Course Hero, a profitable edtech unicorn, raises rare cash

Published August 26, 2020

Like any successful founder, Andrew Grauer had bright, long-term ambitions for Course Hero from the moment he launched it in 2006.

He started the business to create a place where students could ask questions and get answers similar to Chegg, which launched 15 months before Course Hero . But as he slowly built it, he was tempted by a larger question: “What would a university look like if it was built by the internet?”

And so, the Redwood City-based startup itched at that nebulous goal throughout the years. Course Hero tested and failed products: free curated e-courses, in-person tutoring and teacher advice and ratings.

Clarity only came when Grauer realized that the core goal Course Hero launched with — giving students a place to ask and answer questions — wasn’t simply one product that should be fit into a broader suite of services. Instead, it was a thesis around which to build products. So, the startup began looking for different ways and formats to organize knowledge and questions and answers.

“That was a breakthrough insight,” Grauer said. The startup stopped launching other business verticals and decided to stick to Q&A as its core — and only — business. It sells Netflix -like subscriptions to students looking for access to learning and teaching content. Teachers and publishers can put course-specific study content on the platform.

Image Credits: Getty Images/manopjk

In 2020, Course Hero is a profitable business with annual run revenue upward of $100 million.

Today, Course Hero tells TechCrunch that it has raised a new tranche of capital in a Series B extension round of $70 million. The round is now totaling $80 million, bringing Course Hero’s total known venture capital to date to $95 million.

Its $80 million Series B round is one of the largest U.S. funding deals of 2020, and brings Course Hero’s valuation to $1.1 billion.

From a high level, the new raise is not surprising. Other edtech companies have also recently added on more capital to their balance sheets to meet remote learning demand amid the coronavirus pandemic.

But in Course Hero’s case, the new capital comes as a stark contrast to how the business functioned before 2020. After launching, the startup waited eight years to raise a $15 million Series A. Now, after going another nearly six years without raising venture capital, Course Hero has closed two rounds in this year alone.

Grauer tells TechCrunch that the capital will be used for operations, product innovation and feature development. It also plans to use the capital for future acquisitions (in 2012, Course Hero bought an in-person tutoring business).

Course Hero’s change of heart with venture capital boils down to the company meeting new scale demands. Last year, it passed 1 million subscribers on the platform. Now, it is eyeing “many millions” of students, the co-founder says.

Paraphrasing Bill Gates, Grauer said, “We do overestimate what we can do in just three years. And we dramatically underestimate what we can do closer to 10 years.”

Any edtech company that raises money off of current momentum in remote education will have to face the reality of what it is like to grow when remote learning is no longer a necessity. In other words, when the coronavirus pandemic ends, will these same platforms still find surges in usage?

“That’s the risk and reward of raising capital,” Grauer said. He added that “if you raise too much money early on, you can get misaligned expectations based on different time horizons set up by different terms of incoming shareholders or investors.”

Course Hero sees tailwinds in a dynamic that has been brewing since before the pandemic and will likely grow during and after: the growth of “nontraditional students” enrolling in and participating in higher education. Grauer noted that more than 40% of students work 30 hours or more per week. Over a quarter of students are parents, and of that quarter, over 70% are single moms.

“Because that’s the reality, and because we can make an affordable subscription and the economics can work, Course Hero is aligned to serving the majority, the real majority, and that’s the beauty of opportunity,” he said. There is a freemium model, but on an annual plan, a subscription costs $9.95 per month. On a monthly plan, a subscription costs $39.99 per month.

It’s not an opportunity the company hopes to expand into, it’s a reality of its diverse customer base. An internal data analytics survey of Course Hero shows that 58% of students that subscribe work at least part time. Over 25% of subscribers are 35 years old or older, and 22% of subscribers are parents.

Looking ahead, Course Hero hopes to continue to broaden its multisided marketplace.

In July, the business announced it is launching Educator Exchange, which allows college faculty to make money by uploading study materials for fellow teachers or students.

The “direct-to-faculty” relationship could pacify earlier tensions between the platform and teachers by giving the latter a way to monetize on how Course Hero “open sources” creative content on the point of copyright infringement.

Grauer compares Course Hero’s long-term vision to that of Google Maps, in that the platform can make recommendations of content based on other people’s usage.

But we’re not talking recommendations for the closest gas station. Based on how a user learns, Course Hero can recommend a specific professor who has a specific syllabus on a topic in which the user is interested.

“We’ve seen that specificity level differentiates us from others,” he said. “It helps students when they’re doing their real work, that one homework, that studying for one test. And I think that’s where the magic is for us.”

Edtech startups flirt with unicorn-style growth

GO1, an enterprise learning platform, picks up $40M from Microsoft, Salesforce and more

Published May 18, 2020

With a large proportion of knowledge workers doing now doing their jobs from home, the need for tools to help them feel connected to their profession can be as important as tools to, more practically, keep them connected. Today, a company that helps do precisely that is announcing a growth round of funding after seeing engagement on its platform triple in the last month.

GO1.com, an online learning platform focused specifically on professional training courses (both those to enhance a worker’s skills as well as those needed for company compliance training), is today announcing that it has raised $40 million in funding, a Series C that it plans to use to continue expanding its business. The startup was founded in Brisbane, Australia and now has operations also based out of San Francisco — it was part of a Y Combinator cohort back in 2015 — and more specifically, it wants to continue growth in North America, and to continue expanding its partner network.

GO1 not disclosing its valuation but we are asking. It’s worth pointing out that not only has it seen engagement triple in the last month as companies turn to online learning to keep users connected to their professional lives even as they work among children and house pets, noisy neighbours, dirty laundry, sourdough starters, and the rest (and that’s before you count the harrowing health news we are hit with on a regular basis). But even beyond that, longer term GO1 has shown some strong signs that speak of its traction.

It counts the likes of the University of Oxford, Suzuki, Asahi and Thrifty among its 3,000+ customers, with more than 1.5 million users overall able to access over 170,000 courses and other resources provided by some 100 vetted content partners. Overall usage has grown five-fold over the last 12 months. (GO1 works both with in-house learning management systems or provides its own.)

“GO1’s growth over the last couple of months has been unprecedented and the use of online tools for training is now undergoing a structural shift,” said Andrew Barnes, CEO of GO1, in a statement. “It is gratifying to fill an important void right now as workers embrace online solutions. We are inspired about the future that we are building as we expand our platform with new mediums that reach millions of people every day with the content they need.”

The funding is coming from a very strong list of backers: it’s being co-led by Madrona Venture Group and SEEK — the online recruitment and course directory company that has backed a number of edtech startups, including FutureLearn and Coursera — with participation also from Microsoft’s venture arm M12; new backer Salesforce Ventures, the investing arm of the CRM giant; and another previous backer, Our Innovation Fund.

Microsoft is a strategic backer: GO1 integrated with Teams, so now users can access GO1 content directly via Microsoft’s enterprise-facing video and messaging platform.

“GO1 has been critical for business continuity as organizations navigate the remote realities of COVID-19,” said Nagraj Kashyap, Microsoft Corporate Vice President and Global Head of M12, in a statement. “The GO1 integration with Microsoft Teams offers a seamless learning experience at a time when 75 million people are using the application daily. We’re proud to invest in a solution helping keep employees learning and businesses growing through this time.”

Similarly, Salesforce is also coming in as a strategic, integrating this into its own online personal development products and initiatives.

“We are excited about partnering with GO1 as it looks to scale its online content hub globally. While the majority of corporate learning is done in person today, we believe the new digital imperative will see an acceleration in the shift to online learning tools. We believe GO1 fits well into the Trailhead ecosystem and our vision of creating the life-long learner journey,” said Rob Keith, Head of Australia, Salesforce Ventures, in a statement.

Working remotely has raised a whole new set of challenges for organizations, especially those whose employees typically have never before worked for days, weeks and months outside of the office.

Some of these have been challenges of a more basic IT nature: getting secure access to systems on the right kinds of machines and making sure people can communicate in the ways that they need to to get work done.

But others are more nuanced and long-term but actually just as important, such as making sure people remain in a healthy state of mind about work. Education is one way of getting them on the right track: professional development is not only useful for the person to do her or his job better, but it’s a way to motivate people, to focus their minds, and take a rest from their routines, but in a way that still remains relevant to work.

GO1 is absolutely not the only company pursuing this opportunity. Others include Udemy and Coursera, which have both come to enterprise after initially focusing more on traditional education plays. And LinkedIn Learning (which used to be known as Lynda, before LinkedIn acquired it and shifted the branding) was a trailblazer in this space.

For these, enterprise training sits in a different strategic place to GO1, which started out with compliance training and onboarding of employees before gravitating into a much wider set of topics that range from photography and design, through to Java, accounting, and even yoga and mindfulness training and everything in between.

It’s perhaps the directional approach, alongside its success, that have set GO1 apart from the competition and that has attracted the investment, which seems to have come ahead even of the current boost in usage.

“We met GO1 many months before COVID-19 was on the tip of everyone’s tongue and were impressed then with the growth of the platform and the ability of the team to expand their corporate training offering significantly in North America and Europe,” commented S. Somasegar, managing director, Madrona Venture Group, in a statement. “The global pandemic has only increased the need to both provide training and retraining – and also to do it remotely. GO1 is an important link in the chain of recovery.” As part of the funding Somasegar will join the GO1 board of directors.

Notably, GO1 is currently making all COVID-19 related learning resources available for free “to help teams continue to perform and feel supported during this time of disruption and change,” the company said.