Why go to class when you have a computer?
The education tech space is crowded, but demand isn't in short supply. Take the case of Sebastian Thrun. When the Stanford computer science professor offered a graduate-level course on artificial intelligence for free online last year, 160,000 people from 190 different countries signed up. For a graduate-level course on artificial intelligence.
Udemy, a three-year-old company that delivers classes online, aims for a more practical mix of content. Skill-based courses like excel tutorials and "Become a Web Developer From Scratch" are among the most popular, while the faculty ranges from tenured Ivy League professors to some guy down the street. Today, the company announced that it's raised $12 million in Series B funding from Insight Venture Partners, Lightbank, MHS Capital and Learn Capital.
Among the upstarts vying to train minds online—Thrun's Udacity, 2U, Coursera and non-profit Khan Academy—Udemy is the only company that maintains an open platform, meaning anybody, regardless of credentials, can log on and create a course available to its 500,000 registered users. The site currently hosts 5,000 courses, each a mix of video, audio and PowerPoint that users follow along with note-taking software off to the side. Three-quarters of the offerings are free; others charge anywhere from $12 to $399. Udemy keeps 30% of sales with instructors keeping the rest.
The company is mum on sales, but revealed in May that its top ten instructors earned $1.65 million over the course of a year. Given Udemy's business model, Udemy took in less than half that from the same set of instructors. Dennis Yang, the company's President and COO, says that 2012 revenue has grown five times compared to 2011.
Udemy's open model means the company can save cash on content production while focusing on improvements to the online product. Of their 25 employees, half currently work directly with product. The company released an iPad app last month and plans to release mobile apps for Android and iOS next year. "We tend to find our audience is more in the adult learner category, so the product needs to be super convenient for when and where they want to learn," says Yang. Students can also download course materials for offline access.
In the coming year, Udemy plans to produce more conventional, university-level courses similar to those offered by Udacity, 2U and Coursera. Their non-profit "Faculty Project" already streams university courses from faculty at Northwestern, Vanderbilt and Dartmouth among others, but Yang says accredited curricula of the for-profit variety are on the way.
FORBES' Michael Noer recently reported that worldwide spending on education accounts for $3.9 trillion a year, or 5.6% of global GDP. U.S. student debt meanwhile, recently passed the $1 trillion mark, yet only 30% of adults in the U.S. have a bachelor's degree. "There's massive tension in the space," Yang quips. And massive opportunity.
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