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Coursera Raises Millions

July 10, 2013

Coursera, the largest provider of massive open online courses, has $43 million in new investment money, the company announced this week.

One of Coursera's co-founder, Daphne Koller, said the money will give the company a “sizable amount of runway” to expand its user base and continue developing its software platform.

At least $10 million is meant to aide Coursera’s global expansion. Half of that comes from the International Finance Corporation, or IFC, a part of the World Bank Group. IFC's $5 million is being matched by Laureate Education Inc., the higher education for-profit company that largely operates outside the United States.

Elena Sterlin, IFC’s senior manager for health and education, said that the global demand for education is a vast problem that probably cannot be met by building enough universities and finding enough qualified instructors.

“It’s pretty much impossible to deal with this through traditional methods,” she said.

That is where Coursera may come in, Sterlin said. The company, which now has about four million users and continues to grow rapidly, specializes in delivering video lectures and tests on the Internet.

“This is where we see a huge need in terms of students: where it is not a good education versus a less good education -- it’s a question of do you have an education at all,” Koller said.

Other investors are more traditional venture capitalists, including two that already have sizable investments in the company. Coursera did not announce how much each has put up, though IFC disclosed its own, and Laureate’s, $10 million total investment. The other new investors are:

  • Yuri Milner, a Russian tycoon. He was an investor in Facebook, Groupon, Twitter and Zynga and has been called “the world’s most successful investor in social media.
  • GSV Capital, which has invested in Facebook, Twitter, Spotify and Palantir Technologies. It also has a portfolio of ed tech companies, like 2U, Chegg, CorpU, and Parchment, which was founded by the former Blackboard CEO Matthew Pittinsky. "Coursera is on the forefront of transforming the $4.5 trillion dollar learning industry,” said GSV’s CEO Michael Moe in a statement.
  • Learn Capital, which invests in ed tech companies, including Udemy, which also offers low-cost online courses.

Koller said Coursera’s board remains controlled by her and its co-founder, Andrew Ng. Both are computer science professors at Stanford University.

Laureate’s investment marks the first by a for-profit university in an American MOOC provider. The company’s investment came about through Coursera’s talks with IFC, which itself invested $150 million in Laureate because Laureate is expanding its presence in Africa. It already has about 70 physical campuses in 29 countries. (Note: This paragraph has been changed from an earlier version to correct the amount given for IFC's investment in Laureate.)

While for-profits have often been viewed with suspicion by faculty members at traditional universities, Laureate’s major American holding, Walden University, won praise as “perhaps the best of any” for-profit university by a Congressional investigation that was otherwise critical of for-profits. Koller said she would not have been interested in investments by other for-profits, citing the University of Phoenix as an example.

Laureate's founder and CEO, Doug Becker, said his company and Coursera share a similar mission.

“While there may be a perception that the MOOC phenomenon is a threat to traditional higher education providers, we see it very differently,” he said in a statement. “Our view is that this new wave of innovation can be leveraged to enhance the experiences of our students -- whether it be through lowering the cost of delivery, enhancing classroom pedagogy, or increased learning opportunities. We are thrilled to partner with Coursera and look forward to the opportunity to support Andrew and Daphne as they seek to expand globally."

Sterlin said IFC, which invests $20 billion a year in emerging markets and has an $850 million education portfolio, is interested in the “potentially big scale” of Coursera’s offerings. There remain, she said, questions about its ability to offer quality courses.

“We have to still create more evidence of that, but that’s one of the areas we’ll be working with Coursera on," she said. “And the other area we will be working with them on is going into emerging markets.”

Countries in Africa could be particularly challenging markets for any online company because many users rely on their phones to access the Internet, if they have access at all.

Koller said phones on the continent are primarily made by Nokia, rather than Android or Apple, and not as many phones are smartphones or have Internet access. She said figuring out what devices Coursera wants to offer content for is a “non-trivial exercise.”

“Using us on a regular telephone doesn’t really give us a good user experience,” she said.

The company is also working to localize its content but will also be working to develop local partners.

Coursera has already received $22 million in funding from Kleiner Perkins Caufield and Byers and New Enterprise Associates, two venture capital firms that will also be investing more as part of the latest round of funding, as well as the University of Pennsylvania and California Institute of Technology.

 

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