Kortext: a lesson in growth

James Gray, CEO and founder, had a simple idea: as textbooks were one of the last areas of publishing to move from print to digital, he would provide a content platform to aggregate digital textbooks for universities. The idea was to give them a single platform to deliver this important learning content to their students and academics at scale with tooling to support deeper student engagement whether on- or off-campus.

Kortext was founded in 2013 and formed early partnerships with Middlesex University and the University of East London. It secured equity finance to scale its platform before attracting DMG Ventures (dmgv), the venture arm of the Daily Mail and General Trust plc, as a key scale-up partner in 2019, who then led a further investment round in 2021.

The Covid pandemic in 2020 turbocharged the business as all campus teaching was forced off-campus and online. Kortext’s response was to pioneer with key publishers a free student textbook programme, which enabled students to continue to study during the lockdown period. The programme was an enormous success with hundreds of universities benefiting from signing up to support their students on-going studies. As the programme scaled it was also supported by Microsoft and Adobe.

Today Bournemouth-based Kortext works with 4,700+ publishers including Pearson, McGraw Hill, Wiley and Oxford University Press, supplying more than four million digital books and videos to students globally.

This year the company reached a new inflection point.

The opportunity to mature into a sizeable global business focused on supporting its university partners around the world as they transitioned to hybrid and online course delivery. “With education continuing to digitalise, Kortext is in a unique position to scale in this large, global and growing market,” says Chief Operating Officer Mark Edmondson.

Kortext has had to continue to invest in its technology to fully support online teaching and learning, enabling both academics and students to benefit from online access to rich learning content. The next phase is underway: it has launched Kortext Premium in partnership with Microsoft, which harnesses the capabilities of generative AI to provide new AI-powered learning tools for students and is piloting this capability with key university partners.

As well as becoming more deeply embedded in its existing customer base, Kortext also needed to focus on gaining new customers at home and overseas. But winning contracts from universities is not a quick process; each university is itself a major enterprise with its own structure, but all with complex tendering processes and long sales cycles.

The company required experienced senior management and a broader base of international sales talent to establish its presence in its target markets.

And Kortext itself was evolving into a more complex and mature enterprise that needed to keep focused on its internal systems and operational efficiency.

Additional finance was sought to continue scaling. The fact that the turnover and margins that Kortext was starting to generate meant it could consider a debt funding partner.

Kortext looked at packages from several banks, as well as from venture debt providers, before switching to HSBC UK and securing a multi–million pound facility from HSBC Growth Lending.

HSBC UK launched the £250m Growth Lending Fund in 2022, with the aim of providing support to high growth scale-ups earlier in their growth journey. The fund provides access to finance, as well as HSBC’s international expertise, and will help businesses achieve their global ambitions.

“HSBC were able to put forward a compelling offer that was tailored to our business needs. They also understood our technology and platform, our working capital cycle, how tech businesses function and the education market in which we operate,” says Financial Controller Alex Lewis, who is one of the earliest members of the Kortext team, joining back in early 2014.

The new debt facility, he says, gives Kortext balance sheet strength and solidity so that it has the liquidity and the capitalisation to execute on its growth plans as it moves to profitability.

It is also an important marker for the company. “As we demonstrate our ability to scale and prove our business model, we are attracting high-quality talented people to the business. It’s important for them to know that they are joining a fast-growing sustainable company with a strong balance sheet.”

The benefits to Kortext go beyond the provision of additional funding.

“We now have HSBC UK as a partner who can bring us banking products, technologies and corporate banking support to help us mature as a business,” he says. “We now have corporate facilities that match our ambitions to become a global business,.”

The partnership with HSBC is also vital for Kortext as it extends its international reach.

The company is expanding into countries across Africa, the Middle East, and Southeast Asia. “In these markets HSBC’s trade team can help us navigate letters of credit and other trade finance capabilities.”

In other words, HSBC is providing Kortext with a bedrock for its banking and finance systems: “That means we can focus on growing the business efficiently and effectively. If we have a problem, then there is always someone at the bank who has seen it before and knows how to deal with it,”adds Lewis.