CGP Cracks New Fund With eInstruction –

The average school certainly isn’t what it used to be. Technology in the classroom has evolved from encyclopedias, abacuses and film projectors into a menagerie of Internet terminals, graphing calculators and overhead DVD projectors with stereo sound. And it hasn’t stopped there.

As Chicago Growth Partners’ (CGP) latest investment shows, even the manor of class participation and teacher-student interaction has been modified by the microchip. Through a recapitalization earlier this month, the Chicago-based private equity firm acquired eInstruction Corp., a maker of hi-tech educational products used up and down the didactic spectrum.

CGP led the buyout, which included co-investments from Goldman Sachs Asset Management and PPM America Capital Partners. CapitalSource came through with an undisclosed amount of senior financing.

In a sense, Denton, Texas-based eInstruction links students and teachers through a wireless technology that allows for real-time communication and grade tallying on both an individual and class-wide basis. While the teacher is free to lecture with what amounts to a handheld digital chalkboard-the contents of which are projected onto a large screen at the head of the class-he or she can check to see if students had been listening by holding an immediate multiple-choice quiz or test, which students answer electronically using individual remote response pads, which the company dubbed “clickers.”

Declining to get specific on revenues or EBITDA, Rob Healy, a general partner at CGP, said eInstruction has been growing at a rate of between 60% and 90% over the last three years, adding that the technology is increasingly being utilized by both public and private institutions, ranging from kindergartens and high schools to universities and the military. He noted that that rate of growth is expected to continue, especially as the company seeks more entry into business and trade niches.

“One of the things we like about this niche is that the end markets are so big,” Healy said. “From corporate, professional trades, K though 12 , colleges, universities, police and fire rescue-there’s just a lot out there.” Currently there are more than 1.3 million clickers in use in approximately 5,000 K-12 schools and 700 universities in the U.S., Canada, Australia, New Zealand, UK, Israel, Puerto Rico and Singapore.

Healy said the hallmark of the technology is that it allows teachers to see immediately which students understand the material being taught and who needs assistance. “Teachers can adjust their lessons to specifically target those who are getting left behind. The main reason for [eInstruction’s] widespread success is that it empowers teachers to know, with real time clarity, to how their students are doing in the classroom, which, in turn, allows them to tailor their lessons while the material is freshest and most pertinent,” he said.

For the most part CGP intends to capitalize on eInstruction’s existing organic success, while introducing it to strategic relationships and experienced management, Healy said.

This marks the inaugural acquisition for CGP VIII, the firm’s first attempt at an independently-raised investment vehicle since it spun out of William Blair Capital Partners last October. Fund VIII, which recently held its second close, is targeted at $400 million. Healy said the vehicle would likely see a third close in September before a final close is held later this year.