K12, Inc.’s founder has stepped down to start a new online venture that he believes will lead to the increase of technology-based learning for students as well as increasing “capital needed to scale high-growth businesses”.
As he has already resigned, the plan for Ron Packard, the founder and chief executive of Herndon-based online education provider K12 Inc., is to form a new company focused on technology-based learning programs. However, he will continue to serve on K12’s board of directors. The newly-appointed chief executive is K12 executive chairman Nate Davis.
Being the nation’s largest full-time virtual school and providing online curricula and other educational services for students in pre-kindergarten through high school in 29 states and the District, K12 was founded in 1999. Offering high achievers, dropouts and other students more flexible schooling options, it was conceived as an alternative to traditional education. However, critics have blasted the model pointing to a 2012 study indicating that students enrolled at K12 lag behind their counterparts at traditional schools in math and reading proficiency.
As Catherine Ho of The Washington Post reports, an investor group led by Safanad Limited, a New York and Dubai investment house, will own the majority stake of Packard’s new venture, which has yet to be named. According to an announcement this week from Safanad, K12 will own an initial minority stake of more than 25%.
With combined revenue in 2013 totaling to $20.3 million including the International School of Berne and Capital Education, several businesses within K12 will move to the new company in exchange for minority ownership.
Packard said the deal is expected to close around the end of January. In addition, he said that because start-ups need a more entrepreneurial environment than a large company offers, the new company is being created separately, rather than within the existing K12 framework. He explained by saying that it is always difficult to start such a company within an existing public company.
“You need a less constrained environment,” he said. “These businesses require capital initially, and operating losses. It’s hard to do that within a public company.”
According to the announcement, the focus of the new company will be global expansion of technology-based learning programs in pre-kindergarten through college through several existing early-stage businesses and targeted investments within the education services sector. With reference to K12 spokesman, Jeff Kwitowski, one major difference between the new company and K12 is that the new venture will develop classroom-based digital learning programs internationally, while K12 operates online schools serving students primarily in the United States.
“I look forward to the opportunity to lead this new company,” Packard said in the statement. “Our goal will be to bring in the additional capital needed to scale high-growth businesses and further the expansion of technology-based learning for students throughout the world. We will seek to grow these businesses as well as look at new investment opportunities and acquisitions.”