Notably, given Kiwi firms often look offshore for the largest contribution to their later-stage capital raises, the round was led by Wellington-based venture capital firm Movac.

“We’re really excited about this one. At $25m, this is the biggest single cheque that we have ever written,” Movac partner Mark Vivian told the Herald. The VC firm – a newcomer to Crimson – now holds a 3% stake. Vivian has joined the board.

Others who chipped in towards the $67.6m round included: Auckland’s Icehouse Ventures, which returned to the table, boosting its stake to 6%; Sydney-based HEAL Partners; US News (the American media firm that publishes the Best Colleges rankings); Tel Aviv-based Five Sigma; and Boston’s HighSage Ventures.

Smaller stakes were taken by Gregory Cappelli, the former chief executive of Apollo Education Group, formerly the world’s largest publicly traded US education company of all time “NFL legend” turned investor and philanthropist Larry Fitzgerald jnr and GreenMount, an investment partner of Ngāi Tahu.

Crimson has previously raised a total of US$70m over several rounds, most recently a $19m capital raise in late 2023 led by Icehouse – which tipped in $10m – at a US$550m valuation.

With its Series D raise, Crimson claims to be the first “edu-tech” unicorn in Australasia. It certainly tops Auckland-founded Kami – where a United States private equity firm recently took control at a close to $300m valuation and Dunedin-founded Education Perfect, where KKR bought a majority stake in a mid-2021 transaction that valued the Kiwi firm at $455m.

Where the money’s going

Crimson is best known for its consultancy, which coaches kids – from their early teens – in their efforts to be accepted by the world’s top universities.

In the most recent admissions round, Crimson secured a record 294 offers to Ivy League universities and “over 447 offers to the Ivy league plus the US Top 10″ the firm says. (The company has traditionally played its cards close to its chest, but in the build-up to a splashy front page Wall Street Journal profile on Beaton, the Crimson founder supplied the paper with a list of students admitted. The Journal said acceptance letters were certified by PricewaterhouseCoopers).

But the new funds are also earmarked to fuel the growth of the firm’s registered online school, Crimson Global Academy (CGA).

“Just four years after it launched to offer International A Levels to Kiwi students, CGA has quickly grown to over 1700 student enrolments from over 60 countries, and more than 200 teachers make up the high-calibre faculty who deliver live, small group classes, 1:1 classes or support with asynchronous learning,” Crimson says.

“We’re also excited by charter schooling opportunities in different parts of the world, too, for places that are supportive of online charter as a way to drive up equity to good quality schooling platforms. And then we’re also investing heavily in Revision Village, which is our popular study resource for students around the world pursuing the IB [International Baccalaureate] diploma.

“And we’re expanding that to more curriculum and providing more tools for teachers, from AI marketing tools to AI tutoring tools to other types of content so students can boost their academic performance.”

Crimson has also added management consultant and ex-Labour Party leader David Cunliffe to its advisory board, joining former Prime Minister Sir John Key, ex-Australian Prime Minister Kevin Rudd and Clinton-era Treasury Secretary and ex-Harvard president Larry Summers.

While Cunliffe won’t want to re-live the 2014 election (where he led his party to a defeat as Key’s National Party was elected), he was well-regarded on both sides of the aisle for his time as Communications Minister – a grunty stint that included the operational separation of Telecom.

Beaton and the former Labour leader might not seem a natural pairing, but the Crimson chief executive says “I’ve admired David for years”. Fullbright Scholar Cunliffe, like Beaton, did his first post-graduate degree at Harvard.

“Then he worked at BCG, and then, you know, he could have just stayed in the States and built a career as a management consultant advising huge corporates, but he came back to New Zealand, took his skills to, you know, the public service, and then was able to have a great impact locally. So I was, you know, always inspired by what he’s done in that pathway.

“I also came to know him through his son, who was an amazing debate coach for us on the Crimson platform for a long time.”

Additionally, Tiger Management chairman Alex Robertson – son of one of Crimson’s earliest backers, the late billionaire Julian Robertson – has been named as a new director.

Is it making money?

Crimson’s trailing 12-month revenue is upwards of US$100m, Beaton says. He declines to give detailed financials for the privately held firm but does offer “we’re cash flow positive and have been for some time”.

College consulting in the US has tripled over the past two decades to become a US$2.9b per year business. Some 10,000 people work as full-time college consultants in the US, according to the firm, with another 3000 in the rest of the world.

Does that give an indication of Crimson’s addressable market?

Beaton says that sounds like an accurate assessment of the US undergraduate market, but points out his firm also consults to trying to get into Oxford or Cambridge, and has its online tutoring and its Revision Village platform for IB students too.

“When we first came to the US, there was plenty of college counselling, but the culture and appetite has definitely grown tremendously in the past five years. There’s probably a higher bar to get into a lot of these top schools.

“And there’s also a lot more immigrants coming to America looking to compete to get into these places.

“And then there’s more global awareness of these universities too, you know, from movies like Spider-Man: Homecoming and shows like The Kissing Booth on Netflix and talk about the college admissions process. You can buy the university merch as a teenager and in Tauranga.”

The Wall Street Journal said more people applying meant fewer getting in as the number of spots at Ivy League universities remained relatively static. The paper said: “Admission rates are now below 5% at schools such as Harvard and Yale – down from around 20% two generations ago”.

‘Legacy’ admissions outlawed

There is one interesting development that could democratise admissions.

On a recent edition of NYU Stern professor of marketing Scott Galloway’s “Prof G” podcast, host Ed Elson noted that so-called “legacy admissions” – or preference given to an applicant with a parent who attended a university – have been outlawed in Colorado, Virginia and, as of last month, California.

He believed legacy admissions would be banned in the US in a few years, freeing up some US$2b in alumni donations.

“This gigantic historic industry of paying to get into college in the form of buildings and donations is about to be stripped away from the universities. [About] US$2b in annual ‘college fixing’ dollars that will soon be looking for a home and this leads me to believe the best investment in education is something like Crimson Education; an elite college consultant that’s going to be the beneficiary of legacy admissions disappearing and the billions of dollars that go to buildings will end up in the pockets of private companies that offer private consulting.”

Galloway – a recent Spark event speaker who has made US$100m-plus from various start-ups – said his own motivation for donating to his alma mater, UCLA was not to grease the wheels.

It was, “Out of citizenship and gratitude to California taxpayers, but also out of ego. I didn’t do it anonymously. It makes me feel masculine and successful. I liked that I was on UCLA’s home page and all my peers who wouldn’t let me into their fraternity or wouldn’t go on a date with me see that daddy’s a f***** baller now.”

He accused the Ivy League colleges of manufactured scarcity. They were non-profits which promoted themselves as providing a social good but also manufactured scarcity by not expanding their number of places.

And the cost of coaching to nab one of those limited spots can be high.

The Wall Street Journal said: “Clients pay Beaton’s firm from US$30,000 and US$200,000 for a four- to six-year [programme] that includes tutoring in academics and test-taking, and advice on how to gather stellar teacher recommendations and how to execute extracurricular projects”.

A spokesman for Crimson said: “That’s in reference to a portion of our services, specifically US admissions counselling for US-based clients.

“Crimson Education as a group encompasses several edtech companies alongside our college admissions business. Kiwi families can access our IB revision platform for free or via a monthly subscription of $100, can attend NumberWorks’nWords for personalised tuition for $65 a lesson, and access career development from $5000. Our schooling options via Crimson Global Academy are comparable in price to traditional schools.”

Crimson’s pre-Cambridge IGCSE fees are $4850 per subject or $26,750 fulltime.

In terms of coaching to get into an elite university: “With a $30,000 consulting package, you would be looking at 1:1 tuition, extracurricular mentorship and development, career development, competition training and interview prep over three or more years”.

He added: “Crimson also has the largest financial aid programme in its industry for low-income students and a specific New Zealand scholarship for young Māori and Pacific students which has led to Sam Taylor going to Harvard, Koan Hemana going to Harvard, J’Adore Harris-Tavita going to Duke, Tai Renner going to Columbia, and Andre Fa’asoa into Yale to name a couple of examples.”

The Te Ara a Kupe Beaton Scholarship sees four students per year awarded scholarships worth up to $25,000 each to help them gain admission to top global universities.

Beaton says Crimson Global Academy can also be used for filling gaps if, say, a school lacks a good computer science class.

“A good example of this would be Jade Sceats who was at Kirikiri High School. She tapped into CGA part-time, then she went fulltime for three years. She’s just gone to Princeton for computer science.” (An educational and potential career earnings turbo-boost, but one that doesn’t come cheap. Sceats told the Herald in April that her Princeton tuition fees would be around US$60,000 per year.)

And focusing back on the US, Beaton says: “There’s a flat number of slots in the Ivy League schools. But there’s an expansion of the number of schools considered selective.”

He gives UC San Diego and New York University as examples of half a dozen universities who’ve gained elite status. “So if you take the broader view, there’s more opportunity.”

Galloway, incidentally, said he arranged for his teenage son to have a couple of tutoring sessions with Crimson but “my son was doing really well in school and didn’t like it and didn’t feel like he needed it”.

“I remember it being quite expensive so we ended up not using it. And now my son is in 11th grade and I’m meeting him for his college tour next week and I can already feel the anxiety starting – not so much for him but for his parents and we’re probably going to use a college counsellor.

“I don’t know if we’ll use one but I’m open to it because here’s the bottom line: If you have money, you want to take advantage of every advantage you can have for your kid. So I can see why this market is booming.”

IPO?

Achieving unicorn status is often a precursor to a sharemarket listing. Does Crimson have IPO ambitions?

“Our aspiration is definitely to build a company of global scale. We look at some of the companies in China like TAL Education that have built really transformative education businesses across the whole education life cycle and we see a big opportunity to build the global education platform for ambitious students. And I think the benefit of public markets is they enable you to take an ambitious plan, access capital, access M&A [mergers and acquisitions] currency and grow,” Beaton says.

“It’s certainly something we want to be equipped for.”

One possible sign his firm is tooling up for a public listing: Beaton recently hired Arkesh Patel as chief operating officer – a Westlake Boys’ High School old boy who studied at Cambridge on the Sir Douglas Myers Scholarship, followed by Harvard Business School for his MBA before joining Bain and Company then a string of start-ups.

“From an accounting, finance systems, governance, investors perspective and capability perspective, one of the reasons I appointed Arkesh, who helped lead the Lyft IPO, is because he’s a Kiwi who brings some deep Silicon Valley experience.”

Gravy train?

Beaton confirms he still sees Crimson very much as an “edu-tech” company. Students relate to it through its app and the cloud. An algorithm is used to match them with the best learning options. But mentoring individual students is a labour-intensive business. It’s not like a SaaS (software as-a-service) business like, say, Xero, where once you’ve covered your costs, every new customer is gravy.

“Let’s say we accept the criticism that Crimson is service-based and thus presumably has lower margins and less repeatability,” Icehouse Ventures chief executive Robbie Paul says.

“Then what does that say about Crimson growing faster and more efficiently than almost every high-profile NZ start-up one could name?”

Movac’s Vivian says, “Crimson’s units operate in are very large, fragmented with several large players who don’t compete directly and many small scale operators, and in some markets there’s a degree of price insensitivity. Parents and families are placing more effort and focus than ever to make sure that their kids are provided with the right educational support to reach their potential.”

He adds, “Crimson has achieved very strong year-on-year growth, strong and improving margins, and the ability to make acquisitions that are value-accretive in short order. With this very large capital raise, it gives us a substantial chunk of capital to aggressively grow in both existing and new markets.”

Key man risk?

Venture capitalists talk about “key man risk” – or what would happen if a founder who is so integral to a start-up disappears from the scene, for whatever reason.

“As part of my due diligence for our investment, I spent time with several of the key business unit leaders, and got real comfort in their skills and experience,” Movac’s Vivian says.

“Also, their specific marketing and sales functions are sophisticated and successful, and complement the more public role that Jamie takes. There’s plenty of depth in the management team that he’s assembled at Crimson, and importantly, all those executives are laser-focused on the common vision for the Crimson group.”

The early years – and how he lives now

“Jamie was an intern with me in 2012 before he went to Harvard. He went from a first-time user of Excel to the most proficient in the office in a matter of weeks. He also determined – correctly – it was less expensive to receive intermittent parking tickets around the office than to ever pay for parking,” remembers Icehouse Ventures’ Paul.

“In 2014 he flew from Boston to Auckland to pitch at the Showcase and returned to Boston 24 hours later. He repeated this for the 2022 Showcase, that time flying from Ankara.

“Jamie called in 2015 after raising $1.4m from Icehouse Ventures and Julian Robertson. I was expecting him to say he was dropping out of Harvard – where he was doing a double degree in three years, magna cum laude) to focus on Crimson. Instead he was calling about a project he was working on at a hedge fund [Robertson’s Tiger Management]. This pattern of XXL output has continued ever since.”

Beaton doesn’t drink and has never tried drugs. At Harvard, he never went to a party or attended a football game.

That followed a work-hard tradition that was well under way by his middle teens, when his mother sent him to a weekend school for an extra edge. The Saint Kentigern and King’s College old boy also earned post-grad degrees at Yale (a Doctor of Law) and Princeton (Master of Finance) and Oxford (a Philosophy PhD on a Rhodes Scholarship) among others.

Does he relax a bit these days?

“I’ve definitely had a bit more balance. I play this game called Warhammer, which takes me to all these interesting states for tournaments,” he says, in reference to a table-top war game, which involves fantasy figurines.

“And I’ve gotten a lot more into fitness in recent years, and I’m a big movie buff. I go to a lot of theme parks, so there’s definitely plenty of good fun. But work is still pretty intense. And, you know, I like it that way. It keeps me excited.”

POSTSCRIPT: Something in the water?

Why has New Zealand punched above it’s weight with edu-tech startups, producing the likes of Crimson, Kami, Education Perfect and Writer’s Toolbox?

“It might be that New Zealand tech companies have a strong tendency to build products that work well before going to market, rather than marketing vapourware that we see in some markets,” says Movac partner Mark Vivian.

“The great thing about the NZ tech ecosystem is that we’re ever-improving the ability to share experience, networks and ideas, to make sure we’re not making the same mistakes as those who have gone before.

“There’s also the recycling of talent. A case in point is that one of Crimson’s business unit leaders is a former exec from Education Perfect.”

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.