Sylvan Learning Creates Net Subsidiary - InformationWeek

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Sylvan Learning Creates Net Subsidiary

Sylvan Learning Systems Inc. will put $300 million in cash and assets into a subsidiary that will fund and nurture companies developing Internet-based education and training technology. Sylvan expects the fund, revealed today, will attract another $200 million from outside investors.

Sylvan Learning is one of the larger and better-known companies in the fragmented education and training industry, with $341 million in revenue in 1999. It will move its current Internet investments, including Caliber Learning Network Inc. and Sylvan's online tutoring venture, into the new incubator company.

Investment funds affiliated with Apollo Management LP have committed to half of the $200 million the company hopes to raise from outside investors. Other investors include Internet service provider Rare Medium Group Inc., which also will provide services to the new company, and an affiliate of Investor AB, a Swedish company with large stakes in companies such as Saab and Ericsson.

Venture capital has been steadily flowing into online learning ventures during the past year, chasing the double-digit growth projections from industry analysts. International Data Corp., for example, predicts 83% annual growth in Internet education and training through 2003. IDC analyst Cushing Anderson warns that the money will attract some companies that know more about technology than teaching, and he hopes Sylvan Learning keeps the education experts in charge of multimedia offerings. "The issue comes down to quality instruction," Anderson says. "If they stay focused on quality instruction, they will succeed."

The new company will be led by Christopher Hoehn-Saric, who has been co-CEO of Sylvan Learning Systems for nine years.

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