Tag Archives: Private Equity

One is too risky. 100 is La La Land.

Optimistic CEO prioritizing core business initiatives

I work with private equity sponsors and CEOs of European knowledge and workflow businesses, mostly in education. Sometimes it’s during due diligence. Sometimes it’s post-deal, as a non-executive director, adviser or mentor. The businesses differ, but some of the same questions keep coming up.

1. Which initiatives will actually create value?

CEOs are usually optimistic entrepreneurs who see opportunities everywhere. When you get into a company, you sometimes find a great number of initiatives, but little detail behind them and no clear view of which will make a difference. Which ones could really grow revenue, profit or the value of the business? How big is each opportunity? How are we going to make it happen? Often, if you can structure the plan around something like 5–10 core initiatives, you can find a workable way to create value and maintain the focus needed to drive execution. One is probably too risky. 100 is La La Land.

2. Do we have the team for the next stage?

The people who built the company have often done something remarkable. But running a larger, international business under new ownership can ask something different of them. They may still be brilliant but no longer be playing the game at which they excel.

Making changes to the team is often one of the hardest things a CEO has to do, especially when the person is a co-founder or an old friend.

Dealing with the non-performing jerk is easy, and it has usually happened already. The hard case is the person with the great attitude and work ethic, the one you play tennis with. They were a superb HR director in a small family-owned business. Now they are out of their depth in a larger international company owned by private equity.

A wrong hire in the local team hurts, but you typically see it and fix it quickly. A wrong leader in a new market can cost so much time that the market opportunity is simply lost to the investor.

3. How will we know whether it’s working?

Some businesses report a great deal and still aren’t on the right track. Many years ago, I received more than 1,000 pages of pre-reading for a regular monthly meeting. I may have written 100 of them myself and that was in the the B.C. era (Before Claude). The number of slides created and read was not a very good KPI for that particular business. Lesson learned.

A former colleague once told me that he had worked at a company where he spent a day each month writing a management report but suspected the leadership didn’t actually read it. So one month he wrote: “This month I lost all my customers to our main competitor.” There was no reaction. The month after, he stopped writing the report. Nobody noticed that either.

A measure or report is useful if it leads someone to act differently, and if it tells them early enough to change course. If an international expansion is behind plan, is the problem the market, the proposition, the sales approach or the person leading it?

4. What happens when it isn’t working?

Sooner or later something isn’t. What matters is whether people can say so. Agree who owns each initiative. Make the goals as clear as possible, review the progress rigorously and honestly and unblock the things that are standing in the way. It’s not always pretty and clean work, it’s messy and unpredictable and can be frustrating. You need to show some grit. Decide when to invest more, when to change the approach and when to stop.

How I can help you depends on the situation. Sometimes it’s knowledge of a market or experience of a situation the team hasn’t faced before. Sometimes a capable CEO simply needs someone who will listen, challenge an assumption and help them work out what they think.

If that sounds useful, get in touch.

It’s time to scale up European edtech

Last week, Brighteye Ventures, a leading European investor in education technology, published the fifth edition of its European Edtech Funding Report. It looks like 2023 might be the trough of the cycle that peaked with the pandemic in 2021, and there are increasingly strong signals of a resurgence in investor appetite in 2024.

Reasons to be Cheerful

  1. After a period of decline, overall new venture funding for European edtech in 2023 surpassed the levels reached in 2020 ($1.2B vs $951M) and the number of deals increased on 2022 (288 vs 256).
  2. About 1/3 of all global edtech deals took place in Europe in 2023 (a record high proportion, up from 21% in 2019), indicating a high level of investor interest in the European market.
  3. International private equity and venture capital investors are currently holding a record amount of dry power, with $2586B ready for deployment at the top 25 PE investors globally.

Resilience?

From a European perspective, “resilience in the volume of deals” was driven by a rising number of deals under $4M, with over half of the completed deals being done at $1M or less. 

On the micro level of individual businesses, this thinly spread funding might make some sense, yet on the macro level of the industry and the customer, it also highlights part of the European challenge, namely lack of scale. You have to wonder if something substantial and world-class will be built out of some of these tiny deals. Usually “recessions” (possibly a relative term in tech) are a good opportunity for industries to restructure, with strong firms building on their strengths and weaker firms going out of business in what is typically a healthy evolutionary process.

Enable and simplify the work of the teacher

According to some estimates there are currently about 27,500 edtech companies in the K-12 sector, obviously not all deployed in all schools, but it’s not uncommon for schools to use hundreds of digital products. Imagine the life of a teacher. Her first concern is leading a classroom of 25-30 children, which is no mean feat in itself. When she deploys a digital solution it needs to:

a) positively impact learner outcomes

b) be easy to use and

c) ideally save time that she can use for interacting with students.

A teacher is best served by a smaller number of well-performing and frequently-used solutions than a huge toolbox of occasionally-used options.

Build a European Champion

In my view, investors in European edtech should focus on increasing scale and building a handful of segment-specific European/International Champions. At scale, a European Champion has the resources in terms of talent, know-how and money to develop and deploy top-notch learning solutions, yielding excellent learning impact and delivering good financial returns. It’s my hope (and expectation) that a group of investors will take the opportunity at this early stage in the new economic cycle to take our industry and the services we provide to schools to the next level.

BETTer Future

I’ll be visiting London and BETT at the end of March (probably 22nd -24th).  As for so many of us this will be my first trade fair since the pandemic and I’m really looking forward to joining in real life again (never expected to be this enthusiastic about a trade fair, not even BETT 😊). It does feel like we are now emerging from the restrictions of the last couple of years and I’m excited to get out there again.

I’m especially interested to meet people from companies with strong market positions, from scale-ups and from investors in the education, edtech, science and healthtech spaces during my trip to London.

As of March I have some availability for advisory and interim work and have extensive skills and experience in leadership/leading change, digital/transformation and commercial/strategy work.  I have deep knowledge and networks across the European education sector.

I’m also open to become a Non-Executive Director of such an organisation, as long as this doesn’t conflict with existing work. Very flexible in terms of location.

Feel free to send me a message at johnmartin@contentconnected.com or DM me on social media if you would like to meet up in London!

Looking forward >>

#OpenForWork #Leadership #Education #Edtech #Science #Digital #Transformation