IBIS Capital | Global e-Learning Investment Review 10 Things You Should Know About e-Learning 1 $4.4tn 5 4 2012 global education expenditure The cost of education has risen 84% since 2000, 37% higher than CPI, which has lead to situations like the US student loan debt accumulation to over $1tn. e-Learning is a cost effective alternative Supported by 1.4bn students and 62.5m educators 2 The e-Learning market is the fastest growing market in education, standing at $91bn in 2012 23% Internet users have grown 870% since 2000 massing over 2.4bn users globally and causing an evolutionary shift in how people can engage with the world 7 8 257% 2.4bn internet users 6 CAGR Global Education vs. e-Learning Expenditure Forecasts 2012-2017 3 700m individuals 9 IBIS Capital’s near term view on e-Learning: 10 2013 Consolidation will be the theme as businesses seek to expand geographic reach, scale and service offering of the world’s population will lack basic literacy skills by 2015 : 23.0% penditure 7 CAGR 2012-201 ng Ex e-Learni 8.0 8% The US(1) to push forward with Project Tin Can which will set industry-wide e-Learning standards for software 8% 6.3 5.4 4.4 50% 4.0 34% 2.0 e-Learning companies l 10.0 6.0 3,000+ n $oa1ntdebt Global Education Expenditure Breakdown by Sector 2012 Global Education Expenditure ($tn) about new ideas and consumer learning requirments are disrupting the whole education eco-system 2-2017 CAGR iture: 7.4% 201 Education Expend US student tablet ownership grew 257% last year and in 2011 technology adapted training has penetrated over 40% of the Global 500 Fortune companies In Europe alone there are forecasted out to 2017 Current industry hype IBIS Capital’s hot picks for e-Learning for 2013: next generation content and its creation tools, adaptive learning, collaborative learning, Learning Record Stores (LRS), re-purposable learning, Massive Open Online Courses (MOOCs) and Open Education Resource (OER) management 0 2012 2015 2017 Post Secondary K-12 Global Education M&A Activity Total Deal Value ($bn) (2) Global Education Fundraising Activity e-Learning as % of Total Volume 50.0 Total Capital Raised ($m) 80 75% 74% Other Corporate & Government Learning Volume 150 6,000 130 68% Industry Overview (3) 5,000 40.0 120 60 56% Content Industry Structure Management Systems Distribution 4,000 3,000 40 Customer 91 87 47% 30.0 67 67 65 20.5 90 2,366 20.0 60 2,000 13% 8.5 2.4 2007 1.2 2008 2009 Total Deal Value ($bn) • Regulatory/Curriculum • Corporate Requirements • Consumer Requirements • Scale • Complexity • Eficiency • Online • Free/Paid • One-to-One/One-to-Many • Cost • Level of Qualiication • Flexibility Publishers Software Platform Immersive Learning 2010 Content Tools MOOCs Open Source Smart Technology Learning Portal 2011 Content Company * Education Giants e-Learning as % of Total Volume Total Capital Raised ($m) 61% 26% Management Systems 13% Content Target Sector Transaction Value $m 24 John Wiley & Sons Distribution Andreessen Horowitz, Charles River Ventures 9.1 75% UK 15.2 Oct 12 Pearson Management Systems US Founder Collective, IA, Shasta, The Social+Capital Partnership 6.2 37% US 15.7 Oct 12 John Wiley & Sons Management Systems 220 US Google, Bill & Melinda Gates Foundation and other funding 5.0 74% Japan Aug 12 IBM 1,307 Benesse, Atomico Ventures, Globis Capital Partners 4.1 Management Systems Aug 12 Higher One Holdings Management Systems 38 Distribution US Social learning management system Management Systems Free education for anyone anywhere Distribution Quiz-based e-Learning apps Content Distribution Acquirer Nov 12 Free online university courses Immersive learning Transaction Target Date Market Cap. $bn Investors UK UK Avonmore Developments, Huda Associates, Private Investors Company 4.7 58% 100% US US 650 4.2 2.8 2.3 Note: * Client of IBIS Capital 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, 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 2012 yTD Volume 70% 21% 9% Recent Fundraisings HQ HQ 2011 Distribution Education Revenue as % of Total Revenue Sector 2010 e-Learning Breakdown by Sector in 2012 YTD (Volume) 2011 FY Revenue $bn Overview 2009 0 2007 Recent M&A Transactions IBIS Capital’s 5 Disruptive Businesses 2008 30 864 0 0 2012 yTD e-Learning Breakdown by Sector from 2007 to 2012 YTD (Volume) Management Systems 999 4.2 Distribution Type of Business 1,349 969 1,000 0 Key Affecting Factors 1,435 20 10.5 10.0 Transaction Target Date Investor Target Sector Nov 12 VegasTechFund Distribution 9.8 Oct 12 Academic Partnerships Distribution 1.8 Oct 12 Charles River Ventures, Andreessen Horowitz Distribution 15.0 Oct 12 PROfounders Capital Distribution 4.6 Oct 12 Bill & Melinda Gates Foundation, Retro Venture Partners Management Systems 3.3 (1) The Advanced Distributed Learning company is sponsored by the US Secretary of Defense and is contributing signiicantly to Project Tin Can (2) Includes transactions above $20m since 2007 and excludes transactions with undisclosed values. Includes the McGraw-Hill / Apollo transaction, which is still pending (3) Includes fundraisings above $1m since 2007 and excludes fundraisings with undisclosed values Transaction Value $m