IQ (1) As at 12-Jun-13

Activity (%)

France

RoW

US

UK

8%

Reference journals for the business world

Market

17%

Online Business School Planeta Formacion Corpotiva Revistas Harvard Deusto

Hachette Education

Overview

20%

Aula Planeta

2012 Publishing Revenue by

23%

Company

33%

Overview of Training & Professional Businesses

Spain

27


IBIS Capital | A European Perspective on e-Learning

The European Education Market

IBIS Capital | A European Perspective on e-Learning


Distribution of Companies Breakdown of European e-Learning Companies by Country in 2012 Key Points 1,000 750

 Kompass International found c.3,000 European companies in the e-Learning sector

671 532

98

92

92

88

84

76

64

54

Norway

Spain

Belgium

Romania

Finland

Slovakia

104

Other

109

Denmark

Poland

Germany

UK

France

127

Italy

303

250

Czech Republic

378

Sweden

500

Breakdown of European e-Learning Companies by Sector in 2012 1,000

908

862

750

430

500 321

350

250

8 Software for education and training

Software

Consultants

Training courses

IBIS Capital | A European Perspective on e-Learning

Language courses

Web-based training

 Poland’s government is investing heavily with the aid of EU structural funds into e-Learning and learning technologies for education  The UK market has approximately 260 e-Learning software development companies, more than double France (2.5x), the next largest market in Europe  In France, 1% of any company’s salary bill must be spent on training and development or it is levied as a tax on employers partially explaining the large amount of corporate training companies in France  Despite being the largest market in Europe, the number of UK e-Learning software development companies have fallen by 11% p.a. for the last 2 years, in part due to consolidation within the industry

Source: Kompass International Note: The figures represent the companies who have registered with Kompass International, and should not be taken as a true reflection of market size and activity. Nevertheless it is a good indication of activity within markets in the absence of other comparable data sets

29


Learning Populations Across Europe Projected 2015 Student Population Across Different Age Groups Key Points (m) 20.0

5-14

15-20

20-29

17.9 13.9 13.1

12.1 9.4

10.0

7.5 6.9 3.5

2.3 2.0 2.0 1.9 1.8 1.7 1.5 1.4 1.2 1.1 1.1 1.0 0.9 0.4 0.2 0.1

Iceland

Estonia

Slovenia

Slovak Republic

Ireland

Norway

Finland

Denmark

Switzerland

Austria

Czech Republic

Hungary

Portugal

Sweden

Greece

Belgium

Netherlands

Poland

Spain

Italy

UK

France

Germany

Turkey

0.0

2012 Employed Working Population for Persons in between 20-64 Years Old

0.4

0.2

0.2

0.2

Malta

Iceland

0.6 Estonia

Cyprus

0.9 Latvia

Luxembourg

1.2

0.9

1.3 Croatia

Slovenia

1.8 Ireland

Lithuania

2.3

2.3

Finland

2.4 Norway

Slovakia

2.9

3.6 Greece

2.5

3.9 Hungary

Bulgaria

3.9 Austria

Denmark

4.2

4.1

Portugal

4.4 Sweden

Switzerland

4.5 Belgium

7.7

4.8

Netherlands

Czech Republic

8.8 Romania

15.3 Poland

22.3

16.7 Spain

23.3

25.2

20.0

 The working population in Europe is also significantly larger than that of the US, with approximately 239m workers in Europe as compared to 155m in the US  The key markets can be seen by the population sizes, however students and workforce numbers do not directly correlate

38.4 27.7

(m) 40.0

 The total enrolled student population in Europe is approximately 111m as compared to US with approximately 77m enrolled students. European governments (EU 27) spent approximately Euro 674bn in 2011, equivalent to approximately 5.3% of GDP. Denmark and Iceland allocating the largest share of GDP (7.8%).

 European market has a significant addressable market for e-Learning with an already sizeable commitment to education

Italy

Turkey

France

UK

Germany

0.0

IBIS Capital | A European Perspective on e-Learning

Source: OECD, Eurostat

30


The European e-Learning Landscape P = Pupils T = Teachers S = Schools

European e-Learning

The numbers within countries indicate the number of e-Learning companies in that country

P: 7m

2012 total expenditure

T: 265k S: 27k

Academic

64

2011 total expenditure

92 127

P: 44m

92

T: 1.3m

P: 13m

S: 159k

532

303 88

109

47m

T: 2.7m

88

T: 331k S: 65k

378 54

76

671

P:

$7.6bn

$966bn

Number of pupils

111m

Number of teachers

4.6m

Number of schools

417,144

Corporate

2011 total expenditure

$71bn

Working population

239m

98

S: 166k

IBIS Capital | A European Perspective on e-Learning

Source: McKinsey, OECD, Eurostat, Eurypedia, National Statistic Offices, Ministry of Educations, Kompass International Note: The figures represent the companies who have registered with Kompass International, and should not be taken as a true reflection of market size and activity. Nevertheless it is a good indication of activity within markets in the absence of other comparable data sets

31


Population Growth Rates & Internet Penetration Student Population 2010A-2020P CAGR’s 3.0%

5-14

2.2%

2.0% 1.0%

1.3% 0.6%

0.6%

0.3% 0.3%

20-29

0.4% 0.3%

0.1%

0.0%

0.7%

0.5%

0.1%

0.8%

0.4% 0.5% 0.2% 0.2%

0.3%

0.1%

1.2%

1.1%

0.1%

(1.0%) (2.0%)

UK

Turkey

Switzerland

Sweden

Spain

Slovenia

Slovak Republic

Portugal

Poland

Norway

Netherlands

Luxembourg

Italy

Ireland

Iceland

Hungary

Greece

Germany

France

Finland

Estonia

Denmark

Czech Republic

Belgium

Austria

(4.0%)

Population and Internet Penetration by Region

85%

97%

91% 69%

58%

78%

72%

72%

71%

65%

97%

89%

77%

79%

90%

82% 51%

80%

93% 73%

65%

81% 53%

55%

44%

1

0

0

0

Iceland

Liechtenstein

1 Cyprus

Malta

1 Estonia

Source: OECD, Internet World Statistics

Luxembourg

2

4 Lithuania

2

4 Croatia

Latvia

5 Norway

Slovenia

5

5

5 Slovakia

Ireland

6 Denmark

IBIS Capital | A European Perspective on e-Learning

Finland

8

7 Bulgaria

8 Austria

Switzerland

9 Sweden

10

10

10 Belgium

Czech…

11 Greece

Hungary

11 Portugal

17

22 Romania

Netherlands

Poland

Spain

France

Turkey

0 Germany

 Countries such as Germany are expected to see the biggest falls in student populations  Internet penetration is highest in Western Europe and the Nordic countries whilst Southern Europe and Central & Eastern Europe is less penetrated

38

47

50

65%

67%

84% 58% 63

61

UK

Italy

83% 81 46% 80 66 80%

Penetration (% Population) 93%

Population 2012E (m)

100

 OECD projects that the overall student population will fall to 104m in 2020, driven mostly by the declining growth rate of students between 15-29  Overall population birth rates are leading indicators to growth in the lower age range.

(3.0%)

150

Key Points

1.9%

1.5%

1.2%

15-20

32


European ICT Infrastructure in Schools Summary of Infrastructure Penetration in Schools Across Europe by number of computers, number of connect computers and % of schools that have broadband Computers per 100 students

10

10

100%

31 75%

24 23 16

13 12

11 10

8

33

75%

20 19

16 15

20

94%

75%

71%

65%

% schools with broadband

96%

95%

92%

40 30

Computers connected to the internet per 100 students

50%

14

0% 2011-12

2006

Grade 4

2011-12

2006

Grade 8

2011-12

Grade 11 General

2006

2011-12

Grade 11 Vocational

Grade 4 75%

Grade 8 2006 2011-12

86%

71%

Grade 11 General 91% 95%

81%

73%

Uses 51%

Used ICT for Used ICT in class Used ICT in >25% preparing last year of lessons last year lessons last year

23%

Insufficient computers

26%

21% 10%

Lack of teacher skills

10%

Lack of content

9%

44%

23%

8%

Lack of content in national language

Used ICT for Used ICT in class Used ICT in >25% preparing last year of lessons last year lessons last year

Insufficient computers

Lack of teacher skills

IBIS Capital | A European Perspective on e-Learning

10%

Lack of content

9% 7%

Lack of content in national language

Insufficient computers

Source: Survey of Schools: ICT in Education

87% 49% 50%

Used ICT for Used ICT in class Used ICT in >25% preparing last year of lessons last year lessons last year

47%

27%

20% 11%

77%

32%

49%

46% 33%

Grade 11 Vocational 93% 97%

84%

35% 32%

34% 29%

Used ICT for Used ICT in class Used ICT in >25% preparing last year of lessons last year lessons last year

Inhibitors

91% 96%

 Computers in schools has increased however this still remains the largest inhibitor to ICT use

 Lack of content in the national language remains an issue

Summary of Uses and Inhibitions of Use of ICT in Education Across Europe (% of Teachers) 88% 96%

 The principal use of ICT by teacher is in preparing lessons (mean use of over 95% across the all grades and countries)

25%

0 2006

Key Points  Computer and broadband penetration to schools across Europe has increased significantly over last 5 years

18% 11%

18% 14%

Lack of teacher skills

Lack of content

19%

Lack of content in national language

22%

21% 10%

7% 7%

Insufficient computers

Lack of teacher skills

11%

Lack of content

8% 7%

Lack of content in national language

33


Digitally Equipped Schools Percentages of Students by School Type in Terms of Equipment Type 1

Type 2

Type 3 (see key points for definition)

Grade 4 (9.5 average age) Norway Sweden Finland Denmark Spain Malta Portugal Estonia Ireland Luxembourg Latvia Cyprus France Belgium EU Czech_Rep Austria Lithuania Slovenia Croatia Hungary Greece Bulgaria Slovakia Romania Italy Turkey Poland

0%

Finland Sweden Denmark Norway France Malta Portugal Latvia Spain Estonia EU Austria Ireland Belgium Lithuania Croatia Bulgaria Czech_Rep Cyprus Greece Poland Slovenia Hungary Slovakia Romania Italy Turkey

20%

40%

60%

80%

100%

 Type 1: Highly digitally equipped schools, characterised by relatively high equipment levels, fast broadband and relatively high connectedness  Type 2: Partially digitally equipped schools, with lower than type 1 equipment levels, slow (less than 10mbps) or no broadband, and some connectedness  Type 3: As type 2 but with no connectedness

0%

Grade 11 General (13.5 average age)

20%

40%

60%

80%

100%

Grade 11 Vocational (13.5 average age) Sweden Norway Denmark Finland Estonia Croatia France Austria Slovenia Spain Bulgaria Lithuania Portugal EU Latvia Belgium Czech_Rep Greece Cyprus Hungary Slovakia Turkey Italy Romania Poland

Sweden Norway Denmark Finland Slovenia Croatia France Latvia Estonia Austria Czech_Rep Portugal EU Spain Belgium Bulgaria Malta Lithuania Slovakia Hungary Cyprus Ireland Italy Poland Greece Turkey Romania

0%

Legend

Grade 8 (13.5 average age)

25%

50%

75%

100%

IBIS Capital | A European Perspective on e-Learning

0%

Key Points  The Nordic region represent the most digitally enabled region within Europe

 Surprisingly Grade 8, around age 14, is the demographic most badly served in the schools digital environment

25%

50%

75%

100%

Source: Survey of Schools: ICT in Education Note: Criteria looked used to evaluate extent of digitally equipped school: Equipment provision: numbers of desktop, laptop computers, e-readers, mobile phones, interactive whiteboards, digital cameras and data projectors; The proportion of fully operational equipment; Broadband speed and type of broadband access; Maintenance and support; Indicators of

34


IBIS Capital | A European Perspective on e-Learning

The European Corporate Learning Market

IBIS Capital | A European Perspective on e-Learning


e-Learning Penetration Increasing in European Corporates % of Employees Using e-Learning Across European Countries

% of Employees Using e-Learning Across All Firm Sizes

Country

Firm Size by Employees

< 10%

10-50%

60%

UK

40%

43% 30%

29%

20%

> 50% 51%

60%

39%

2010 2012

33%

19%

29%

35%

38%

2010 2012

60%

44%

1,000-5,000

20% 2010 2012

40%

40%

32% 19%

2010 2012

38% 42%

19%

40%

> 10,000

2010 2012

25%

35%

2010 2012

2010 2012

30%

31%

41%

2010 2012

35%

41%

12%

2010 2012

2010 2012

2010 2012

% Budget Spent on e-Learning

36% 18%

20%

2010 2012

51%

44%

40%

17%

25%

8%

0% 2010 2012

40%

34%

 Companies are increasing their use of e-Learning regardless of their size

0% 2010 2012

Italy

2010 2012

 UK and Spain are leading the adoption of e-Learning in Europe

12%

20%

0%

60%

2010 2012

60%

20%

France

25%

0% 2010 2012

60%

39%

40%

 Market acceptance of e-Learning has resulted in increasing use for both large and small companies

34%

27%

51%

20%

0%

Benelux

43% 26%

0% 2010 2012

60%

60%

> 50%

20%

5% 2010 2012

40%

10-50%

40%

40%

< 1,000

0%

Spain

< 10%

Key Points

2010 2012

2010 2012

53%

43% 26%

26%

4%

< 5%

7%

5-9% 44%

12%

20-29%

26% 15%

20% 0% 2010 2012

2010 2012

2010 2012

IBIS Capital | A European Perspective on e-Learning

10-19%

> 30% 25%

Source: Ipsos, CrossKnowledge, Fefaur

n/a

36


Corporate Training in the UK Total UK Training Expenditure 2011

Key Points

Training spend per learner

Indirect costs 50%

£49bn

Direct 50%

£838

Contribution and Proportion of Direct Costs by Country Total expenditure (£bn)

Direct costs (%)

85%

100%

59%

56%

51%

3%

9%

3%

Northern Ireland

Scotland

Wales

 Included in their number is the foregone cost of employees salaries and wages whilst on training, otherwise known as indirect costs, which account for c.50% of the total amount spent

50% 50% 0% England

Total Expenditure and Number of Skill-Shortage Vacancies in the UK by Sector 2011 10.0

Total expenditure (£bn)

Direct costs (%)

9.5

100% 6.7

5.4 5.0

3.5 0.9

3.5

3.4

2.8

2.5

1.5

0.0 Thousands

 Business services sector suffers from the largest shortage in skills in the UK after the wholesale and retail sector

5.4

3.5

0.3

0.1

 The UK Commission’s Employer Skills Survey 2011: UK Results, was the first report that accurately calculated the amount of spend applied to corporate training

50%

0%

30

Number of skill-shortage vacancies

15

11.8

9.5 2.6

0.7

0.5

5.4

Proportion 8.8

50%

26.9

9.1

4.3

3.2

3.7

6.7

10.2

IBIS Capital | A European Perspective on e-Learning

Other activities

Health and social work

Education

Public administration

Business services

Financial services

Transport and communicatio ns

Hotels and restaurants

Wholesale and retail

Construction

Electricity, Gas, Water

Manufacturing

Mining and Quarrying

0% Agriculture

0

25%

Source: UK Commission's Employer Skills Survey 2011: UK Results, Bersin & Associates

37


Corporate Training in the UK Learning Technology Spend (% Budget)

L&D Spending per Learner by Firm Size

15% 2009

2012

 Spend per learner in the US was $706 per learner, according to Bersin & Associates, almost half of that in the UK (£838 = c.$1,300)

955 838 693

7% 7%

6%

685

8%

7% 5%

 Of the large companies in the UK, twothirds are reporting reductions in training budgets in 2012

3%

Large

Midsize

Small

Total UK

Large

Training Delivery Methods in UK 2009 vs. 2012

Midsize

53%

2009

Total UK

53% 48%

2012

10%

e-Learning

Small

Training Delivery Methods 2012 UK vs. US 77%

Instructor-led classroom

15%

15%

22% 14%

Experiential

14%

10%

10%

6%

4%

Virtual instructorled classroom

6%

6%

 Compared to 2009, twice as many UK firms now use learning management systems (LMSs) and learning content management systems (LCMSs), and three times as many use rapid elearning tools

1%

1% 0%

US

12%

9%

Other

UK

 UK large businesses employ 8.1 L&D staff for every 1,000 learners, on average—more than twice the number of their US counterparts

 US is using significantly more eLearning solutions than the UK for the provision of training

10%

Collaborative

Key Points

1% 50%

100%

IBIS Capital | A European Perspective on e-Learning

0%

20%

40%

60%

Source: CrossKnowledge, Ipsos, Fefaur, Bersin & Associates

38


IBIS Capital | A European Perspective on e-Learning

General European Investment Trends

IBIS Capital | A European Perspective on e-Learning


European Investment in 2012 (All Sectors) Investments by Stage and Region (€bn) €bn 3.0

Rescue Capital

Replacement Capital

Investments by Stage Growth Capital

Venture Capital

Buyout

8.0 10.2 2.0

1.0

0.4 0.1

0.4 0.1

0.1 1.1

0.8

Buyout 77%

8.6 0.0

0.8

3.6 0.1

0.1 0.4

0.0

0.8

10.0

8.1

0.8

5.6

0.8

4.8 0.0 0.0 0.4 0.5

0.2

Start-up 5%

1.0

0.0 0.2 0.0 0.1

2.8

Growth 10% Rescue 1% Replacement 3%

6.9

5.0

Later-stage 3%

Seed 0%

3.9 0.7

0.0 UK & Ireland

France & Benelux

DACH

Southern Europe

Nordics

CEE

Investments by Stage and Region (# of Companies) Number of companies 1,500

1,546 11

1,287

1,000

29

740 500

21

410 7

325

11 15 109

432

12 74

414

577

965

71

24

220

173

139

Growth 21% Rescue 1%

224 1 671

58 123

319

400 200

Later-stage 17%

887

37

8

0

Investments by Stage

91

123

Southern Europe

Nordics

9

Seed 7% Start-up 35%

Key Points  The buyout market dominates investment by value whilst venture capital represents the largest number of deals  Although UK & Ireland attracts more investment capital than other areas of Europe, France & Benelux attracts more venture and growth capital  A small proportion of capital (4% by € amount and 3% by number of companies) is applied to rescue or replacement investments, which is consistent throughout economic cycles  Earlier stage investment by number of companies is most active in Germany, Austria and Switzerland (DACH). UK and Ireland are relatively inactive, lying behind France & Benelux, DACH and the Nordics

Replacement 2% Buyout 17%

33

0 UK & Ireland

France & Benelux

DACH

CEE

IBIS Capital | A European Perspective on e-Learning

Sources: EVCA, PEREP_Analytics Notes: (1) Country region breakdowns are as follows: DACH (Austria, Germany, Switzerland), Nordics (Denmark, Finland, Norway, Sweden), Southern Europe (Greece, Italy, Portugal, Spain), CEE (Central Eastern Europe)

40


Geographic Investment Dynamic in Europe Non-European private equity firms investing in portfolio companies in Europe

Key Points  The majority of institutional capital is invested within domestic markets in Europe with cross-border activity accounting for 23% and rest-of-world funds accounting for 2% of the investment pool  Currently, there is a net outflow of private equity and venture capital from Europe

€0.8bn Cross-border investments within Europe

€1.2bn

€8.3bn

European private equity firms investing in portfolio companies outside Europe

 Equivalent geographic venture capital investment flows are as follows: ─ ─ ─ ─

€210m €369m €2,365m €610m

€27.4bn

Domestic investments in European Countries IBIS Capital | A European Perspective on e-Learning

Sources: EVCA, PEREP_Analytics Notes: (1) Europe includes: Austria, Baltic countries (Estonia, Latvia, Lithuania), Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Other CEE (Bosnia-Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Slovenia, Slovakia), Poland, Portugal, Romania, Spain, Sweden, Switzerland, Ukraine, United Kingdom

41


Venture Capital Investment Decreasing in Europe Comparison of Venture Capital vs. Growth Capital Applied in 2012 and as an Average 0.100%

A positive percentage indicates more venture capital applied

2012

2007-2011 Average

0.050%

 Last year showed a trend towards growth capital versus venture capital except for in Hungary, Sweden, Denmark, Ireland, Switzerland and Austria (as per top chart)

0.000% (0.050%) (0.100%)

 Most countries’ venture capital and growth capital investments as a % of GDP are below the 2007-2011 average

0.000%

0.000%

0.002%

0.001%

2007-2011 Average 0.002%

0.002%

0.003%

0.010%

0.005%

0.011%

0.011%

0.021%

0.023%

0.025%

0.021%

0.024%

0.025%

0.027%

0.029%

0.029%

0.032%

2012 0.033%

0.038%

0.054%

0.050%

0.041%

0.054%

0.075%

0.065%

Venture Capital Investments as a % of GDP by Country 0.100%

Key Points

0.000%

 Last year, Hungary received over 2x its 2007-2011 average investment  In general, little capital has been applied to Central & Eastern European

Growth Capital Investments as a % of GDP by Country

0.000%

0.000%

0.003%

2007-2011 Average

0.003%

0.008%

0.008%

0.012%

0.009%

0.012%

0.019%

0.020%

0.021%

0.020%

0.024%

0.027%

0.027%

0.036%

0.033%

0.038%

0.039%

0.041%

0.051%

0.045%

0.053%

0.100%

0.060%

0.200%

2012

0.005%

0.300%

0.000%

IBIS Capital | A European Perspective on e-Learning

Sources: EVCA, PEREP_Analytics Notes: (1) Country region breakdowns are as follows: DACH (Austria, Germany, Switzerland), Nordics (Denmark, Finland, Norway, Sweden), Southern Europe (Greece, Italy, Portugal, Spain), CEE (Central Eastern Europe)

42


The Trend in European Investment Across all Stages Investment by Stage from 2007 to 2012 (€bn) €bn

Rescue Capital

Replacement Capital

8.0 6.0

6.7

6.3

6.0

Venture Capital

4.3

5.2

3.8

1.9

3.7

3.6 2.0

1.6

0.5

Buyout

Key Points

3.8

 Investment in Europe is on the decline across all stages of investment

6.3 5.1

4.0

2.0

Growth Capital

1.8

0.7

0.3

3.2

0.5

0.5

1.0

0.4

1.1

0.0 60

57.2 38.4

30

29.7

34.5

2010

2011

28

12.7

0 2007

2008

2009

 The shift to growth capital can be clearly seen in the investments in growth companies increasing despite the decline in the amount of capital applied

3,836 3,246

3,094

3,010

3000

 Whilst venture capital is in its decline, nearly 3,000 companies were invested in last year

2012

Investment by Stage from 2007 to 2012 (Number of Companies) Number of companies 4000 3,441

 Venture capital investments have been falling at a faster rate than growth capital investments as people shift their attention to less risky opportunities

2,988

2000

1000

348 52 140

593

174 68

994

775 150 176

1,047

932 132 135

103 76

67 118

0 4000 2000

1,299

1,161

2007

2008

615

783

881

878

2009

2010

2011

2012

0

IBIS Capital | A European Perspective on e-Learning

Sources: EVCA, PEREP_Analytics Notes: (1) Country region breakdowns are as follows: DACH (Austria, Germany, Switzerland), Nordics (Denmark, Finland, Norway, Sweden), Southern Europe (Greece, Italy, Portugal, Spain), CEE (Central Eastern Europe)

43


Success Rates & Exit Times: Europe vs. US

Probability of Exit from First Round of VC Financing Exit Assumptions & Vintage Years (1)

IPO Probability

Probability of Exit within 5 Years

IPO

M&A Probability

1995-1999 2000-2003

12.5%

12.2%

40.0%

32.2%

3.1%

4.4%

35.5%

2000-2003

1.4%

2.9%

20.9%

17.1%

2004-2007

1.2%

1.7%

18.3%

12.5%

Europe

12.5% Europe

2.9%

 The probability of exit via M&A and the average time to M&A have not changed significantly over time

17.1%

3.5%

27.8%

 Unsurprisingly, across the US and Europe, the probability of exit via an IPO has declined

M&A

1.7%

Within 10 years:

14.4%

Within 5 years:

1.2% US

18.3% US

1.4%

0.1%

1.1%

5.0%

3.5%

2008-2011

0.2%

0.5%

6.1%

2.2%

04'-07' Vintages

IPO Time to Exit (Months)

2000-2003

00'-03' Vintages

IPO

M&A Time to Exit (Months)

95'-99' Vintages

32 62

30

45

65

51

52

50

Europe

 Contrary to the public’s perception, there is no significant difference in the success rates of European and US exits via IPOs from the same vintage year  With regards to success rates of European and US exits via M&A, Europe is at a disadvantage

M&A

22

Within 10 years: 1995-1999

26.3%

Time to Exit within 5 Years (months)

Time to Exit Exit Assumptions & Vintage Years

20.9%

6.9%

Within 2 years: 2004-2007

Key Points

33 Europe

36

35

21

36

Within 5 years: 1995-1999

25

21

30

36

2000-2003

47

36

33

35

2004-2007

43

22

36

33

43 US

47

36 US

25

33 30

Within 2 years: 2004-2007

9

14

17

16

2008-2011

10

18

17

17

IBIS Capital | A European Perspective on e-Learning

04'-07' Vintages

00'-03' Vintages

95'-99' Vintages

Source: BVCA – European Venture Capital: Myths and Facts (1) A vintage year is defined as the year of the first investment

44


IBIS Capital | A European Perspective on e-Learning

The European EdTech 20

IBIS Capital | A European Perspective on e-Learning


European EdTech Top 20 The Fastest Growing & Most Innovative Companies in Europe 20

Companies from

9 countries across Europe growing between 13% - 934% last year

Companies

Description

1

ALISON

Accredited online skill-based courses

2

Brightwave

End-to-end corporate training

3

Classroom Monitor

Assessment/Analytics for K-12 market

4

Coursio

Content portal

5

Dnevnick

Educational social network

6

EPIC Learning

End-to-end corporate training

7

FindCourses

Corporate learning course procurement

8

GCSEPod

Test & prep mobile platform

9

InfoMentor

VLE for primary market

10

ITycom

End-to-end corporate training

11

Labster

Immersive learning in virtual labs

12

Languagelab

Immersive learning for corporates

13

Languagenut

Language learning targeting K-8

14

Mangahigh

Online platform for K-12 maths education

15

Mendeley

Open ecosystem for academic research

16

Serious Games Interactive Serious gaming for corporates

17

Siveco

End-to-end academic/corporate learning

18

Sofatutor

Online private tutoring

19

Twig World

Digital learning resources for 7-16 year olds

20

Virtual College

Accredited online vocational courses

Top 1-3

Top 4-6

Top 7-20

IBIS Capital | A European Perspective on e-Learning

Sources: European EdTech Top 20, Company information

46


IBIS Capital | A European Perspective on e-Learning

Appendix

IBIS Capital | A European Perspective on e-Learning


IBIS Capital | A European Perspective on e-Learning

A Closer Look at the European Education Market

IBIS Capital | A European Perspective on e-Learning


School Models, Average Size & the Distribution Private School Main Models of Primary and Lower Secondary Education in Europe in 2010/2011

Key Points

Single Structure (ISCED1 + ISCED2) Continuous education from beginning to the end of compulsory schooling with no transition between primary and lower secondary education

 In almost half of all European countries, students follow the same common core curriculum during lower secondary education after primary education, i.e. up to 15 or 16 years of age

Common core Curriculum (ISCED2) Primary education followed by a “common core” curriculum during lower secondary education

 On average in Europe, 12% of schools are private schools

Differentiated branches/streams (ISCED2) Primary education followed by differentiated secondary education delivered through distinct educational pathways

 In Europe, the average school size for a 15-year old is 605 pupils

Distribution of 15 year-old Students by Size of School 1,310

1,062 984

938

920

862

768

750

737

696

674

633

624

620

620

616

575

561

554

534

480

475

433

432

419

418

411

410

388

330

Distribution of Students Attending Public or Private Schools Primary and Secondary Schools (ISCED 1-3)

296

258

159

Private

n/a

n/a

n/a

Public

100% 75% 50% 25% 0%

IBIS Capital | A European Perspective on e-Learning

Source: Eurydice, OECD, PISA, Eurostat, UOE Note: (1) There are some country discrepancies in the data (2) Where the data is not available for a specific year, the latest available data has been taken

49


Length of Compulsory Education & Expected Duration in Education Expected Duration of Education for 5 year olds 2000-2009 (ISCED 0-6)

Compulsory Education Across Europe 1980/81

Part-time 0

2

4

6

8

2006/07 10

12

14

2010/11 16

18

20

0

Belgium (FR)

EU27

Belgium (DE)

Austria

Belgium (NL)

Belgium

Bulgaria

Bulgaria

Czech Republic

Croatia

Denmark

Cyprus

Germany

Czech Republic

Estonia

Denmark

Ireland

Estonia

Greece

Finland

Spain

France

France

Germany

Italy

Greece

Cyprus

Hungary

Latvia

Iceland

Lithuania

Ireland

Luxembourg

Italy

Hungary

Latvia

Malta Netherlands

Liechtenstein

Austria

Lithuania

Poland

Luxembourg

Portugal

Malta

Romania

Netherlands

Slovenia

Norway

Slovakia

Poland

Finland

Portugal

Sweden

Romania

UK (excl. N. Ireland)

Slovakia

Northern Ireland

Slovenia

Iceland

Spain

Liechtenstein

Sweden

Norway

Switzerland

Croatia

Turkey

Turkey

United Kingdom

IBIS Capital | A European Perspective on e-Learning

5

10

2000 15

2005

Key Points 2009 20

 Across Europe, compulsory full-time education lasts for a minimum of 8 years with most countries lasting between 9 and 10 years. This represents the recurring school market that is replenished year on year  On average, the duration of education across the EU-27 was 17.2 years, c.9 years more than the minimum length of compulsory education

 In addition, the Europe 2020 Strategy has set a target that at least 95% of children between the age of four and the age for starting compulsory primary education should participate in early childhood education

Source: Eurostat, UOE Note: (1) There are some country discrepancies in the data, new UK reporting in 2009 obscures the data on the expected duration of Education for 5 year olds (2) Where the data is not available for a specific year, the latest available data has been taken

50


Europe Still Requires Widespread Improvement in Basic Skills Percentage of Low Achievers in Basic Skills in 2006 and 2009

Key Points

60

2006 41

36

20

23

20 18

15

19

13

17

18

18

15

14

21 22

18

17

18

23

25 17

16

15

8 n/a

0

60

47

47

40 20

30 22

22 19

17

19

21

24 23 25

23

ď&#x201A;§ The EU-25 mean of low achievers, i.e. those who fail to acquire basic skills by the age of 15, is c.20% in reading, maths and science. The Europe 2020 Strategy is targeting to bring this number below 15% across Europe

42

34

33

26 24 22

13

13

ď&#x201A;§ Evidently, there has been a lack of significant widespread improvement across Europe from 2006 to 2009 in basic competencies such as reading, maths and science

23 21 24

21 20

20 21

18

17 10

8

n/a

0

EU Belgium Bulgaria Czech Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden UK Croatia Iceland Turkey Liechtenstein Norway

Maths

28

24 26

21 20 20 21

EU Belgium Bulgaria Czech Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden UK Croatia Iceland Turkey Liechtenstein Norway

Reading

40

2009

40

60

0

33

25 18 18

17 17 15

8

15

18 19 21

15 17

30

24 14

21 13

13

17

15

n/a

19

19 6

19 18 15

11

16

EU Belgium Bulgaria Czech Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden UK Croatia Iceland Turkey Liechtenstein Norway

Science

20

41

39

40

IBIS Capital | A European Perspective on e-Learning

Source: Eurostat, UOE

51


The Majority of 15 Year Olds Spend Little Time on Homework Distribution of 15-year-old students according to the number of hours a week they report spending on homework and study at home, public and private sectors combined, 2009 Language of instruction Maths Science No time or <2 Hours

2 – 4 Hours

AT BE (DE) BE (FR) BE (NL) BG CY CZ DE DK EE EL ES EU FI FR HR HU IE IS IT LI LT LU LV MT NL NO PL PT RO SE SI SK TR UK - 1 UK-SCT 70

80

90

100

 The findings from an analysis by Hattie (2009, p. 234) conclude that the frequency of mathematics homework has a positive impact on achievement, whereas homework that requires longer periods to complete does not. Furthermore, rote learning leads to more effective results with increased knowledge retention

>4 Hours

AT BE (DE) BE (FR) BE (NL) BG CY CZ DE DK EE EL ES EU FI FR HR HU IE IS IT LI LT LU LV MT NL NO PL PT RO SE SI SK TR UK - 1 UK-SCT 60

Key Points

AT BE (DE) BE (FR) BE (NL) BG CY CZ DE DK EE EL ES EU FI FR HR HU IE IS IT LI LT LU LV MT NL NO PL PT RO SE SI SK TR UK - 1 UK-SCT 0

IBIS Capital | A European Perspective on e-Learning

10

20

30

40

 Despite the statement above on rote learning, Finnish students do less homework and spend fewer hours at school than the OECD average and the country consistently ranks among the Top 3, sharing honours with education superpowers, such as China, Korea and Singapore, which are associated with rigid discipline and rote learning  The “Flipped Classroom” concept has been gaining traction in Europe changing the emphasis on the aim of homework or home learning

0

10

20

Source: Eurostat, UOE Note: (1) UK – 1 includes England, Northern Ireland and Wales; UK – SCT includes only Scotland

52


Language Learning Across Europe Percentages of Pupils Learning at Least 2 Foreign Languages in EU, 2000-2010

2.0 – 2.4 1.5 – 1.9 1.0 – 1.4 1.5 – 0.9

60%

Key Points  At present, it is obligatory to learn at least one foreign language in compulsory education with a second language optional in most of the member states

2.5 - 3.0

ISCED 2 ISCED 3 ISCED 3 prevocational and vocational

80%

Average Number of Languages Learned Per Pupil in General Upper Secondary

 The Barcelona European Council of 2002 set the objective for “teaching at least two foreign languages from a early age, we can see that over the period of 2002-2012, pupils learning 2 languages in ISCED 2-3 increased

40%

20%

 Despite the above statement, the ESLC average of mastering the first foreign language to an independent level is below 45% which significantly worsens at mastering a secondary level with an average at 25%(1)

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0%

Percentage of Tested Pupils Achieving Each Level, 2011 First Foreign Language Beginner

Second Foreign Language Basic

Advanced Basic

Malta (EN) Sweden (EN) Estonia (EN) Netherlands (EN) Slovenia (EN) Greece (EN) ESLC average Croatia (EN) Bulgaria (EN) Belgium DE (FR) Portugal (EN) Spain (EN) Belgium FR (EN) Poland (EN) Belgium (NL) France (EN) UK ENG (FR)

Independent

Advanced Independent

Belgium NL (EN) Belgium DE (EN) Malta (IT) Netherlands (DE) Slovenia (DE) ESLC average Belgium FR (DE) Spain (FR) Estonia (DE) Bulgaria (DE) Greece (FR) Croatia (DE) Portugal (FR) France (ES) Poland (DE) Sweden (ES) UK ENG (DE)

0%

20%

40%

60%

80%

100%

IBIS Capital | A European Perspective on e-Learning

0%

20%

40%

60%

80%

100%

Source: First European Survey on Language Competences: Final Report Notes: (1) A sample of 54,000 pupils at the end of ISCED 2 has been used (2) There are some country discrepancies in the data

53


School Assessment Criteria & Evaluation Elements of the Education System Subject to Evaluation (ISCED 1-3), 2010/2011

Existence of Standard Criteria for the External Evaluation of Schools (ISCED 1-3), 2010/11

Local authority evaluation

Standard criteria

School and teacher evaluation

No standard criteria

Mainly teacher evaluation

No external evaluation

Mainly school evaluation

No data

Publication of Findings from the External Evaluation (ISCED 1-3), 2010/11

Use of Student Performance Data in the External Evaluation (ISCED 1-3), 2010/11

Routine publication

Standard criteria

No routine publication

No standard criteria

No external evaluation

No external evaluation

Local autonomy

No data

Key Points  In most countries, schools are subject to external evaluation, while internal evaluation is performed by school staff. Internal school evaluation can be mandatory or even compulsory in some geographies  School evaluation may focus on a number of areas including: the quality of educational or administrative processes adopted by schools; compliance with standards or regulations; and, outcomes of the teaching and learning process  Where external valuation is the common occurrence, student performance is the key proxy for school evaluation

No data

IBIS Capital | A European Perspective on e-Learning

Source: Eurydice

54


Public Funding Dominates Private Funding Proportions of Educational Expenditure from Public and Private Sources (ISCED 0-6) in 2008 Public funding

13% 13% 8% 15% 5% 6% n/a

14% 6%

20%

13% 10% 9% 17% 10% 10% n/a n/a 5% 16% 9% 13% 10% 0% 12% 18% 3% 3% 31% 9% n/a 2% 10% 8% 0%

Private funding 40%

0%

Key Points  The majority of government expenditure is concentrated at the lower secondary to post-secondary non-tertiary education level  Private funding of education remains marginal (mean of 13.8% across Europe) with the main driver being the EU member states policy for the funding of education-oriented preprimary schooling and tertiary education

20% 40% 60% 80% EU BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK IS LI NO CH HR TR

100%

Total Public Expenditure on Education by Education Level (ISCED 0 to 6) as a Percentage of GDP, 2008 ISCED 0

ISCED 1

ISCED 2-4

ISCED 5-6

ISCED 0-6

10 8 6

7 5

5 5

4

5

5

5 5 4

8

8

7 6

6

6

5

5

6

6

5

5

0

6

7 7

6 4

4 5

6

2

2 n/a

n/a

n/a

EU27 UK Turkey Switzerland Sweden Spain Slovenia Slovakia Romania Portugal Poland Norway Netherlands Malta Luxembourg Lithuania Liechtenstein Latvia Italy Ireland Iceland Hungary Greece Germany France Finland Estonia Denmark Czech… Cyprus Croatia Bulgaria Belgium Austria

0

IBIS Capital | A European Perspective on e-Learning

Source: Eurostat, UOE, National Account Statistics

55


Decentralised Decision-Making For Operational Resources Location of Decision-Making Powers to Determine the Overall Amount of Public Expenditure on Specific Resources for Schools (ISCED 1-3), 2010/11 Centrally/Top

Local y

No data

Teaching

Non-Teaching Staff

Key Points  Expenditure on staff represents more than 70 % of total annual education expenditure

 Current expenditure represents more than 84 % of total expenditure by public institutions in all  countries

Capital Expenditure/Immovables and Movables

IBIS Capital | A European Perspective on e-Learning

Current or Operational Expenditure

Source: Eurostat, UOE

 From the evidence available, it is clear that there is a tendency for decisions relating to the financing of teaching staff to be taken by central governments or by the regional body with full responsibility for education, while decisions relating to the financing of operational resources tend to be shared between head teachers and local authorities

56


School Autonomy is Widespread in Europe Decision-Making Autonomy for Teaching and Learning Resources across European Common compulsory core curriculum

Curriculum content of optional subjects

Choosing teaching methods

Choosing textbooks

Pupil grouping for compulsory learning

Setting internal pupil assessment criteria

BE (FR) a BE (FR) b BE (DE) a BE (DE) b BE (NL) BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK-1 UK-2 UK-3 IS LI NO HR TR

Key

Full autonomy Limited autonomy No autonomy Not applicable Local authority decision-making

Key Points  Schools have least autonomy in areas directly related to the principle goals of their education system, where central authorities define a content-based or goal-oriented core curriculum that all teachers should follow  Teachers across Europe are highly involved in choosing teaching methods, setting internal assessment criteria and choosing content

 The operational expenditure on content and teacher tools (including LMSs) are often made by the school head whereby the school governing body is likely to be involved with matters concerning optional core curriculum content or grouping pupils for compulsory learning

a) b)

Schools for which the Community is directly responsible and a minister is the responsible authority Schools in the public and private grant-aided sector. In the grant-aided sector, the responsible authority is deemed the school-based management body UK-1 England and Wales UK-2 Northern Ireland UK-3 Scotland

IBIS Capital | A European Perspective on e-Learning

Source: Eurydice, Parthenon U.S. Teacher Survey (Dec‐2012)

57

A European Perspective on e-Learning  
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