A UK-headquartered ed tech that counts some of the world’s largest educational publishers as clients is raising seed financing of up to £750,000 at a £5 million valuation with plans to grow tenfold, EducationInvestor Global can reveal.

Digital Learning Associates (DLA), a software-as-a-service (SaaS) provider of video-based educational content, has plans to significantly expand its footprint in the $42 billion global English-language tuition market, forecast to reach $55 billion by 2027.

The firm has instructed Henry Warren, who chairs Watobe and was Pearson’s former innovation director, to lead the capital raise, which will see a small slice of DLA’s equity handed to angel investors, venture capitalists and high-net-worth-individuals.

Founded by former BBC executives Stephen Haggard and Adam Salkeld in 2015, DLA’s annual recurring revenue stands at £350,000, according to an investor presentation seen by this publication. Its full-year 2021/22 revenue growth target – which it is “on track” to meet – is 200%.

DLA, which has grown by more than 25% year-on-year since launching, “serves” 10 million students worldwide. Listed among its top customers are Oxford University Press, Latin America-focused Santillana, German publisher Cornelsen, language-learning app Busuu and Chinese tutoring behemoth New Oriental.

The next step in DLA’s growth strategy involves broadening its geographical remit, with a focus on Asia and Latin America, as well as its client base. According to Haggard, the company is witnessing a marked increase in demand for its content among pathway providers and tutoring networks, in addition to publishers, which at present are its primary customers.

DLA will use the seed capital to create new business lines, including video-led readers in e-book and print form, online courses, and curated collections that education platforms can re-sell. Funding will also help bankroll a global marketing and sales expansion.

By 2024, DLA aims to lift its number of customer deals from 35 this year to 255, which will generate revenues totalling £3.6 million and net profit of £1.1 million.

DLA says that its business model is intrinsically different to those under which English-language learning providers acquire video content.

Traditional, commission-based models entail high unit costs, according to DLA, and minimum orders often start at £10,000 with six- to 12-month lead times. Moreover, the firm says, content is typically generic as a result of poor scripting and acting and cannot be repurposed.

DLA’s content, on the other hand, is sold on a SaaS basis, with rentals starting at £200 a year, and can be inserted immediately into products and workflows, eliminating lead times. Its videos are entertainment-grade, DLA says, designed to be customised and repurposed – meaning the same unit of content can be sold to multiple clients.

“Making a one-off video for an instructional purpose used to take a year and cost $10,000 a unit. We know that because we once used to produce it,” said Haggard.

“The sector was ready for a smarter approach. So, we give them instant access to authentic high-quality video under licence. We help them lightly customise it for their syllabus, and it’s all at a price about a tenth of the old model. It’s a no-brainer for an education business.”

Because DLA’s videos can be repurposed and sold to multiple clients, a 90% gross margin on each unit can be achieved, the firm says.

DLA’s competitors include BoClips, Moving Image, Nat Geo, TedED and the BBC.

Its investor presentation details potential exit routes that could be explored following three years of growth.

The organisation says it has already been approached by a “major” publisher regarding a takeover – and suggests that pathway providers and tutoring platforms seeking “unique content” could also be interested in pursuing an acquisition.

Date published: 14 June 2021

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