financing epals


financing epals

Aug 31, 2011

ePals: Raised $24 million in an offering on the Toronto Venture Exchange ("TSXV") under the trading symbol "SLN." It was a sweet moment for ePals CEO Miles Gilburne, who has spent more than a decade and $40 million (include a quarter of his own money) painstaking building what those who have gotten an inside peek call a rock-solid platform for students and teachers to communication and collaborate around the world. It's a huge platform, too: ePals has more than 6 million registered users and hopes to hit 10 million by year end.

Gilburne describes going public in Canada as an "elegant" affair. Unlike the nail-biting U.S. IPO gauntlet, companies using the TSXV raise money in a private placement and once the money is in escrow, merge with a shell company to be reborn as a publicly traded entity. "It gives me access to smart investors who are looking for a 3x-10x return," he says, and avoids the costly paperwork of complying with Sarbanes Oxley.

What ePals needs: revenue. In spite of that huge user base, ePals has generated only a trickle of revenue and reported an $8.4 million loss (EBITDA) last year. Ouch. To turn it around, ePals wants to open up and become a platform for delivering others' content and services to the 700,000 schools and millions of minds, all around the planet. Why not? The iTunes store is currently the only edu-platform in town but it exacts a hefty fee from vendors. Pearson is reportedly working on a similar catalogue/platform play but may have to wrestle with baked-in attitudes about licensing and profiting from content. Edmodo is a contender, too, though it's kept mum about its revenue model. In the meantime, ePals is hammering out proto-APIs that it hopes to share soon with the kinds of folks who might have content to sell. The ideal platform will be smooth and easy to use--and lower costs for both buyers and sellers. And hey, while we're making wishes, how about a snappy, edtechie sort of name?

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