Today’s Deal Radar is an educational gaming company, Tabula Digita. Based in New York city, the company was founded by NT Etuk. Part Nigerian and part Bahamian, he came to United States to study Computer Science. Between undergraduate and business school, he did Big Brothers Big Sisters, where he had a little brother. Etuk had to teach him Algebra but found that the challenge with the young man lay with his interest in the subject and not with his learning ability. He saw that a lot of young people lost out only because learning was not fun and engaging. He started Tabula Digita, to try and rectify that.
The company was founded in 2003 when the edutainment market was a dead zone. It was extremely difficult to get people to invest in such companies — people were skeptical about games that were entertaining enough for kids to enjoy but educational enough to satisfy the demands of academia. Noticing that retail sales were weak due to insufficient updating, Tabula decided to take a different route– it positioned itself in the school market instead of the consumer market and then expanded. The company felt that since the school system is difficult to get into, once the company secures a position there, the schools will be loyal customers over long periods of time. Further, since in the school market one competes based on the needs that programs fulfill such as Algebra, it had to be better than the competition and target a fundamental market need. As the trend in the market in 2003 was to target early age math and language programs, it decided to focus on Algebra. And since Math and Science were being seen as strategic for United States, the company felt that it could make a mark there.
Today, Tabula Digita has videogame-like products that combine 3-D graphics, animation, and sound, everything associated with mainstream games which allow students to network and learn from each other. Using the power of internet, it creates a classroom where educational experience isn’t limited by the traditional four walls. It tracks everything that is happening in the “worlds” and reports to the teachers, students and parents. The company believes that this way it has managed to address, a fundamental challenge with edutainment — measurable outcomes.
The company charges an annual subscription fee to school districts that ranges between $5 and $20 per student ($5 for one subject and up to $20 for multiple subjects) per year. The company also generates additional dollars from purchases by parents whose kids had experienced the games through educational channels. In such circumstances, the company generates an additional $60 per student per year from home usage.
The company’s core target segment comprises of the top 100 school districts in the United States. These districts encompass 10 million students (20% of the total K-12 market), where the average size of the district is 120,000 students, and have the most funding. The total market opportunity in these districts (based on their business model) would be approximately $200 million and on including the home subscription opportunity, the total opportunity comes to $260 million. The company aims to be one of the top 3 choices in the marketplace, looking at a realizable opportunity of $80 – $90 million.
Tabula’s major customers include New York City (the largest district in the country with 1.1 million students), Chicago Public Schools (#2 with about 435,000 students), Broward county (#6 with about 270,000 students), Orange County (#13 with about 160,000 students). Further, in 2008, the company witnessed an increase in bookings in 2008, with the booking growing six times that of 2007 bookings. The bookings helped the company break-even on its school district business in 2008.
The company has raised $10 million so far: a $1 million as angel investment; $3 million Series A from Ascend Venture group; and a $6 million Series B from Ascend Venture group and angels. The company is looking to raise a Series C round to focus on the consumer opportunity.
This segment is a part in the series : Deal Radar 2009