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Ed Tech in Asia: Key Trends and Opportunities

Allison Baum
Allison Baum

This document discusses key trends in educational technology (ed tech) in Asia. It notes that while most ed tech investment has been in the US so far, Asia is poised to become the largest market due to its large population and emphasis on education. It identifies several opportunities for ed tech companies in Asia, including the business-to-consumer market due to high education spending, the potential for mobile ed tech given Asia's mobile usage, and growing demand for language learning. The document also covers challenges of localizing for Asia and the need for more cross-border collaboration and specialized investors to help global ed tech solutions succeed locally.

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ED TECH IN ASIA: KEY TRENDS Allison Baum,18 June 2015
INTRODUCTION
WHY BE HERE? Were here to put a dent in the universe. Otherwise, why be here? - Steve Jobs
Early stage venture investors supporting exceptional entrepreneurs to build remarkable businesses
WHO WE ARE Allison Baum, Managing Director, Tokyo, Japan Experience in educa3on opera3ons management including: curriculum development, marke3ng, teacher training, real estate expansion, hiring, and business development Bootstrapped and launched educa3on business in Asia, scaled to US$1mm revenue run rate, 2,000+ students, 60 teachers, 6 employees in nine months Ins3tu3onal sales and trading at Goldman Sachs, 8 years investment experience in public and private markets Tytus Michalski, Managing Director, Hong Kong SAR, China 16 years in cross-足border investment experience across Hong Kong, Singapore, Tokyo, London, Canada, and the United States Previously Chief investment O鍖cer of PMA Investment Advisors, where he managed both regional funds and the equity team Founding member of PMA, scaled from US$600mln to US$3bln in ins3tu3onal AUM and sold in 2006 for US$200mln Stephen Forte, Managing Director, Menlo Park, CA, USA Tech Strategy at Telerik, US$260mln exit Experienced entrepreneur with 5 successful exits Mentor at Thiel Founda3on, ChinaAccelerator, HAXLR8R Founder of Mach5, a Silicon Valley based startup accelerator and co-足founder of AcceleratorHK, Hong Kongs 鍖rst startup accelerator
WHY EARLY STAGE? RETURNS 端錫 Target returns 30% IRR / 5x TVPI multiple 端錫 Current portfolio on track to exceed targets ACCESS 端錫 Diverse network of deals & people 端錫 Over 300 co-investors around the world INNOVATION 端錫 Cutting edge technology, teams, businesses
THE NEXT FRONTIER
2015 1800
THE RISE OF ED TECH 0 500 1,000 1,500 2,000 2,500 2010 2011 2012 2013 2014 Millions Private Investment in Learning Technology Companies (US$ Millions)
THE RISE OF ED TECH
HIGH PROFILE EXITS 0 10 20 30 40 50 60 70 80 90 100 2011 2012 2013 2014 (est) # Deals EdTech Exits +200% in 2014 IPO M&A
端錫 75% capital invested into edtech in 2014 was U.S. 端錫 9/10 largest 鍖nancings in U.S. 端錫 60 million K-12 students 端錫 96% of K-12 students in the world are outside of the U.S. USA HAS LED THE WAY
ASIA IS NEXT US$59.90bn: Size of global ed tech market by 201816 600 million: K-12 students in Asia 5 years: Time until Asia is the largest regional market 16 300 million: People learning English in China 195 million: College graduates in China by 2020 40% income spent on education
DEVELOPING ECOSYSTEMS 端錫 People 端錫 Connectivity 端錫 Capital
GRASS IS GREENER
LOCAL CHALLENGES 端錫 Localization 端錫 Business Model 端錫 Language 端錫 Culture 端錫 Values 端錫 Timing
端錫 B2C business models 端錫 Mobile 端錫 Language Learning 端錫 Exits KEY OPPORTUNITIES IN ASIA
#1: B2C IN ASIA 端錫 600 million K-12 students 端錫 40% income spent on education 端錫 60-96% of secondary school students receive outside tutoring
Ed Tech in Asia: Key Trends and Opportunities
#2: MOBILE IN ASIA 端錫 APAC = 57.7% of the worlds mobile phones 端錫 80% of internet users in China access via the mobile/tablet 端錫 Highest % mobile payment users in the world
Ed Tech in Asia: Key Trends and Opportunities
#3: LANGUAGE LEARNING 端錫 300 million people learning English in China 端錫 30% of foreign students studying in U.S.are from China 端錫 English skills correlate with 30-50% higher income
端錫 EducationTravel = US$80 billion / year 端錫 Language Education= US$12 billion /year 端錫 80% students sent by agents
端錫 Mobile 端錫 Publishing/Media 端錫 Tech/ Gaming 端錫 Education 端錫 IPO #4: EXITS
CROSS BORDER ACTIVITY
端錫 Global solutions 端錫 Local implementations 端錫 Cross-border collaboration 端錫 Global, specialized investors WHATS MISSING?
GLOBAL CHALLENGES ACCESS EFFICIENCY ENGAGEMENT OUTCOMES 端錫 Limited 端錫 Quality vs. scalability 端錫 High 鍖xed costs 端錫 No infrastructure 端錫 Differentiated learning 端錫 Motivation 端錫 Assessment 端錫 Relevancy
GLOBAL SOLUTIONS ACCESS EFFICIENCY ENGAGEMENT OUTCOMES
WHERE FRESCO FITS IN 端錫 Bridging the gap 端錫 Investing in scalable solutions 端錫 Dedication to sector 端錫 Early stage Capital 端錫 People 鍖rst
HOW WE DO IT
If you want to build a ship, dont drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea. Antoine de Saint-Exup辿ry
GET INVOLVED The people that are crazy enough to think they can change the world are the ones that do. - Steve Jobs
KEEP IN TOUCH 端錫 www.fresco.vc 端錫 allison@fresco.vc 端錫 @allison_baum

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Ed Tech in Asia: Key Trends and Opportunities

  • 1. ED TECH IN ASIA: KEY TRENDS Allison Baum,18 June 2015
  • 3. WHY BE HERE? Were here to put a dent in the universe. Otherwise, why be here? - Steve Jobs
  • 4. Early stage venture investors supporting exceptional entrepreneurs to build remarkable businesses
  • 5. WHO WE ARE Allison Baum, Managing Director, Tokyo, Japan Experience in educa3on opera3ons management including: curriculum development, marke3ng, teacher training, real estate expansion, hiring, and business development Bootstrapped and launched educa3on business in Asia, scaled to US$1mm revenue run rate, 2,000+ students, 60 teachers, 6 employees in nine months Ins3tu3onal sales and trading at Goldman Sachs, 8 years investment experience in public and private markets Tytus Michalski, Managing Director, Hong Kong SAR, China 16 years in cross-足border investment experience across Hong Kong, Singapore, Tokyo, London, Canada, and the United States Previously Chief investment O鍖cer of PMA Investment Advisors, where he managed both regional funds and the equity team Founding member of PMA, scaled from US$600mln to US$3bln in ins3tu3onal AUM and sold in 2006 for US$200mln Stephen Forte, Managing Director, Menlo Park, CA, USA Tech Strategy at Telerik, US$260mln exit Experienced entrepreneur with 5 successful exits Mentor at Thiel Founda3on, ChinaAccelerator, HAXLR8R Founder of Mach5, a Silicon Valley based startup accelerator and co-足founder of AcceleratorHK, Hong Kongs 鍖rst startup accelerator
  • 6. WHY EARLY STAGE? RETURNS 端錫 Target returns 30% IRR / 5x TVPI multiple 端錫 Current portfolio on track to exceed targets ACCESS 端錫 Diverse network of deals & people 端錫 Over 300 co-investors around the world INNOVATION 端錫 Cutting edge technology, teams, businesses
  • 9. THE RISE OF ED TECH 0 500 1,000 1,500 2,000 2,500 2010 2011 2012 2013 2014 Millions Private Investment in Learning Technology Companies (US$ Millions)
  • 10. THE RISE OF ED TECH
  • 11. HIGH PROFILE EXITS 0 10 20 30 40 50 60 70 80 90 100 2011 2012 2013 2014 (est) # Deals EdTech Exits +200% in 2014 IPO M&A
  • 12. 端錫 75% capital invested into edtech in 2014 was U.S. 端錫 9/10 largest 鍖nancings in U.S. 端錫 60 million K-12 students 端錫 96% of K-12 students in the world are outside of the U.S. USA HAS LED THE WAY
  • 13. ASIA IS NEXT US$59.90bn: Size of global ed tech market by 201816 600 million: K-12 students in Asia 5 years: Time until Asia is the largest regional market 16 300 million: People learning English in China 195 million: College graduates in China by 2020 40% income spent on education
  • 14. DEVELOPING ECOSYSTEMS 端錫 People 端錫 Connectivity 端錫 Capital
  • 16. LOCAL CHALLENGES 端錫 Localization 端錫 Business Model 端錫 Language 端錫 Culture 端錫 Values 端錫 Timing
  • 17. 端錫 B2C business models 端錫 Mobile 端錫 Language Learning 端錫 Exits KEY OPPORTUNITIES IN ASIA
  • 18. #1: B2C IN ASIA 端錫 600 million K-12 students 端錫 40% income spent on education 端錫 60-96% of secondary school students receive outside tutoring
  • 20. #2: MOBILE IN ASIA 端錫 APAC = 57.7% of the worlds mobile phones 端錫 80% of internet users in China access via the mobile/tablet 端錫 Highest % mobile payment users in the world
  • 22. #3: LANGUAGE LEARNING 端錫 300 million people learning English in China 端錫 30% of foreign students studying in U.S.are from China 端錫 English skills correlate with 30-50% higher income
  • 23. 端錫 EducationTravel = US$80 billion / year 端錫 Language Education= US$12 billion /year 端錫 80% students sent by agents
  • 24. 端錫 Mobile 端錫 Publishing/Media 端錫 Tech/ Gaming 端錫 Education 端錫 IPO #4: EXITS
  • 26. 端錫 Global solutions 端錫 Local implementations 端錫 Cross-border collaboration 端錫 Global, specialized investors WHATS MISSING?
  • 27. GLOBAL CHALLENGES ACCESS EFFICIENCY ENGAGEMENT OUTCOMES 端錫 Limited 端錫 Quality vs. scalability 端錫 High 鍖xed costs 端錫 No infrastructure 端錫 Differentiated learning 端錫 Motivation 端錫 Assessment 端錫 Relevancy
  • 29. WHERE FRESCO FITS IN 端錫 Bridging the gap 端錫 Investing in scalable solutions 端錫 Dedication to sector 端錫 Early stage Capital 端錫 People 鍖rst
  • 30. HOW WE DO IT
  • 31. If you want to build a ship, dont drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea. Antoine de Saint-Exup辿ry
  • 32. GET INVOLVED The people that are crazy enough to think they can change the world are the ones that do. - Steve Jobs
  • 33. KEEP IN TOUCH 端錫 www.fresco.vc 端錫 allison@fresco.vc 端錫 @allison_baum