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Shaw Academy

Platform:
Crowdcube
Stage:
Expansion
Industry:
Education
Location:
UK - South East
Date Rated:
11/10/17
Raise:
£2,194,000
Equity:
2.56%
Valuation (Pre Money):
£83,509,125
Industry: Education
Location: UK - South East
Platform: Crowdcube
£2,194,000 Expansion
Valuation: £85,703,125
Date Rated: 09/10/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: None

Business Summary

Shaw Academy is an online educator aiming to disrupt the cost of education around the world making practical education accessible to all throughout a more interactive and engaging live education. Shaw Academy has helped over four million students and its Professional Diplomas are accredited and internationally recognised. This round of investment will be used to hire more educators, to fund further product development and expansion.

Financial Overview

Date (y/e) Dec-15 Dec-16 Dec-17 Dec-18
Sales Dec-15£3,725,443 Dec-16£8,014,623 Dec-17£11,023,346 Dec-18£38,439,007
Gross Profit Dec-15£1,840,012 Dec-16£4,989,716 Dec-17£9,527,377 Dec-18£33,883,663
GP as % sales Dec-1549% Dec-1662% Dec-1786% Dec-1888%
Overheads Dec-15£5,461,425 Dec-16£8,534,206 Dec-17£9,941,634 Dec-18£21,945,852
Operating Profit Dec-15-£3,691,887 Dec-16-£3,815,956 Dec-17-£1,007,563 Dec-18£11,160,830
OP as % sales Dec-15-99% Dec-16-48% Dec-17-9% Dec-1829%
Closing Cash Dec-15£407,592 Dec-16£142,312 Dec-17£1,693,251 Dec-18£17,179,210

Note: This financial information has been sourced from the company on 09/10/2017. Financial data is NOT verified by Wheatfromchaff Ltd.
79%
SKILLS:
EXPERIENCE:
COMMITMENT:
The Founders have formed a complete management team with the complementary and proven expertise required to further develop the product and scale the business.
The Founders have significant management experience and they will be supported by a proven Chairman and Finance Director who should help guide the company to a successful exit.
The Founders have committed over 4 years to the business although we worry that £950k in dividends may have reduced their motivation. 5% of shares are set-aside for employees.
83%
MARKET:
PRODUCT:
COMPETITION:
The E-learning market is worth over £130bn globally and growing rapidly as it increasingly provides a more accessible and affordable alternative to an expensive traditional education.
The company's product has a vast number of positive testimonials. A wider selection of courses is planned and availability over mobile should help strengthen the offer further.
There are many competitors in the E-learning industry, but the team is building the foundation for leadership and is rapidly grabbing market share with its freemium and affordable approach.
75%
PROFITABILITY:
CASHFLOW:
RETURNS:
Historic growth, a substantial marketing budget and a wider offering suggest that the company can achieve these sales projections and enjoy healthy profit margins in the future.
This round of investment will provide enough working capital to fund the intended expansion and sales could drop 50% before further funds are needed.
If the team can deliver next year's forecast, they will be on the right path to deliver reasonable returns to its investors but they will not enjoy any tax relief.


Conclusion

Shaw Academy has benefited from a freemium model that has helped to increase visibility, engagement and gain early traction, and the management team is now forming global distribution partnerships with major players in the communications and e-commerce industry that should help accelerate growth. Furthermore the company has invested early in a scalable and accessible platform that should be able to support this.

The entry valuation is undoubtedly high at 8-12 times revenues but the growth trajectory is impressive and the market potential enormous, so if the management team can continue to execute well a lucrative trade sale or IPO is feasible. Cash generation is expected to be strong but dividends are unlikely as the Founders have clear intentions to maximise growth by re-investing profits.

We are therefore curious as to why almost £1m in dividends have been paid out last year yet over £4m in venture debt taken on in 2017 ?

Related Links

Crowdcube Pitch

shawacademy.com

 

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The Ratings we publish have been approved and issued at Financial Promotions in the United Kingdom by Wheatfromchaff in the United Kingdom who is Authorised and Regulated by the Financial Conduct Authority FRN: 751017. Wheatfromchaff Limited registered office is Kilver Court, Kilver Street, Shepton Mallet, Somerset, BA4 5NF and telephone number +44 (0) 1749 347 577. Telephone calls may be recorded. VAT No: 214 0196 49

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