betterU Education Corp. (CVE:BTRU, FRA:5OGA) – How To Monetize A Developing Country

Palisade Research September 21, 2017
Category: Research

betterU Education Corp. is a global education marketplace that provides access to quality education from the top educators into emerging markets such as India.

To date, the company has enlisted over 10,000 programs from over 50 institutions and 8 countries. betterU has also announced several global strategic partnerships that have gone unnoticed by the general public, with each deal having the potential to generate enormous value for its shareholders.

Current Price: C$0.42
Shares Outstanding: 51.8 million
Market Capitalization: C$21.8 million

Currently focused on the hundreds of millions of potential customers in India, betterU aims to equalize education around the world by providing accessibility, choice, and affordability, all within an ‘Amazon’ like platform providing opportunities to those who want to better their lives. The company’s vision is to provide a better education, which can lead to a better job and ultimately create a better life by bridging the gap between education and the job industry.

betterU was founded in early 2013, and it took over 4 years to put the foundation in place, including global leadership, localized teams, international partnerships, mass marketing, support technologies and infrastructure to operate in India.

It took more than 2 years to establish the company’s operating entity within India including incorporating, banking and an ability to collect payments in local currency. 98% of the country’s population of over 1.3 billion do not have credit cards to enable them to purchase international education. India is considered a closed currency market, and the only way to transact is to be established as an Indian entity, which has been for many foreigners too lengthy of a process to set-up.

This was one among many significant barriers to entries that make it extremely difficult for other educators to do business in India. betterU has the first mover advantage, and is the only global education marketplace established for emerging markets.

The business model is simple, betterU provides mass marketing across India, collecting all registrations payments, user data and then connects the learner seamlessly into a content partner’s learning environment. betterU holds back 20% to 50% of revenues collected as their fee depending on the partner’s brand and offering that is available. To date, betterU has over 10,000 courses in its arsenal, provided by reputable institutions such as edx’s Harvard University, Massachusetts Institute of Technology, Udemy, Pluralsight, Skillsoft and more.

(Sample of content partners, Source: betterU)

Education In India – Big Business

There is no denying India is a large market. Ever since Jim O’Neill, the global economist at Goldman Sachs, coined the phrase ‘BRIC’ in the early 2000s, India has proven to be a financial juggernaut on the world stage. The country is singled out due to its young population, healthy savings and investment rates, and its increasing integration into the global economy. In fact, for the first time, India was the first on the World Bank’s growth look in 2015-2016.

By extension, the education sector provides massive opportunity, with almost 30% of the population between the ages 0-14, and 260 million students enrolled in more than 1.5 million schools. Over 34 million students are enrolled in ~50,000 colleges and institutions for higher education, making it the largest vertical in the world. The education sector is currently valued at $98 billion, and is expected to climb to $144 billion by 2020.

Intuitively, the online education market will be growing just as fast. In a recent study released by KPMG, the sector is currently valued at $250 million, and is expected to reach ~$2 billion by 2021. This growth will be primary fueled by paid users, which is expected to grow from current 1.6 million users to 9.5 million in 2021. The largest segment of online education is re-skilling and certification, currently valued at $93 million, and expected to grow to $463 million by 2021.

Strategic Partnership With The Largest National Media Company

betterU’s head office is located in Ottawa, Canada, but it also has local offices in Delhi, Bangalore and Mumbai. One of the key shareholders in its Indian entity, Skillsdox India Private Ltd., owned 50% by betterU and 50% by Bennett, Coleman and Co. Ltd. (the Times Group), the largest media company in India.

betterU and the Times Group have entered into an investment and marketing agreement, where the Times Group will make an in-kind investment of ~$30 million into Skillsdox India. The Times Group will provide media-based marketing that will cover 80% of India. This partnership provides betterU with immense exposure and penetration for education in India.

Last month, the company launched a visibility campaign, and saw 14,000 visitors with a bounce rate of 29% versus the average of 50%. Last year numbers saw a 3% conversion to registrations, 40% of whom ended up buying. The company’s social media followers grew from ~20,000 over the last year to now over 130,000 in just the last 6 weeks.

The company has only used $1 million of the in-kind investment, and is now building out a digital campaign to fully utilize the marketing partnership. Once this campaign is fully active, it will provide a significant pipeline of learners to the platform.

Strategic Partnership With The Telecom Sector Skill Council (TSSC)

Prime Minister Modi has a vision to skill 500 million people by 2022. Thus, many global educators are clamoring for a spot at the table, however, most simply do not have the infrastructure to do so. betterU’s unique approach of pre- and post assessments to determine the ideal learning path has given the company an incredible edge in dealing with a variety of learners and scenarios.

In November 2016, betterU held its first Skills Leadership Summit in Delhi that included many industry, academia and government leaders. A panelist, the CEO of TSSC, Lieutenant-General Kochhar outlined the importance of skills development and the required collaboration between industry and educators.

betterU fostered this relationship, and after 10 months of discussions, an MOU was executed with the TSSC to jointly support the skilling of millions of workers in the telecom sector. The two organizations will combine efforts to support multiple initiatives, including the development of country-wide learning centres; the development and acquisition of localized educational programs; development of rural area mobility learning; and the further advancement of a customized skilling platform.

The TSSC expects the need to skill over 8.8 million people in the telecom sector by 2022, and will do so by utilizing the portfolio of courses available through betterU’s global education marketplace. This will be an incredible collaboration once formalized, and will provide a robust and steady stream of revenue for betterU.

Strategic Partnership With NASSCOM/IT-ITes SSC

Similar to the TSSC MOU, betterU have begun formal discussions and due diligence with NASSCOM/IT-ITes SSC for the purpose of skilling millions of professionals across the IT sector. In show of support of for betterU and Canada’s commitment to bilateral trade, Brian Parrott, Minister Commercial and Senior Trade Commission Services from the Canadian embassy, was also present at the meeting.

Robust Pipeline

Speaking with management, there is a variety of opportunities in the pipeline at various stages of development. Each has the potential to either bolster revenues or provide game changing cash flow to the table.

betterU is on the cusp of consummating a partnership with one of the largest technology companies in the market, which will allow this company to establish itself in India with a strategic partner who can collect its revenue. This can lead the way to a larger, more formal agreements down the line.

betterU’s most recent partnership is with the Central Bank of India to provide instructor led leadership training in Mumbai for all their Assistant General Managers. The company is currently expecting feedback on the training results, and looking forward to continue building its relationship.

Proven Management Team – Brad Loiselle

Brad Loiselle, President, CEO, Founder, is a serially successful entrepreneur, with an exit in the online education space already.

He was the founder of Canada’s largest supplier of licensed paper goods, EasyWrapLines, which manufactured and distributed licensed paper goods products (gift bags, wrapping paper, etc.) for entertainment companies such as Disney, Marvel, Nickelodeon, Warner Brothers, and Fox Entertainment, just to name a few.

After this venture, Brad was in China and saw the struggles of education up close. He thought that technology was the perfect way to organize the space, and realized no one was offering content to the online masses. He created his own methodology, built the platform, and hit the conference circuit to get the word out.

His company, iPal (Interactive Professional Applied Learning), provided a full development solution to online education. His focus was to create a company that would eventually bring quality education to the mass population of the emerging markets.

iPal developed courses for employees at companies such as BMW, Scotia Bank, IATA, Service Canada College, and Knightsbridge. In fact, it was Knightsbridge that eventually acquired iPal in July 2011, using the methodology to build courses across North America.

Brad saw the potential of what online learning could bring to the developing world, and built betterU to service this lucrative space. Brad has a significant equity position in betterU and has entered into a volunteering pooling agreement to restrict his shares for sale on the exchange, and maintains the burning desire to build a leading company to eventually sell off to a major tech company.

The online education space is a hot sector. Some notable acquisitions include Tutor.com acquiring IAC for an estimated $40 million; Pearson Education buying a controlling stake in TutorVista for $127 million. Chan-Zuckerberg, Sequoia and others have -backed Byju for over $125M; Chegg acquiring InstaEDU for $30 million; and Linkedin acquiring Lynda.com for $1.5 billion.

Moving Forward

At a $20 million market cap, betterU is significantly undervalued.

It appears there is a lot of interest on the investment front, and we believe Brad will be able to secure a significant investment in the next six months.

The company will experience rapid organic growth through its partnership with The Times Group, with each partnership in the pipeline offering significant leaps in valuation once solidified.

Brad is a proven company maker, and it also helps he already has a significant exit in the online education space. This will be his third home run, and at current prices the perfect entry into this stock.

Palisade Global Investments Limited holds shares of betterU Education Corp.. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.

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