Tierra Encantada founder Kristen Denzer said “no” a lot over the past five years as she was approached by 50-plus private equity firms and outside investors interested in her Spanish immersion childhood education concept.
A “yes” to Susquehanna Growth Equity now brings a $38 million minority growth investment to the Minneapolis-based franchise as Denzer, also Tierra Encantada’s CEO, prepares for the next stage of growth.
“Maintaining quality while you scale and grow, that was a big piece for me,” said Denzer, who founded Tierra Encantada in 2013 and noted she wanted to keep her majority ownership, a key condition for a private equity suitor. “I’m still here, I’m still involved and I want to get us to where we’re going.”
Since opening the first Tierra Encantada, which means “enchanted land” in Spanish, in the Minneapolis suburb of Eagan, Denzer’s expanded the corporate and franchise footprint to 12 locations. The majority, eight, are in Minnesota, with two in Texas and one each in Illinois and Virginia. Four more locations are slated to open this year.
Founder and CEO Kristen Denzer launched Tierra Encantada in 2013.
Susquehanna’s investment, the first institutional capital for Tierra Encantada, comes from a group Denzer said truly understands and appreciates the value her childcare concept has for kids and families.
Fluent in Spanish, Denzer launched the company in part because she wanted her kids to speak the language given both its prevalence in the U.S. and the cognitive benefits of learning a second language at a younger age. She also sought to improve the childcare offering overall by providing fresh-cooked, organic meals with a global bent, and developing a science, technology, engineering, arts and math curriculum. As a full immersion program, 100 percent of the curriculum is taught in Spanish.
“If you look at childcare as a sector … parents today want more than just childcare. When they’re spending what they’re spending, they want to be getting something more,” Denzer said. “We’re what parents want today.”
“Tierra Encantada’s differentiated Spanish immersion curriculum, coupled with its elevated culinary experience, is completely unparalleled within the early education sector and a key driver as to why we believe the brand to be so successful,” said SGE Managing Director Kyle Squillario in written comments.
The Pennsylvania-based firm, he noted, counts franchising as a core focus. Also in its portfolio are College Hunks Hauling Junk, Main Line Brands (Mosquito Authority and others), Premium Service Brands (360° Painting, Maid Right, Rooter Man and others) and Stronger Youth Brands, formed after SGE bought youth sports concepts Soccer Shots and Little Kickers. The firm invests in growth-stage software, services, internet and information services companies, and brings flexible capital and time horizons to its deals.
Kyle Squillario is a managing director at Susquehanna Growth Equity.
The youth enrichment sector in particular, Squillario said, “fits squarely within our firm’s investment strategy.” Tierra Encantada’s founder, meanwhile, created a concept with staying power.
“Simply put, Kristen Denzer and her team have built a tremendous reputation and gave us great confidence,” he said. “It was very clear to us they truly care about the overall welfare of the children, the people they employ and the success of their franchisees.”
Tierra Encantada provides detailed financial performance information in its franchise disclosure document, including average unit volume—$2.2 million—and average EBITDA, or cash flow, listed at $415,864. It reports expenses by unit, and lists the square footage and capacity for each location, which helps prospective franchisees get a clearer financial picture. Locations range in size from just under 7,000 square feet to upwards of 20,000 square feet, with child enrollment capacities from 108 to 274.
The cost to open a center ranges from $1,455,443 to $3,062,115.
The monetary investment from SGE will help Denzer build out the leadership team with people experienced in scaling a franchise and hire ahead of new unit growth to ensure the infrastructure is there to support franchisees.
PTierra Encantada in March hired Meg McDougall as its first chief marketing officer. She joined the company from Anytime Fitness parent Purpose Brands, formerly Self Esteem Brands. As Tierra Encantada goes into new markets, McDougall said one key value proposition she’s layering into the marketing message is the lifetime value of being bilingual.
Denzer noted she’ll also tap into SGE’s strategic guidance.
She and Tierra Encantada’s executives will have access to the firm’s value creation team, which assists all its portfolio companies with hiring, growth and other “mission critical strategic initiatives.”
“In addition to providing capital to support Tierra Encantada’s expansion plans, we intend to leverage our deep experience within franchising and multi-unit economic models to help the support the organization as it scales throughout the nation,” said Squillario.
Tierra Encantada staff are fluent in Spanish and 100 percent of the curriculum is taught in Spanish.