The Long Road to Edutainment: Tabula Digita CEO Ntiedo Etuk (Part 4)

SM: Did your contract with the Princeton Review get the company established financially?

NE: In the middle of September we finally got the contract completed. On September 15th we were finally done, but they told me they were not going to transfer the money until October 1st. By September 30th we had drained everything. We had literally used all of our money. I had paid Robert for August and had not paid myself. I was hoping the money would indeed come in on October 1st so I could give him his check on October 2nd. When the money actually got transferred, I had $27 in my personal account and $300 in our business account.

The only problem was that Princeton Review had required to see our books at the end of each year. I was $100,000 in debt before we received the cash payment from Princeton Review. The question was how to get more money to get to the next level. On December 23rd a former mentor of mine from Citigroup, who loved the idea, gave us a $300,000 check.

SM: Who supported you through all of this emotionally?

NE: Different people in different ways. I had two girlfriends during that time period, both of whom completely believed in me and the idea. I woke up many days and had to rely on the unconditional love from my mother. I woke up one day and asked my mother, who had put in a significant amount of money, if she would still love me if this all did not work. Of course she said she would always be there. My uncle was also very important. He was there for me at 3 a.m. when I could not sleep. I also have to give my co-founder credit. He is a passionate guy, and we both did this to change the world of education.

SM: You got $300,000 from your Citigroup mentor in 2004, and you had a partial product. What was next?

NE: That is the point where I said that I needed to get professional money. I had obtained another $100,000 that had come in as well. Robert was happy creating new ideas. I was focused on finding the people in the educational and venture capital space where we could go and get some money.

I went to venture capitalists and there was one in particular, the Ascend Venture Group, that had a split focus on education and applied technology. There were a few other players as well. I hit it off with Ascend immediately. They gave clear, focused feedback, which I was not getting from other VCs. They liked our passion and idea. They did not like that we did not have a company or a history of having built a company, and that we only had a partial product that was not completed. The market that we were trying to target was the SES market, which was supplemental educational services. That market was dominated by Platform Learning and Education Online.

We claimed that we would be a player in that space. We were going to be an educational gaming after school program were we would get paid $1,500 per kid to build a education program around their needs. We knew we could beat everybody else. Ascend Ventures was the main funder behind Platform Learning. Daryl Wash, one of the VCs at Ascend, hated our business model because the SES industry is difficult to penetrate.

I thanked him for the feedback and asked him when our next meeting was. He sat back and realized that we were serious. He said “OK, I will give you that chance. Come back in one month and let’s see what you have done based on what you have heard today”.

Ultimately we ended up with three term sheets. Of the three term sheets we received, Ascend was the worst one in terms of valuation. However, I believed they were the most knowledgeable. I also felt that in the education space if we had to shift things around they would be patient because they understood it. We did the deal and got the money in at the end of that year.

Two months later the SES market imploded. Platform Learning had gotten to $60 million in revenue in two and a half years. Ascend had agreed to invest in part because because that SES channel made sense. The channel that would have gotten us direct access to 60,000 kids and immediate revenues in the million-dollar range evaporated.

SM: How much did you raise?

NE: Our Series A was $3 million. I had raised $1.2 million from friends and family for a total of $4.2 million. We were still in development and told everyone that we would not have the product ready until April of 2007.

This segment is part 4 in the series : The Long Road to Edutainment: Tabula Digita CEO Ntiedo Etuk
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