New Crimson capital values founder Jamie Beaton's stake at $73m

Crimson founder Jamie Beaton

See more: Crimson’s full-blooded valuation draws scepticism (Oct 7)

Education consulting firm Crimson Consulting appears to have raised $US30 million in its latest capital raising round, largely from US billionaire Julian Robertson, according to Companies Office filings.

Mr Robertson (who has an honorary New Zealand knighthood) and his investment vehicle Tiger Global Private Investment Partners contributed $US29.5 million while other supporters included former Seek executive Jason Lenga ($US150,000), Ice Angels ($US218,195) and Guy Wallace ($US98,530), according to a director's resolution issued this morning.

The recent share adjustments indicate the company claims an astonishing value of $US160 million ($220 million), and 21-year-old Crimson founder Jamie Beaton's 33% stake at $73 million.

Mr Beaton and Ice House chief executive Andrew Hamilton have declined to comment.

The Auckland-based business says it helps students get into the world’s Ivy League universities by coaching and tutoring them. The prime minister’s son, Max Key, is among its consultants.

On its website, Crimson says it received 45 offers for its clients to study at Ivy League universities in 2016. It says it employs 2000 tutors worldwide.

The series B round has reduced Mr Beaton’s and co-founder Shandre Kushor’s shareholding from 49% to 33%, and 11% to 9%, respectively. Mr Robertson and his company's stake increased to 18.6% and 10%, respectively.

Mr Robertson and other international investors injected $US5 million into Crimson in August 2015, which was 10 months after it raised $1.4 million from the Icehouse’s Ice Angel Showcase.

It has acquired several tutoring companies in the past couple of years, such as Ivy Plus, Med View, Number Works and Uni Tutor.

Crimson said it acquired Campus Link in February and issued founder Anne Gaze a small number of Crimson shares. However, she disappeared from the company’s share register a few weeks later.

Mr Beaton said Campus Link had returned to its old structure and Crimson “wishes it all the best.”

Ms Gaze would not comment but Campus Link’s website says it is not owned by Crimson and “repeated requests have failed to have us taken off their site.”


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22 Comments & Questions

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Don't believe the head line valuation number this will be all smoke and mirrors.

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Why? Its basic maths

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I suspect (I don't know) that the above deal will have a number of conditions attached to it which will mean that all "shares" are not equal.

For example most of these deals will include a liquidity preference, where on liquidation or sale of the buisness etc some investors will have priority - either for a return of their capital or even up to say 5 times their capital before other shareholders get anything.

I suspect that if the above business was sold for $220m the current "valuation" the founders would probably walk away with zero.

A leading US VC lawyer once stated - "you tell me the valuation and I will tell you the special conditions".

Again this is my view - but this is part of the PR hype that surrounds this industry - always trying to get bigger and bigger valuations even if not real, it just makes the PR better.

Have a look at the Balex offer on Snowball Effect, they have a liquidity reference in that deal.

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Give the kid a break. Who cares if there are preference shares in there (which you don't actually know anyway)

It's a fantastic effort to get this far and if it does go Pete Tong no one will get hurt.

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If you look at Companies Office records, you will see that the new shares issued have 'the same rights as the other shares in the Company'. All of the shares are equal. I am a Director of Crimson Consulting Limited.

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I accept that the shares have the same rights as shown in the companies office, but so do a lot of other companies shares where there are proferences, which are contracted between the shareholders not the company.

Are you saying that there are no rights attaching to the shares etc that may give the incoming investors any preference? In which case I stand corrected on my earlier comments.

They were not an attack on the company or the individual but rather highlighting that often valuations are not all they seem.

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Not so fast. Sir Julian is a very very shrewd and experienced, senior investor. If he sees value there, then there's value there.

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In which case he probably has in place liquidity preferences as per above.

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He's an American and not a British subject and therefore should not be addressed as "Sir Julian". It's an honorary knighthood only.

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So what? If he's been given an honorary New Zealand Knighthood, and I'm talking about him in New Zealand, then I'll call him Sir Julian if I like.

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Sounds like it's time for bubbles all around!

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I will admit I'm struggling somewhat to see how there's so much value in this. Educational tutoring is not exactly new. Is the whole thing simply people banding together to use capital to acquire a whole bunch of similar providers?

I would also be curious to see stats on resulting successful Ivy League admissions controlled for other factors.

At the same time, kudos for getting people to invest in one's scheme. That is another thing entirely.

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Look closer - headline numbers are misleading:

2000 tutors on the database - how many have tutored in the last month? I suspect not that many.

45 offers for Ivy League - how many individual students is this? For example, a top student could get 5 of these.

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Reading the comments above is a very interesting exercise in American vs. New Zealand attitudes and mindsets when it comes to business, investing etc.

The American stumps up $30M, the New Zealanders knock. The American says, let's have a go. The New Zealanders say I'd rather not. The American is a multi-billionaire. The New Zealanders are.....................you do the math.

Do you want to know why we are really unproductive and poor (well in OECD terms we are) it's because of that negative knocking mindset. With that attitude, not enough stuff can get done.

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Completely agree.

Even if the new investors have downside protection (liquidity preference), the fact is the company has $30m to continue growing. That includes new jobs in NZ and the US as well as a growing platform for independents (like Uber and AirBnB) to earn money.

Does it really matter if Jamie is worth $0 or $73m. He is (probably) drawing a salary and getting far more experience that if he had taken an unpaid internship at a US startup.

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Agreed. It is the media calculating net worth because it makes a good story.
Regardless of any downside protection it is good for NZ.
He's 21, so even if it doesn't work out he hasn't got much to lose except his youth.

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I don't see anyone knocking the investment of $30m or the company. What I see is some questions as to whether the valuation is perhaps inflated as a result of non-public terms.

I have seen lots of deals where a NZ entrepreneur references an offshore deal as evidence why they should be valued at $10m but don't understand they are not comparing apples with apples.

But good on them for getting the money as no doubt it reflects that they are executing in their plan. Will be an interesting one to watch.

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New Zealanders are too busy buying houses and will just keep saying 'remember the 87 crash." Meanwhile anyone involved in the right equities is doing very well.

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That's not quite true. Many Kiwis were very keen on investing in such ideas, even including the educational sector. E.g. Intueri.

Moreover, my own comment was not intended to be negative nor cynical. I am simply searching to better understand the actual value being offered by the service vs. other tutoring...or whether it's more an acquisition drive to accumulate as many tutors as possible into one company.

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Hi The Horse,

Their model appears to be 1) rename and repackage commoditised tutoring into a package and sell the dream of Harvard etc. 2) scale this by buying other tutoring companies.

Tutoring is the same - just a package now. Then you need to raise funds to buy more tutoring companies to have tutor and client growth to justify valuation.

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Its for a few reasons. Some reasons are we concentrate on tourism. Tourism makes countries poor as it only employs minimum wage earners. Have a look at Caribbean, pacific islands, Thailand beaches etc. all poor because no one that lives there has any spending money

The other is Callaghan and NZTE, they are a huge hand brake on NZ business and innovation. People need to be out there doing and making things including mistakes. Having your hand held by someone that has never done anything in their life except study business structure is just dangerous and wastes all of your time. You should be developing and selling products rather than filling out forms and going to 'work shops'

Then there is a nationwide obsession with raising money and thats how you get rich. These valuations are just on paper and if the people that work within the NZTE type capital system get a hold of you and con you with their wisdom you will also be left with a partner that knows nothing about your business and a %age you are un happy with

NZ needs more doers and far less talk abouters.

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Is the purpose of this education consulting company to help kiwis or to make themselves billionaires?

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