Vuepoint, E-learning Provider to the Fortune 500, Secures Over $11 Million in Growth Capital Led by Wheatley Partners 08/01/01 By Emily Trask, Editor, Eduventures.com Announcement Last week, Vuepoint Corp., an e-learning company in the corporate market, announced that it secured approximately $11 million in growth capital. The investment was led by Wheatley Partners, and it included Hudson Venture Partners, Dalewood Associates LP, Dalewood 2 Private Technologies Ltd. and Wafr Holdings. EarlyBird Capital acted as placement agent for the transaction. What it Means At a time when venture capital investments have scarcely been seen in the education and training space, Vuepoint's ability to garner more than $11 million in venture capital is indicative of the company's solid strategy of offering a turn-key e-learning program to corporate customers. Vuepoint's investment is greater than the $10.7 million total corporate investments that were made in June of this year. Corporate Profile Founded in 1996, by its present CEO Ara Ohanian, who brings 10 years if international corporate and knowledge transfer experience to the company, Vuepoint was established to enable the transfer knowledge-based corporate events into an ongoing process throughout a company. Ohanian and his team spent the first few years of the company's existence in research and development, aiming to develop flexible and customizable software for global enterprises. And although the company is five-years old, the $11 million capital infusion marks Vuepoint's first round of institutional funding. Previously, the company was funded by its founders and other individual investors. Vuepoint's Offerings Vuepoint has created software that is intended to provide a single e-learning solution enabling companies to avoid the overlap of capabilities and inefficiencies that are inherent in using different types of e-learning software. • Vuepoint Learning System (VLS) - As its flagship product, the company offers a fully integrated platform that combines the capabilities of a learning management system (LMS) and a learning content management system (LCMS). This single platform enables the rapid creation and dissemination of a company's content to employees and consumers. And, it provides a complete back-end management tool in order to identify individual learning needs and gaps in order to align employee skills with the goals of Vuepoint's customers. In the fourth quarter 2001 upgrade of the product, the VLS will also provide content authors with the freedom to decide whether or not they wish to tag content to create learning objects. • Consulting Services - The company offers support services to ensure smooth integration of the VLS into a company's infrastructure. o Content Development - provides outsourced content authoring service to migrate a company's individual content to the VLS o Immersion Programs - training companies' e-learning experts to create and rapidly populate the VLS with their own content o Global Management Strategy - offers training on how to utilize the VLS to achieve company growth and align the system with a company's business goals and objectives Business Model and Revenue Streams Vuepoint generates its core revenues from recurring annual licensing fees for the VLS platform, with a minimum of three-year licensing agreements. Although the company's support services are neither required nor included as part of initial licensing fees, customers can pay additional fees to utilize Vuepoint's extensive consulting services. The company currently maintains approximately 20-30 major clients, with each account worth between several hundred thousand dollars to one million dollars. So far in 2001, the company has secured a number of multi-million dollar accounts. Growth Strategy While the company intends to use the $11 million of its recently secured growth capital to develop new products and capture more clients, Vuepoint's main objective over the next year is to reinforce its customer service capabilities for existing clients. The company aims to increase customers' speed to knowledge in order to increase their potential for productivity. Vuepoint believes that building its implementation and delivery capabilities is critical to building its brand equity within the corporate space and securing new, large-scale global accounts. Eduventures Analysis Vuepoint faces competition from LMS providers, knowledge management companies, content-authoring providers and any company that enables the migration of knowledge to an electronic format. To Vuepoint's advantage, many corporate- seekers of e-learning software are discouraged with the lack of truly integrated, flexible and customizable products. The company differentiates itself from its competitors, not only in its integrated LMS and LCMS offering, which dramatically reduces an enterprise's cost of ownership, but also through the speed of its system implementation and the speed of its responses to customers' needs. To its credit, Vuepoint has secured accounts with a number of large-scale corporations including, Toyota Motor Corporation, A.T. Kearney, 3Com and Black&Decker. Vuepoint claims to distinguish itself by focusing on the mission- critical business content of enterprises. As such, the company positions its VLS product as a marketing weapon, moving beyond being an e-learning application to becoming an integral part of a company's business infrastructure. The company's most significant challenge is to convince potential clients of the value and reality of its integrated learning and content management system. To date, Vuepoint has provided ROI results for a number of its customers to demonstrate the cost-effectiveness of its products, including A.T. Kearney, which exhibited positive ROI within only one year of its three-year licensing contract, which more than covered its e-learning investment a few times over. Leveraging recently infused capital, Vuepoint must work to achieve its ramp-up of consulting and support services to ensure, beyond a doubt, seamless integration of its VLS across enterprises and to maintain attractive customer ROI results, in order to effectively grow its business in a cut-throat marketplace. Bottom Line Over the last few months, venture capital investments has slowed to a trickle in the education industry. However, while investors remain cautious, they are still interested in investing in growing companies that possess viable business models and can produce demonstrable customer successes and results. So, while stories of companies being delisted, closing down and selling out to larger companies have been in the news, investments in companies such as Vuepoint prove that venture capitalists are still able to fund compelling investment ideas.