From Non-profit To IPO: The Turnaround Of Grand Canyon University: Brent Richardson (Part 3)

SM: What was the financial structure utilized? Did you raise money?

BR: The first year my brother and I, along with two other investors, put in capital that we thought was enough to get the organization to where we thought it needed to be. In 2005, the Department of Education came in and required a big letter of credit from us. We had to go and get some outside capital. We found a private equity group called Endeavor Capital that invested in August of 2005. That put the company on sound footing. We did not do any more capital raises, other than some very small pieces, until the IPO.

SM: How much did Endeavor put in?

BR: Around $18 million.

SM: That is a fairly large round. What was your investment thesis at that point? What was the business model, including the market you were planning on going after?

BR: There were two things the university had that we were capitalizing on and that we thought we could continue to capitalize on. First, the university has been here since 1949 and had a long history of producing great teachers and great nurses. We then added Ken Blanchard to the business school and re-wrote all the curricula and tried to build that up.

The main area of effort, and where we thought we could get student growth, was online. Most of those students would be interested in masters degrees in education. When I got here we had three masters degree programs in education, and now we have 15. That was a big part of the build.

Our other goal was to continue to take all of our courseware and add it to the online side of the university. We probably added 12 more masters in education, we have six masters programs in nursing, an RN to BSN online. In our MBA we have 12 different tracts or concentrations. We have added a lot of curricula which followed our business model. We also added a PhD last year, and we will continue to add PhDs.

The way in which we turned it around was twofold. Being in the K-12 education space for several years allowed us to gain an understanding of how to sell our masters in education programs to teachers in that space. We knew where needs were. We created degrees that we knew would sell. We knew a lot of superintendents who would let us into their district to get teachers into our programs.

For our health care programs, we formed relationships with 70 hospitals and health care providers in the state. Due to the reputation of the Grand Canyon University, we were able to build and improve those programs both in-residence and via online offerings. We really built up those programs over a two-year period.

When I arrived we had 1,200 traditional students. Our goal was to get the number of students up to about 12,000 over a three-year period with the expectation that the majority of those students would take courses online. We were able to accomplish those goals.

This segment is part 3 in the series : From Non-profit To IPO: The Turnaround Of Grand Canyon University: Brent Richardson
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