Even with the global financial turmoil and economic downturn, the education industry in 2008 continue to be favored by investment institutions because of its good cash flow and immune to economic cycles. and continuous economic growth was continues to . The amount of investment in 2008 has increased by 45.76% compared with that of 2007. The released“The Annual Investment Report on China's Education Industry of 2008”, according to the Vocational education to obtain the maximum amount of investment, financing, total about $100 million, accounting for 48% of the total amount of education training market.
Experts in venture capital industry say there is more potential for education industry in the financial crisis, and there are more potential needs in the network education service area. In the investment of education industry, investors are more concerned with the business model, team building, forward-looking services and so on.
Education industry is popular with investment institutions
Even if the global financial turmoil and economic downturn, 2008 education industry is still in good cash flow and sustained growth is not affected by the economic cycle and the advantages of continue to get the favour of investment institutions, investment amount of 2008-2008 annual increase of 45.76%. This number comes from the annual report on the investment of education industry in China (hereinafter referred to as the report) just released.
Education industry market mainly includes language training, coursework tutoring, education level education, professional education, education investment and IT professional education. According to the report, language training and education training received the most investment, accounting for 22 per cent of education investment.
From all the niche markets of education industry financing amount, vocational education to obtain the maximum amount of investment, financing amount is RMB 782 million yuan ($100 million), accounting for 48% of the total amount of education training market. Second, it invested rmb485 million in education and RMB 249 million in education.
Industry expert analysis points out that the language training investment has been in a heated situation, especially English training has become saturated. Since 2004, new Oriental acquired the first venture capital investment in the language training market. In addition to the new world education, which is mainly engaged in Japanese training, other institutions are mainly English training. "In the future, the investment amount of traditional English training will be reduced, and there may be investment opportunities in some segments of the English market, such as education training for online English, and English for young children. In addition to English, small language training institutions such as Japanese, Korean and Chinese will be favored by investment institutions. "Said the expert.
From 2004 to the end of 2008, a total of 51 VC/PE investment cases were disclosed in the education industry, involving a total investment of 4.556 billion yuan (us $650 million). "The three years from 2006 to 2008 have been the biggest investment boom in China's education industry." So says venture capital experts.
Mergers and acquisitions will increase this year
“"There is greater potential for education in the financial crisis." In a 2009 summit in venture capital development era, China's education industry shenzhen innovation investment group co., LTD., vice President of Li Wanshou said that under the economic slump, the future development of a new round of incubating more motivation and energy, will get more into education field.
In particular, there are "more potential needs" in the area of education. "When education resources and online technology reach a certain scale, the scale effect of education will be highlighted," said huang bo, chief executive of hongcheng education group. It is also known that in the developed countries, education is about 70 percent of the young adults, compared with about 22 percent in China. "this education space is still very large". Huang bo said that in the future, there will be more students and more needs in the network education service area.
It is understood that since the network education development, from out of the Internet bubble to into rapid development, has already get rid of the hype phase, pay more attention to the service content and quality, and thus obtain investment institutions. In 2008, China's venture capital market network education has received 882 million yuan of investment, accounting for 48.4% of China's education market. This is almost more than the total amount of investment in education, China's education market network, from 2000 to 2007.
According to the report, although the education industry in our country are numbered, the number of mergers and acquisitions event and have occurred within the industry, belong to the type of "the big fish eat small fish", but this year is expected to increase in the number of mergers and acquisitions will continue to education industry.
In such a good trend, huang bo also admitted that there are several issues to be noted in the merger of education. First of all, mergers and acquisitions, if the relevance of the company is bigger, will reduce the risk of mergers and acquisitions, "because the company will have staff, have the ability to control this business, when to know the business, its controllability and integrate the risk is relatively low". Huang bo said.
In addition, in the acquisition process, the core issue is the human. It is understood that in Europe and America, the success rate of a merger is generally lower than 50%. In our country, the success rate is lower, "so the integration of integrity and culture is quite difficult". Third, in the acquisition process, there may also be many laws and regulations and local government coordination problems.
Business models and service investors value most
“"For venture capital firms, the key is to focus on the business model and team building, not the education." Li Wanshou said.
The choice of venture capital is a hot spot for many entrepreneurs. At the summit, many entrepreneurs asked the guests questions, and most of them focused on whether their enterprises could get the attention of VCS. To this, the company has been listed on the nyse Noah education group executive vice President Chen Yao similar to Li Wanshou views, he thinks, investors first focus on the business model, because of the education industry in China started relatively late, the international capital to enter, its market is late, so now the Chinese education industry is relatively highly dispersed, without a comprehensive platform. "Although the education industry is a very good cash flow industry, it needs to be able to replicate strong and standardized business models to make the company bigger." Chen Yao said.
On the other hand, are keeping distance education group, vice President of lang yuan peng, points out that in addition to business model, investors value content of the project and also the company's services, "education industry first is to have a good content, good service, if there is no good content, eventually students are not acceptable. It is essential that you provide good help when you are studying. 'having a good executive team and a very good business plan can make the business big,' Mr. Lang said.
Longyu, managing director of bertelsmann's Asia Pacific investment fund, also said that entrepreneurs need to make a proactive accumulation of services and content in order to win the "gold rush" in education.
In the education industry, sun tao, the executive director of yinglian investment, gave some advice to entrepreneurs, first of all, to understand the business model and future growth point of the company. Secondly, we should have a good cooperation team, and do well in internal management control and personnel reserve. Finally, we will look for partners who can help long-term, sustainable and stable growth and better realize the enterprise strategy.
