IBIS Capital | Global e-Learning Investment Review

10 Things You Should Know About e-Learning Global Education vs. e-Learning Expenditure Forecasts 2012-2017

$4.4tn Current industry hype

Internet users have grown
1 4 5 870% since 2000 massing
7 8 Global Education Expenditure ($tn) Global Education Expenditure
about new ideas and consumer 10.0 Breakdown by Sector 2012
over 2.4bn users globally and learning requirments are

257%
2012 global education expenditure 7 CAGR
causing an evolutionary shift disrupting the whole 2012-201
The cost of education : 23.0%
ng Expenditure
Supported by 1.4bn students in how people can engage education eco-system 8.0 e-Learni
has risen 84% since 8%
and 62.5m educators with the world iture: 7.4% 201
2-2017 CAGR
2000, 37% higher than Education Expend 6.3 8%
CPI, which has lead to
2
The e-Learning market situations like the US 2.4bn The US(1) to push forward with
6.0 5.4

9
is the fastest growing market
in education, standing at
student loan debt accu-
mulation to over $1tn.
internet US student tablet ownership
grew 257% last year and in
Project Tin Can which will set
industry-wide e-Learning
4.4
50%

23%
4.0
$91bn in 2012 e-Learning is a cost
effective alternative
users 2011 technology adapted
training has penetrated over
standards for software 34%
40% of the Global 500 Fortune 2.0
IBIS Capitals near term view
6 on e-Learning:
companies

CAGR
IBIS Capitals hot picks 0
In Europe alone there are 10 2012 2015 2017

3,000+ 2013
for e-Learning for 2013:

n
$1ntdebt
next generation content and K-12 Post Secondary Corporate & Government Learning Other
its creation tools, adaptive
forecasted out to 2017
learning, collaborative learning,
e-Learning companies
loa
Learning Record Stores (LRS),
Global Education M&A Activity Global Education Fundraising Activity
(2) (3)
re-purposable learning, Massive
3 Consolidation will be the theme
Open Online Courses (MOOCs)

700m
as businesses seek to expand
and Open Education Resource
of the worlds population geographic reach, scale and
(OER) management
will lack basic literacy skills service offering Total Deal Value ($bn) e-Learning as % of Total Volume Total Capital Raised ($m) Volume
individuals by 2015 50.0
74% 75%
80 6,000 150

130
68%
Industry Overview 40.0
5,000
120
60
56%
4,000 91 87
30.0 47% 90

40 3,000
Industry Structure Content Management Systems Distribution Customer 20.5
65 67 67
2,366 60
20.0
2,000
13% 1,435
20 1,349
10.0 10.5 999 30
8.5 969 864
1,000
4.2
2.4 1.2
0 0 0 0
2007 2008 2009 2010 2011 2012 YTD 2007 2008 2009 2010 2011 2012 ytd

Total Deal Value ($bn) e-Learning as % of Total Volume Total Capital Raised ($m) Volume

Key Affecting Regulatory/Curriculum Scale Online Cost

e-Learning Breakdown by Sector from 2007 to 2012YTD (Volume) e-Learning Breakdown by Sector in 2012YTD (Volume)
Factors Corporate Requirements Complexity Free/Paid Level of Qualification
Consumer Requirements Efficiency One-to-One/One-to-Many Flexibility
Distribution
61% Distribution
70%
Type of Business Publishers Software Platform Immersive Learning Management
Systems 26% Management
Systems 21%
Content Tools MOOCs

Open Source Smart Technology Learning Portal

Content
13% Content
9%
Recent M&A Transactions Recent Fundraisings

IBIS Capitals 5 Disruptive Businesses Education Giants Transaction Target Acquirer Target Transaction Transaction Target Investor Target Transaction
Date Sector Value $m Date Sector Value $m
Company Overview Sector HQ Investors Company 2011 FY Education HQ Market Nov 12 John Wiley Distribution 24 Nov 12 VegasTechFund Distribution 9.8
Revenue Revenue as % of Cap. & Sons
$bn Total Revenue $bn
Oct 12 Academic Distribution 1.8
Free online university Distribution US Andreessen Horowitz, Charles 9.1 75% UK 15.2 Oct 12 Pearson Management 650 Partnerships
courses River Ventures Systems
Oct 12 Charles River Distribution 15.0
Social learning Management US Founder Collective, IA, Shasta, 6.2 37% US 15.7 Ventures,
management system Systems The Social+Capital Partnership Oct 12 John Wiley Management 220 Andreessen
& Sons Systems
Horowitz
Free education for anyone Distribution US Google, Bill & Melinda Gates 5.0 74% Japan 4.2
anywhere Foundation and other funding Oct 12 PROfounders Distribution 4.6
Aug 12 IBM Management 1,307 Capital
Systems
Quiz-based e-Learning apps Content UK Benesse, Atomico Ventures, 4.1 58% US 2.8
Globis Capital Partners Oct 12 Bill & Melinda Management 3.3
Gates Founda- Systems
Aug 12 Higher One Management 38 tion,
* Immersive learning Distribution UK Avonmore Developments, Huda 4.7 100% US 2.3 Holdings Systems
Retro Venture
Associates, Private Investors
Partners
Note: * Client of IBIS Capital (1) The Advanced Distributed Learning company is sponsored by the US Secretary of Defense and is contributing significantly to Project Tin Can
All market data as at 10 December 2012 and using historical exchange rates where relevant | Source: IBIS Capital analysis, Learning Light, GSV Education report, Ambient Insight, Microsoft, Consumer Financial Protection Bureau, Annual Survey of Colleges, The College Board, (2) Includes transactions above $20m since 2007 and excludes transactions with undisclosed values. Includes the McGraw-Hill / Apollo transaction, which is still pending
Integrated Postsecondary Education Data System (IPEDS), U.S. Department of Education, National Center for Education Statistics, Babson Survey Research Group, Internet World Stats, McKinsey, Educause, ASTD, Kompass (3) Includes fundraisings above $1m since 2007 and excludes fundraisings with undisclosed values