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Business Rx: Online learning site seeks an education in growth strategies

By Special to Capital Business
Monday, November 1, 2010; 22

THE ENTREPRENEUR

Anil Hemrajani calls his Reston-based company Big Universe Learning because he feels that education can give young children around the world the tools and global awareness they need to solve the planet's problems. After selling a successful start-up information technology company in 2003, the software developer spent some time as a consultant, author and speaker, but knew he wanted to take on another project.

Hemrajani thought he might create an online platform to house a library of books and allow children to read, share, interact and create their own stories. He then set out to strike up partnerships with small and mid-size children's book publishers.

In early 2007, Hemrajani launched an alpha version to test his site, with an official launch of the beta site a year later. By March 2010, he had solidified his business model and is now working with partners to sell his platform to schools and educators.

THE PITCH

Hemrajani

"Education is a big problem worldwide and in the United States: 37 percent of all fourth-graders and 68 percent of inner-city fourth-graders in the U.S. can't read at a first-grade level. If you can't read, then you're not learning in any other subject because you can't read the material in the text books.

"Budget cuts across schools have left fewer dollars for reading and writing supplies in schools around the country, combined with larger classrooms, leaving fewer books to go around. Add to that the growing digital generation -- kids now are growing up and engaged with digital media and want to interact with it.

"We've partnered with 24 children's book publishers to build a large library of fiction and nonfiction books online. We get their content at no cost upfront. In return, we give them Internet marketing advantages, revenue-sharing and reports on the product line. We sell directly to schools -- both online and through direct sales, for about $1,000 for an annual subscription. The idea is to sell at the district level. The schools get unlimited access for all of their students, anytime, anywhere.

"In the last couple of years, our 2,000 books have been read almost 700,000 times. We also have a really interactive, fun creative-writing tool that allows kids to create and share their own books online. More than 14,000 books have been created -- covering everything from science reports to vacations. Users can interact in a safe sharing community. Today there about 37,000 users signed up from 152 countries. They can create and share their own virtual bookshelves to use at school, at home -- anywhere they have Internet access.

"We've received great feedback -- we've won seven awards, have been mentioned on more than 100 blogs, get great comments from users and have nearly 2,000 Facebook fans and 9,700 Twitter followers.

"Right now, the company is looking for an investment to ramp up on the sales side. Our biggest challenge is figuring out how to scale up in the most effective and efficient manner. With our current resources, how should we focus to really grow the best way possible?"

THE FEEDBACK

Elana Fine, director of venture investments, Dingman Center for Entrepreneurship at the University of Maryland's Robert H. Smith School of Business

"Big Universe offers a compelling value proposition to schools, publishers and investors. By partnering with smaller publishers to provide content with no upfront cost, you've developed a creative, high-margin business model. However, now you need to develop a similarly creative approach to your distribution strategy.

"It's great that you have some initial traction selling to individual schools and districts, but the sales cycle to each individual school district is long, cyclical and budget-dependent. This sales process is difficult to scale due to the fragmentation of school districts.

"One idea is to develop a corporate 'adopt-a-school' program that would allow corporations to sponsor Big Universe subscriptions to a number or schools at one time. For example, for $100,000 a year a corporation could sponsor at least 100 schools, reducing the number of customers you need to quickly scale revenue. Target five corporations that are known for their educational philanthropy.

"Big Universe could also work with nonprofit organizations focused on bringing technology to classrooms to identify other corporate sponsors and distribution channels."

REACTION

Hemrajani

"It's been a learning experience and I've learned quite a bit in the last three years and I feel really good about where our company is right now.

"Our next steps: We already know the product works, but we need to increase revenues, through increased sales, and by trying to raise money with an investor. In the meantime, we're continuing to work on distribution deals that don't cost us money upfront. I know that those are the right things to be doing.

"The bottom line: we're engaging kids to read and write."

Looking for some advice on a new business, or need held fixing an existing one? Capital Business and the experts at the University of Maryland's Dingman Center for Entrepreneurship at the Robert H. Smith School of Business are ready to assist. Contact us as capbiznews@washpost.com.

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