Coursera, one of the companies featured on Forbes’ 2018 list of Next Billion-Dollar Startups, is worth well over $1 billion, says its CEO, Jeff Maggioncalda. The seven-year-old online education provider, based in Mountain View, California, announced this morning that it had raised an additional $103 million in funding. “This gives us the resources to more aggressively push on our mission of greater access to quality education and greater opportunity for people who are being left behind in this economy,” he says.
Since our feature story on Coursera last October, the number of registered learners on the site has climbed from 36 million to 40 million. When we published, the company had been valued at $800 million. Its revenue, which Forbes pegged at $140 million in 2018, is fueled in part by partnerships with 1,800 enterprise customers. They include Adobe, which paid Coursera an estimated $150,000 last year to provide machine-learning courses to Adobe employees.
Three months ago, Coursera signed a deal with the Abu Dhabi School of Government, an entity set up to train 60,000 government employees in digital skills like data science and artificial intelligence. Maggioncalda says that partnership is Coursera’s most extensive to date.
Coursera also offers 14 online masters degrees, in computer science, business and public health, from schools like the University of Michigan and the University of Illinois at Urbana-Champaign. And it just launched its first online bachelor of science degree with the highly regarded University of London.
Coursera’s news comes at a time when critics like Kevin Carey, director of education policy at the liberal-leaning New America foundation, have raised concerns about the high cost of online degrees. In a widely-read April article published in the Huffington Post, headlined “The Creeping Capitalist Takeover of Higher Education,” he wrote that online education should slash the price of a good degree. But instead, many schools use online program managers, known as OPMs, to produce and market their online courses. OPMs charge as much as 60% of tuition for the service. Students who earn online degrees offered through OPMs pay the same high tuition as they would if they studied on campus. “What this means is that an innovation that should have been used to address inequality is serving to fuel it,” he wrote. (Read Forbes’ story on 2U, a leading OPM here.)
By contrast, Coursera does no course production and takes only 40% of tuition. Its marketing costs are low, says Maggioncalda, because it already reaches a huge number of learners. One example of a low-cost Coursera degree: its online iMBA from the University of Illinois’ highly-ranked Gies College of Business, which costs $22,000. Out-of-state students pay $75,000 in tuition for an on-campus degree.
Though its partnerships with companies and its degree programs are growing, he says the $49 fee (or subscription fee of $49-$99 per month) learners pay to earn completion certificates for its wide selection of courses that are open to the public still account for the largest share of Coursera’s revenue.
Stanford computers science professors Daphne Koller and Andrew Ng founded Coursera in 2012 as a platform to offer massive open online courses, known as MOOCs. Their vision was to give students around the world free access to college courses taught by professors from top universities. At first, Coursera charged nothing to students, who earned no academic credit. Princeton, Penn and Michigan signed on. Tremendous hype followed, with thought leaders like the New York Times’ Thomas Friedman writing about Coursera and its fellow MOOC providers Udacity and edEx, “Nothing has more potential to unlock a billion more brains to solve the world’s problems.”
The narrative soon switched to “the death of the MOOC,” after data from two University of Pennsylvania studies showed that 80% of people who registered for free MOOCs already had degrees and only half of them bothered to look at a single lecture. A minuscule 4% completed their courses.
In 2014 Coursera hired former Yale president Rick Levin and started charging $30-$70 for course completion certificates. In 2017 Maggioncalda took over the top job. He had a track record running a successful company started by Stanford professors. In 2010 he took retirement planning website Financial Engines, founded by Nobel prize winner William F. Sharpe and former SEC commissioner Joseph Grundfest, public. By the time he left, its market cap was close to $2 billion and his net worth was north of $50 million.
At Coursera, he’s put the company on a growth trajectory that includes expansion around the world. After the U.S., Coursera’s greatest growth has come from India, China, Mexico and Brazil, in that order.
The latest investment in Coursera was led by SEEK Group, an Australian company with stakes in online employment and education firms. SEEK was joined by previous Coursera investors Future Fund and NEA. It brings Coursera’s total funding to $313 million.
-Susan Adams; Forbes Staff