1Mby1M Deal Radar 2011: Monarch Media, Santa Cruz, California

Online education and training continue to grow in popularity. It costs less for students to get bachelor’s and master’s degrees online. Employers, too, save money by arranging for employees to take training courses online and on their own time.

Monarch Media has provided e-learning solutions, including online and mobile courses, educational software development, learning management systems, and instructional design for more than 13 years. The Santa Cruz–based company serves a client base across both the private and public sectors. The top target segments are educational publishers, universities, government agencies, nonprofits and corporate training departments, and the company follows a traditional business-to-business approach. Within the educational publishing market, Monarch Media focuses on serving large and mid-sized companies ranging from the largest in the industry, such as Cengage Learning, Elsevier and the National Institutes of Health to specialty publishers like ETR Associates, a provider of specialized public health training materials. Monarch Media also plans to launch new product lines of skills training courses for mobile delivery.

Claire Schneeberger founded Monarch Media in 1997 in an effort to create online solutions for training and education customers. Her focus on open-source technology, instructional design best practices and project management has shaped the company and helped it grow as an e-learning provider. She holds a bachelor’s degree from Smith College and a master’s from Johns Hopkins University.

When Schneeberger founded Monarch Media, the company was one of hundreds of Web development firms that sprouted up during the early years of the Internet boom. Inspired by projects that it felt made a difference, the company gravitated toward the e-learning sector. This focus on online training and learning became a differentiator. Early clients included companies in academic publishing, universities, and nonprofits with educational missions. Another  part of Monarch Media’s success is that in 1999, the company formed an alliance with a software development firm based in India.

Today, Monarch Media intends to marry instructional design and technology to create courses that improve the quality, measurability, and transparency of e-learning. Competitors in this space range from companies such as Skillsoft and Element K, to large courseware providers, to smaller e-learning solutions providers like Emantras.

Monarch Media combines content, instructional design expertise, project management, and computer and mobile delivery based on open source and open standards solutions. Schneeberger believes that what differentiates the company from its e-learning competitors is the company’s commitment to creating e-learning courses that are effective, measurable, and contextual.

Although the company has a global scope, with companies as far away as Tanzania using its solutions, Monarch Media’s primarily focused on serving customers in North America and India. The company sees South Asia and other global markets as important areas to explore.

The company views the total addressable market within these regions as quite substantial. For example, U.S. companies in 2010 spent $682 per employee on training and development. Twenty-one percent of those dollars were dedicated to the types of skills training Monarch Media provides. Since 2005, corporate e-learning spending in India has been growing at a rate of more than 30% annually and is forecast to reach $557 million in 2011.

In total, the worldwide market for self-paced e-learning products and services reached $27.1 billion in 2009 with a compound annual growth rate of 12.8%. Studies also show that in the past four years, e-learning is the only area of the learning and training industry that has continued to show substantial growth. The increase in mobile technologies, particularly smart phones and tablet devices, has opened up huge opportunities for mobile eLearning courseware and other products.

For colleges and universities, the focus is on solutions for professional schools, research centers, and HR departments.

In the government and nonprofit space, the company focuses on agencies and organizations with specific needs to train the public for compliance, continuing education or public awareness purposes.

In the corporate training segment, the company focuses on providing skills training courses primarily aimed at new employees, especially those entering the workforce for the first time.

Monarch Media’s first large customer was an educational publishing company, which allowed the company to penetrate the market as a service business that built relationships within the industry through consulting. Because the e-learning technology environment is constantly evolving, the company’s success hinges on its ability to proactively communicate opportunities to its clients. By following IBM’s technology agnostic consulting model while focusing on providing the right solution backed by project management and support, the company increased its client base in educational publishing and used that experience to expand into higher education and other markets.  The team works to make connections and build relationships with managers within these organizations by using drip marketing and personal contact to build awareness of the company’s products, solutions and industry experience.

Monarch Media is a 100% bootstrapped company. By managing growth and costs, the company has consistently increased revenue and remained profitable each year for 13 years. In 2010, the company earned revenue in excess of $2 million. For the consulting and solutions business, pricing is determined separately for each customer. Project contracts with clients generally range from $10,000 to $120,000.

Recently, Monarch Media has been developing courseware product lines to complement its solutions and services business. The company has also explored outside funding options to support faster growth. The company’s growth model has been to avoid outstripping cash flows by managing growth and costs while making investments in new opportunities, technologies, and partnerships. In the past two years, the company has focused on using profits from the solutions and services business to fund product research and development. Monarch Media has won two Small Business Innovation Research (SBIR) grants from the National Institutes of Health that have provided the company with more than $1.2 million to fund research and further develop its e-learning course methodology. The company has also reached an agreement with its Indian partner to share some of the product development costs. The six-member management team is also evaluating opportunities to build a funding syndicate comprising equity investment (angel or venture capital), bank loans, and further grants to help propel product launch and growth in 2012.

During 2010 and the first half of 2011, Monarch Media added new enterprise clients, including McGraw-Hill, the University of Tennessee, the College Board, the National 4-H Council, and the State of Iowa. The company’s 2010 revenues increased by 70 percent and have continued to grow in the first half of 2011.

Monarch Media has a total of 60 individuals working in two offices on two continents. The team come from a variety of backgrounds with education and experience in Web development, instructional design, video production, graphic design, Flash and multimedia programming, and software development, and hail from companies such as Apple, Fair Isaac and Co., and Sybase.

An exit strategy doesn’t rank high on Monarch Media’s priority list. Instead, the company plans to continue focusing on ways to drive growth and increase revenue.

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This segment is a part in the series : 1Mby1M Deal Radar 2011