Fewer births no worry for MindChamps

WITH Singapore’s birth rates hitting lows and schools being merged, you would think the writing’s on the wall for preschools like MindChamps. But MindChamps founder David Chiem isn’t worried - in fact, he thinks there’s still plenty of room to grow in Singapore and overseas. 

“Currently, in our market (for premium-range preschools), we have 38.5 per cent market share. So there’s still around 62 per cent, where a child is going to another place paying the same fees,” said Mr Chiem, whose company has 51 preschools in Singapore, including those franchised, as at this year’s first quarter. 

He also pointed to how people in the lower-middle income group will continue to rise to the upper-middle income level as Singapore’s economy grows in the years to come. 

“Therefore, there’s still incredible growth.”

For similar reasons, he is unfazed by falling birth rates in some of the countries where MindChamps seeks to expand to - “that’s not even a worry at all”. 

In Singapore, the company is looking to roll out a new model for its preschools next January. What’s key is how MindChamps will have its own research centre to produce empirical research on the company’s approach to education, in comparison to other methods, something Mr Chiem said few education providers do. 

But while Singapore remains the company’s headquarters, MindChamps has also been making a concerted push overseas, backed by a lucrative franchise and external funding.

The company was reportedly in talks to take over a handful of preschools in Beijing, with an aim to capture 5 per cent of China’s premium preschool market. In Malaysia, it has also announced plans to launch 20 international preschools by 2024.

Then this April, MindChamps inked a deal to buy eight more preschool centres in Sydney, a move that will take the total number of MindChamps early learning centres in Australia to 20. 

The goal is to capture about 10 per cent of Australia’s market, which has over 8,000 preschools, according to Mr Chiem. Contributions from its Australian operations have been growing, with revenue from Australian centres making up 41 per cent of the group’s revenue, going by its first-quarter results.

Other target markets include the US and the UK, said Mr Chiem. MindChamps is also present in Abu Dhabi, Dubai, the Philippines, Myanmar and Vietnam.

Much of this expansion is aided by a 90:10 model - 90 per cent of centres franchised and 10 per cent company-owned. In Singapore, the model is around 80:20. 

“One of the toughest things is to get staff to run a place like they own it,” said Mr Chiem, when asked how the motivation for franchising came about. “So if you have franchisees who run the centres like they own it, which they do, the psychology of that, in terms of delivering excellence, outweighs.”
As a gauge, the preschool franchise licence fees which MindChamps charges in Singapore have risen over the years from S$55,000 in 2008 to S$200,000. 

Some of the target markets are also geographically massive, making it difficult for MindChamps to cover all ground by itself. But the firm will continue to own some of its centres for the purposes of training staff and piloting new programmes, Mr Chiem said.

MindChamps has also secured backing from Temasek-linked Pavilion Capital and Keppel Capital, the asset management arm of Keppel Corp, just before its IPO (initial public offering) funds deplete. 

The group raised S$47.6 million when it listed in Singapore in 2017. Just S$5.2 million remain, based on its first-quarter results filings. 

“We definitely have plans for more partnership with funds in different territories,” Mr Chiem said. The group is in talks with a potential partner in the Middle East. 

Asked if the company will tap the Singapore market for funds, he said they will rely on current funding first. 

The Business Times’ parent company, Singapore Press Holdings, is a MindChamps shareholder.