Private Equity Panel with C2 Education and USATestprep

Private Equity Panel with C2 Education and USATestprep

Discussing Private Equity in Technology with the Technology Executives Roundtable of Atlanta

August 5, 2019

Serent partnered with the Technology Executive Roundtable (TER) and Morris, Manning, & Martin, to co-host a panel, focused on Private Equity investments in technology companies, at the Buckhead Club in Atlanta on July 16th.

Centered around TER’s goal for executives to have candid conversations around the issues of growth, the panel delved into the personal journeys of two Atlanta-based founders, Jay Eckard, Founder & Board Member of USATestprep and David Kim, Founder & Vice Chairman of C2 Education, who chose to partner with Serent Capital. The founders shared their experiences and advice on what goes into choosing an investment partner, ways in which a growth partner could help accelerate growth, and factors that founders should consider as they evaluate whether bringing on an investment partner is the right decision for their businesses.

Serent’s Principal, Navid Oreizy shared the investor point-of-view on how Serent operates, what investors look for in growing companies, and how the process works, while John Yates of Morris, Manning, & Martin led the discussions.

“For Jay at USATestprep, his partnership with Serent was based on aligned philosophies.”

Choosing a Private Equity Partner

Opening topics centered around the initial decision to look for capital and the process to choose the right partner.

Choosing a Capital Partner:

  • For Jay at USATestprep, his partnership with Serent was based on “aligned philosophies.” After meeting with multiple potential capital partners, Serent stood out as the partner who knew the education industry and got the “teacher” perspective. As two former teachers turned entrepreneurs, Jay and Joe were particularly focused on a partner who would maintain the “by teachers for teachers” customer-centric culture of the company
  • David Kim said when he embarked on finding a partner, he knew it was “time to pass the baton” and wanted to find an experienced partner to help scale the company beyond where he could take it alone. While his journey in finding a partner took over 18-months, it allowed him to vet the fit with different types of investors and to hone in on what mattered most to him: a partner that could not only help grow the company but also advance its mission of helping more students attend college

A major topic for the founders was the culture of the company and how it would survive and thrive after bringing on a capital partner.

Understanding the Culture:

  • David Kim highlighted that culture was at the center of many conversations he had with his team as they explored new partners, especially given the student-first and mission-driven culture of C2.  After the transaction, David continued to run the company as CEO and was pleased to see that the educational mission of the company remained core to every aspect of the business even as Serent helped grow the employee base and put the infrastructure in place to support rapid revenue growth.

In the discussion of capital partners and resources, Serent’s engagement model was a major differentiator.

 Resources Serent Brings:

  • The “pull” vs “push” engagement model in how private equity firms work with their portfolio companies was a key topic of discussion for the panel. Navid outlined the key differences between programmatic operating playbooks that are typically mandated or “pushed” to the organization, compared to the Serent model, which creates a bespoke framework in tandem with the management team, where management teams “pull” the Serent Growth Team resources they need to super-charge growth.
  • Jay discussed the importance of finding an investment partner with resources to help rather than just capital. As an example, he saw the profound impact that bringing in new senior leadership had on USATestprep after the transaction.  Serent’s Human Capital team helped Jay and Joe transition to board roles, recruiting a new CEO and building out the executive team across all key functional areas.  Jay commented that the team build-out has boosted employee morale as they are bought into the new vision and seeing the acceleration in the firm’s growth.

Setting Up Businesses for Growth:

  • Navid described the Serent model and how Serent’s Growth Team is a “boots on the ground” resource that supports management teams through implementing growth best practices and scaling their teams. In areas like go-to-market, where high-growth companies often find they have gaps, the Growth Team can stand up a scalable and repeatable framework to boost the efficacy of sales teams through an established framework that includes building-out a prospect database, identifying the universe of potential customers and arming the sales team with all the information needed to better target prospects. From there, companies can then layer on account targeting, identifying which prospects are the most ready to buy and focusing resources on converting them. Navid walked the audience through a case study of the Growth Team’s engagement with one of Serent’s software companies.
  • Jay noted that the Growth Team is a “beneficial resource” for USATestprep that brings a lot of “mental horsepower” to the table when having the important, strategic discussions as well as “talent and best practices.” One of the biggest value drivers for him was the Human Capital team that gave him access to a wide pool of experienced, talented people that set USATestprep up for the next stage of growth.
  • For David Kim, he saw a lot of value in bringing in outside board members and building rigor around how he analyzed / monitored the metrics in the business. C2 was able to bring on a “level of expertise” in the board members that they wouldn’t have been able to without Serent. The rigor brought on by the board also taught him more about his own business and growth possibilities over the subsequent years.

Now post-transaction, both David and Jay are focused on giving back to the Atlanta community through support of local charities, donating their time to mentor other entrepreneurs who are looking to grow their businesses.

“C2 was able to bring on a level of expertise to the board of directors that they wouldn’t have been able to without Serent”

Navid Oreizy, Principal, Serent Capital

Navid leads Serent’s investment efforts in the education and healthcare sectors. He is actively involved in the firm’s investments in Diamond Mind, Cardon Outreach, United Allergy Services, C2 Educational Systems, Digarc, Arbiter Sports, USATestPrep, KEV Group, and The Professional Companies.

Prior to joining Serent, Navid was a Vice President at Augusta Columbia Capital, a mid-market technology-focused private equity firm. At ACC, he was responsible for deal sourcing and execution across several vertical markets including healthcare, retail, enterprise software, and infrastructure. Prior to ACC, Navid was an investment professional at Technology Crossover Ventures where he was involved in originating deals, leading due diligence processes, and working with portfolio companies primarily in the healthcare sector. Navid began his career at Lazard where he worked on several merger and acquisition assignments for technology, media, and telecom clients.

Navid has an MBA from Columbia Business School as well as a BS in Business Administration and a BA in Political Science from University of California, Berkeley.

To learn more about Serent and Navid, you can connect with him here.

Jay Eckard, Founder & Board Member, USATestprep

Jay started his professional life as a high school science and technology teacher.  His 15-year experience as an educator provided the insight to help create USATestprep.  Jay’s passion was to create tools that would help teachers while engaging students.  As a co-founder of USATestprep, Jay helped develop and run USATestprep for over 19 years, building the company to serve nearly 2 million students. USAtestprep is the leading online software and content provider for state-specific high stakes testing preparation sold to schools and districts across the country.

Jay graduated from Furman University in 1994 with Bachelors in Science majoring in Chemistry.  Currently, he lives with his wife and two children in Cartersville, GA.

David Kim, Founder & Vice Chairman, C2 Education
As an undergrad at Harvard, David was interested in the relationship between economics and education, a passion which led him to start a tutoring service for local students. That small tutoring service grew into C2 Education, a national provider of college preparation and academic tutoring services. In the years since, David’s work has earned him recognition in such publications as Forbes Magazine, Entrepreneur Magazine, and Inc. Magazine.

David has a BA in Economics from Harvard University. Currently, he lives in Duluth, Georgia with his wife and two children.

Serent Capital invests in growing businesses that have developed compelling solutions that address their customers' needs. As those businesses grow and evolve, the opportunities and challenges that they face change with them. Principals at Serent Capital have firsthand experience at capturing those opportunities and navigating these difficulties through their experiences as CEOs, strategic advisors, and board members to successful growing businesses. By bringing its expertise and capital to bear, Serent seeks to help growing businesses thrive. Learn more about our portfolio companies.

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Nothing presented herein is intended to constitute investment advice, nor sales material, and no investment decision should be made based on any information provided herein. Information provided reflects Serent's views as of a particular time and are subject to change without notice. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. While Serent has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third party information presented herein. Past performance is not indicative of future results. There can be no guarantee that any investment strategy employed by Serent will be successful. A full list of portfolio holdings is available on Serent's website.