Kuala Innovations Limited Acquires Vemo Education, Inc
The Board of Kuala Innovations Limited is pleased to announce that it has agreed to participate in the early stage funding round of privately owned Vemo Education, Inc. and subscribe for 1,000,000 shares, representing 8.2 per cent of the shares (on a fully diluted basis) for cash consideration of US$1 million (one million US Dollars). This will be funded from existing cash resources.
VEMO is an Education Technology company working with U.S.-based colleges and universities to provide a technology platform for income-based student financing programs in the US$1.3 trillion student debt market in the United States. Vemo was founded to address this student debt crisis by developing income share agreement programmes and deferred tuition plans and partnering with higher education institutions to make these funding options available to students.
As student debt has reached a crisis point in the U.S., a solution is needed to combat this growing debt and help offer alternative funding options for students entering higher education. Income-based student financing powered by a strong technology platform is a pioneering effort by VEMO and represents a ground floor opportunity for Kuala.
The founder of VEMO, Mr. Lorne Abony, is a well-known technology and media entrepreneur whose many successful tech ventures included Fun Technologies, an AIM listed company which he founded and sold for Cdn$484 million to Liberty Media in 2005. In his role as CEO ofMood Media Inc, a public company which was listed on both the Toronto and London Stock Exchanges, Mr. Abony oversaw offices in 48 countries, employing over 2,300 employees. In addition to his board seat at VEMO, he is also an executive director of Glu Mobile and Chairman of its Strategy Committee. As the founder and CEO of a number of successful ventures, Mr. Abony has raised in excess of US$1 billion through public and private debt and equity markets.
VEMO's management team has extensive experience in education finance and the financial aid sector. The team's expertise on legal and regulatory compliance, intricate data science capabilities and institutional and constituent understanding enables VEMO efficiently to deliver student-centric, value-oriented alternatives to traditional financing options.
- VEMO Chief Executive Tonio DeSorrento is considered one of the foremost experts on income share agreements in the U.S., having contributed to their development since 2007. Prior to VEMO, he was Deputy General Counsel at Social Finance Inc. (SoFi) and currently serves as an adjunct professor of law at Georgetown University.
- VP of Higher Education Bill Brosseau has worked in the industry for over 20 years and is highly respected by and connected to key decision makers at colleges and universities across the country.
Dr. Jeff Weinstein, VP of Credit and Analytics, has held the role of Chief Data Scientist at student financing companies and has applied that forecasting experience to the proprietary credit model used by VEMO.
VEMO has a robust business model, which the Board believes will provide it with significant revenue streams as the business evolves. As the originator and master servicer of income share agreement programmes and deferred tuition plans, VEMO's revenues will consist of recurring fees paid to the company directly by colleges and universities.
Commenting on the VEMO Investment, Kuala Co-Chairman Mr Stephen Dattels noted:
"Although Kuala is a new company, it is fortunate to benefit from my long association with Lorne Abony, and I really appreciate Lorne inviting Kuala to participate in this early round of funding which was only open to a select group of investors.
VEMO has first mover advantage in the massive student financing opportunity in the United States. With its infrastructure and technology platform in place to fully develop and service income-based repayment options, including income share agreement programmes (ISA's) and deferred tuition plans, as well as advanced partnership negotiations in progress with leading U.S. universities, the Board believes this seed round investment by Kuala helps to further solidify VEMO's position as the leader in the next generation of student financing. The market is huge and VEMO is positioned to grow as ISA funding programmes are utilised to deal with the student funding crisis."
Commenting on the Kuala investment, VEMO Executive Chairman Mr Lorne Abony noted:
"At US$1.3 trillion and growing, the United States has a student debt crisis with few solutions. VEMO's income-based student financing products will allow students to unlock and monetise their greatest asset, which is the present value of their future earning potential. Kuala's investment allows us to expand company operations, including developing a sales and servicing team to secure partnerships with higher education institutions and implement VEMO's technology platform. VEMO is poised to take student financing to a new level and provide students with the opportunity to graduate from college without a huge student debt burden."
VEMO was founded to address the burgeoning student debt crisis in U.S. by creating programmes to help higher education institutions better align their costs with their value for students. At US$1.3 trillion, student debt stands second only to home mortgages as the largest source of borrowing. Federal student loan programmes are at the core of this debt, at about US$1.1 trillion, with US$200 billion generated through private lenders. Class of 2015 graduates who took out student loans to fund their education are leaving higher education with an average of US$35,000 in student debt to pay back.
VEMO's mission is to help address this crisis by partnering directly with higher education institutions to develop customised financing programs for their students. The company provides a full-service approach for income-based student financing programs including income share agreement and deferred tuition plans, offering a range of services such as custom product design, developing the legal, regulatory and compliance framework, and managing origination and servicing. VEMO can customise programmes for each institution's specific student needs rather than taking a one-size-fits-all approach.
VEMO has invested in the infrastructure required to design, price, originate, disburse, and service income-based repayment products. At the core of this infrastructure is a robust technology platform built to maximise big data analytics and data science to create better outcomes for students. VEMO's income forecast engine and proprietary pricing and risk model is powered by this platform. VEMO also employs other backend tools to ensure a frictionless experience for the user, including online applications and disbursements and 24-hour customer service support.
VEMO is currently in negotiations with a number of higher education institutions across the U.S. to put in place ISA programmes and deferred tuition plans.
For the seven months ended 31 October 2015, VEMO had nil revenue and incurred a trading loss of US$988,967 for the period. As at 31 October 2015, VEMO had total net assets of US$1,048,473.