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Feb 15, 2010

Eleutian gets $10 million in backing

Ruffin Provost- Billings Gazette

CODY — Growth at Eleutian Technology has been swift over the last year, but that pace is about to get even faster as the company has landed a $10 million investment from a private equity fund with Wyoming ties.

Cheyenne Capital Fund has bought an undisclosed minority equity stake in the online distance-learning company that employs more than 300 teachers in rural communities around Wyoming to teach conversational English to students in Asia.

“Our partnership with Cheyenne Capital is a very important milestone for our company that will give us the ability to aggressively grow our business here in Wyoming,” said Kent Holiday, Eleutian CEO.

Eleutian had been working with many private equity firms over the last several months to secure growth financing, and most were willing to invest, he said.

“But it almost always involved moving our headquarters to Denver or Salt Lake, and our vision has always been that we’re going to build this company in Wyoming,” Holiday said. “We’re going to make it work here.”

The deal with Cheyenne Capital Fund resulted after Holiday met venture capitalist Robert Grady in November at a Wyoming Business Alliance seminar in Casper.

Formerly a partner at the $88 billion private equity giant the Carlyle Group, Grady had recently moved to Jackson and last year joined Cheyenne Capital.

The Denver-based investment firm with offices in Cheyenne is backed by up to $225 million in available funding from the state of Wyoming, a major investment partner.

While at Carlyle, Grady served as a director for other online and education companies, including Blackboard, a $1.2 billion educational software firm, and Wall Street Institute, an English-language training firm that has taught more than 2 million students in 26 countries.

Grady joins Eleutian’s board of directors as part of the Cheyenne Capital deal, which also includes an agreement for the company to grow its headquarters and operations in Wyoming.

“Bob saw a lot of the benefits of us being in Wyoming, including the quality of the workforce, the model of working with towns and support from the state,” Holiday said.

“Those are important pieces of the business, and he sees that the model works for rural America.”

Grady said, “We believe our investment will accelerate the company’s success. This is the right time to make a growth investment in Eleutian.

“Governments and families in Asia and around the world have made learning English a priority because they see mastery of the language as an essential pathway for young people who aspire to succeed.”

Holiday said part of Eleutian’s success has come from forging relationships with business and government partners in South Korea, where he was an executive with Korea Telecom.

Eleutian is charting an aggressive growth course aimed at bringing the same model to markets in Japan and China, Holiday said.

Cheyenne Capital’s investment will allow Eleutian to rapidly expand sales efforts while simultaneously ramping up operations in Wyoming to meet the increased demand, he said.

“The market for English-language training is currently more than $100 billion annually and will continue to grow,” Holiday said.

He said that managing Eleutian’s growth will be easier with help from Grady, who worked previously as a managing director at Robertson Stephens & Co., a San Francisco-based technology investment bank.

Grady also served from 1989 to 1993 as deputy assistant to President George H.W. Bush and as executive associate director of the White House Office of Management and Budget.

Eleutian is relocating its headquarters from Ten Sleep to Cody, where it plans to build a 10,000-square-foot, $1.75 million building on a four-acre site between Cougar Avenue and Big Horn Avenue, to be completed by summer 2011.

Holiday said that the company is moving “full-speed ahead” with plans to secure a $3 million Wyoming Business Council grant for that project and that Eleutian will continue to take advantage of state grant programs where appropriate.

The company has benefited from Wyoming Business Council grants that helped fund call centers in several Bighorn Basin communities and from training grants from the Wyoming Department of Workforce Services, he said.

Those programs have helped build Eleutian, “and, as we continue to grow, there may be opportunities to provide more of a larger-scale partnership with the state,” Holiday said.

Founded by Holiday in 2006, Eleutian provides 30,000 online tutoring sessions each month and became profitable last year with revenue growth of 69 percent.

One of Wyoming’s fastest-growing employers, Eleutian is working to recruit certified teachers from across Wyoming before expanding to rural communities in Montana, South Dakota and North Dakota, Holiday said.

Contact Ruffin Prevost at rprevost@billingsgazette.com or 307-527-7250