The Best Place to Invest Your Money is…Online Learning?
Looking to make a little extra Lira? Increasing evidence points to online education as a way to do this. Maya tips me off to an article published on BloggingStocks.com over the weekend about Apollo Group, the parent company of the University of Phoenix.
With the stock market down 11% from its October high, we are officially in correction territory. But not all stocks are created equal…Apollo stock is up 89% in the last year. Its most recent year’s revenues of $2.8 billion have grown at a 22% compound annual rate in the last five years and its net income was $434 million, growing at 22%.
Hmmm…cut to South Korea. Ever heard of a company called Megastudy? If not, check out this mind-blowing article from BusinessWeek. Megastudy is an education company in South Korea deriving a huge chunk of revenues from its online operations. Now check out its 2-year stock chart below:
In the words of Borat, “Wawaweewa!”
Or perhaps you’re looking for the Black Swan effect in your investing life and to find that hundred-bagger or thousand-bagger. Well, it might be wise to follow what the top VCs are doing. Two of the top five (or arguably top three) VCs have invested in online education companies (Sequoia into TutorVista and Benchmark into Grockit). Another company (Tutor.com) recently secured over $13 million in capital.
Although I’m sure I’m biased it seems like a pretty good spot to put your money right now whether you’re playing the market or looking to invest in the next Google or Facebook.
January 15th, 2008 at 10:03 am
I think your predictions are right. Online education is looking to be a huge market within the next decade. Scratch that, within the next five years.
I believe this recent development stems from the echo boom. The throngs of children born from baby boomers are now growing up and entering the college market. This year, there will be more graduating HS seniors in history than ever before, competing ruthlessly for top-notch college acceptance letters. This competition breeds an arms-race, amongst HS parents and students, for consumer products that will give anyone a leg up.
Not surprisingly, a host of test preparation startups, online education marketplace startups, and online school and college startups have sprung out of nowhere, competing for those dollars.
Additionally, one interesting thing is the number of Indian-owned education startups out there. Tutorvista.com (as mentioned in the article), globalscholar.com, etc.
Of the many startups looking to dominate this space, I would watch out for one in particular: PrepMe.com. They won a huge business plan competition back in 2005, which put them on the front cover of FORTUNE magazine. Plus, they’ve got a former Product Manager at Google working as their CTO, which undoubtedly helps them from an SEO and SEM angle. I think they’re poised to surge to the front of this online education startup arms-race.