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Feb 27, 2010

Eleutian Nabs $10M From Cheyenne Capital's Grady For Online English

Online English-language education company Eleutian Technology LLC has raised $10 million in growth financing from Cheyenne Capital Fund in the first investment for the firm from former Carlyle Group managing director Robert Grady, who joined Cheyenne in 2009.

Founded in 2006, Eleutian provides remote English-language teaching to students in Asia via live video-conferencing. The company was founded by Kent Holiday, a former executive with Cisco Systems Inc., Ericsson and Korea Telecom, who worked in South Korea for 15 years.

The funding is the first institutional funding for the Ten Sleep, Wyo.-based company. Valuation was not disclosed.

"I had the idea for maybe 15 years now that someday the infrastructure [would be] good enough for video conferencing to take the best teachers in the U.S. and have students in Asia video-conferenced in real-time," Holiday said.

With advances in broadband and video technology, it is now possible for teachers and students to feel like they are virtually in the same room, he said.

Grady pointed to the importance of technology bringing teaching jobs to the U.S.

"A business like this in rural Wyoming would probably not be possible a generation ago," Grady said. "Here we are with employment being a significant concern. This business employs hundreds of Wyoming teachers halfway around the world. It's an interesting new model for rural America that's really made possible by the advances in telecommunications over the last three decades."

Unlike many technology businesses that outsource workers outside the U.S., Eleutian brings jobs back to the U.S. by allowing native speakers to teach from the U.S. rather than in Asia, Holiday said.

"We're actually importing jobs to the U.S.," Holiday said. "For many years companies exported jobs to India or China. We're not only importing jobs to the U.S. but to rural America."

Eleutian provides one-on-one and group teaching. The company has partnered with the South Korean government's Korean Ministry of Education to teach in schools. Eleutian has also set up teaching centers in Wyoming for teachers to speak via video with the Korean students.

The growth of the market for English learning is massive in Asia in particular, said Grady, who has knowledge of online education due to having served as a director at Blackboard Inc. for Carlyle Group until its initial public offering in 2004. He also was on the board of Wall Street Institute, an English language firm.

"It's very large and very attractive," Grady said of the market potential. "Our estimates are it's as large as $100 billion probably just in Asia."

Prior to Carlyle Group, Grady was a partner and managing director at Robertson Stephens & Co., deputy assistant to President George H. W. Bush and executive associate director of the Office of Management and Budget.

Investing in rural America is one point Holiday takes pride in. Northwest Wyoming has many highly qualified teachers - and Eleutian provides additional training as well - and the company has teaching centers in towns as small as 300 people.

In addition, the deal made sense because Denver-based Cheyenne Capital has received investment from the state of Wyoming, Grady said.

Cheyenne Capital is a hybrid fund that invests in funds and also invests directly.

The funding will be used to build out the Eleutian service in South Korea as well as expand in Japan and China.

The former Carlyle Group exec touts the company's ability to bring jobs to rural areas of the U.S