A Kiwi whizz-kid has bought up another tertiary tutoring business and drawn the attention of New York billionaires as he cast his eyes further afield.
Crimson Consulting this week completed the purchase of Dunedin-based Unitutor. The move follows Crimson last year acquiring Auckland University medical school prep service MedView.
Crimson, founded by two Auckland teenagers in February 2014, offers consultancy services to those applying for highly competitive slots in university in the United States and England. Last month it hired Max Key, the son of Prime Minister John Key, as a consultant.
Crimson managing director Jamie Beaton, 20, said from the United States where he is studying at Harvard University, that the acquisition of UniTutor would see its Otago University-focused undergraduate tutoring services rolled out nationwide.
UniTutor was founded in 2011 by Otago University graduate Samantha Berry. She said the opportunity to expand nationally was exciting. "It's been a long ride, but it's most definitely been worth it."
Beaton was unwilling to discuss a purchase price, but said UniTutor had revenues last year of $200,000 that he hoped would triple within 12 months, and the acquisition was part of a strategy focused on expanding quickly overseas.
He said the market was internationally very fragmented, making buying existing players an easier proposition. "The strategy at the moment is to go around and buy all these businesses for cheap multiples and quickly build up the brand of Crimson."
Beaton said his acquisition targets were old-school brick and mortar businesses that typically traded at lower valuation multiples but could benefit from the scalability of Crimson's online model.
He said the deal showed the "beautiful synergies between brick and mortar academics and online education companies".
Beaton said he was in discussions with four similar business in Sydney, and hoped to make a play for one soon with plans to begin focusing on China in the middle of next year.
He said a recent round of capital raising pulled in $7.5 million, including $6 million from New York billionaire and retired hedge fund manger Julian Robertson, with the offering valued the business at $75 million. Such a valuation would have Beaton - who was only able to legally become a director of Crimson last year after he turned 18 - knocking on the door of the National Business Review Rich List. Crimson is 49.48 per cent owned by Beaton with co-founder Sharndre Kushor holding a 14.37 per cent stake.
Beaton said Robertson's interest in the business was mirrored by his hedge fund Tiger Management, who were intrigued at the possibility of Crimson breaking into the $100 billion Chinese market for tutoring.
Young Kiwi success stories:
• Tech entrepreneur Derek Handley is New Zealand's youngest managing director of a listed company and has featured on the Silicon Alley 100 list of the most influential people in technology.
He quit his job as a 23-year-old in pursuit of a career as a business owner, and eventually stumbled across global mobile marketing businesses. In 2001 he co-founded The Hyperfactory. After the success of this business, Handley started several others.
• Senior Google executive Victoria Ransom is ranked #19 on Fortune Magazine's 40 under 40 list and was named one of Fortune Magazine's Most Powerful Women Entrepreneurs 2012. Most recently, Ransom has won a Kea World Class New Zealand Award.
During her short entrepreneurial career Ransom has developed three companies, the most recent being Wildfire - a social software company that helps brands reach customers over social media networks such as Facebook and Twitter.
• Trade Me founder Sam Morgan sold New Zealand's largest online auction site in 2006 to Australian media company Fairfax for over NZ$750 million.
Morgan formerly worked for IT consultancy Deloitte before founding Trade Me in 1999, at the age of 23. Trade Me is the most visited website in New Zealand. It has 1.2 million members who are expected to host 35 million auctions this year.
• US-based Kiwi entrepreneur, Claudia Batten, last year became the youngest winner of the Supreme Award at the World Class New Zealand Awards.
In her twenties she switched from commercial law and moved from Wellington to New York where she helped co-found two groundbreaking digital businesses: Massive Inc, later sold to Microsoft for a reported US$200-$400 million, and Victor & Spoils, the first advertising agency built on the principles of crowd-sourcing.
• Scott Bartlett is chief executive of state-owned transmission company Kordia and formerly CEO of internet service provider Orcon. He started his telecommunications career in 2002 as CEO of Quik Internet which he later sold to Vodafone.
In 2007 Bartlett was listed as the 18th most influential person in the PC World Internet top 20.