Online learning marketplace Udemy raises $50M at a $2B valuation from Japanese publisher Benesse
The internet has, for better or worse, become the default platform for people seeking information, and today one of the companies leveraging that to deliver educational content has raised some funding to fuel its next stage of growth. Udemy, which provides a marketplace offering some 150,000 different online learning courses from business analytics through to ukulele lessons, has picked up $50 million from a single investor, Benesse Holdings, the Japan-based educational publisher that has been Udemy's partner in the country. The investment values Udemy at $2 billion post-money, it said.
This is a big jump since the startup last raised money, a $60 million round in 2016 that valued it at around $710 million (according to PitchBook data). With this round, Udemy has raised around $130 million in funding.
The plan will be to use the funding to expand all of Udemy's business, which includes a vast array of courses for consumers that can be purchased a la carte - to date used by some 50 million students; as well as enterprise services, where Udemy works with companies like Adidas, General Mills, Toyota, Wipro, Pinterest and Lyft and others - 5,000 in all - to develop and administer subscription-based professional development courses. Udemy's president Darren Shimkus describes this as a "Netflix-style" model, where users are presented with a dashboard listing a range of courses that they can take on demand.
Udemy will also be looking at improving how courses are delivered, as well as consider new areas it might move into more deeply to fit what Shimkus described as the biggest challenge for the company, and for the global workforce overall:
"The biggest challenge is for learners is to figure out what skills are emerging, what they can do to compete best in the global market," he said. "We're in a world that's changing so quickly that skills that were valued just three or four years ago are no longer relevant. People are confused and don't know what they should be learning." That's a challenge that also stands for businesses, he added, which are trying to work out what he described as their "three to five year human capital roadmap."
The investment will also include a specific boost for Udemy's international operations, starting with Japan but extending also to other markets where Udemy has seen strong growth, such as Brazil and India.
"We've worked closely with Benesse for several years, and this investment is a testament to the strength of our relationship and the opportunity ahead of us," said Gregg Coccari, CEO of Udemy, in a statement. "Udemy is on a mission to improve lives through learning, and so is Benesse. 2020 will be a milestone year where we serve millions more students and enable thousands of businesses and governments to upskill their employees. This growth wouldn't be possible without our expert instructors who partner with us every step of the way as we build this business."
Benesse's business spans instructional materials for children through to courses for adults both online and in in-person training centers - one of the better-known brands that it owns is Berlitz, which operates both virtual courses as well as a network of physical schools - and Udemy has been developing content alongside Benesse both in Japanese as well as English, Shimkus said, targeting both consumer and business markets.
"Access to the latest workplace skills is crucial for success everywhere, including Japan; and Udemy is the world's largest marketplace enabling professional transformation. With this partnership, we envision a world where more people can continue to learn continuously throughout their lives," said Tamotsu Adachi, Representative Director, President and CEO of Benesse Holdings Inc., in a statement. "Udemy and Benesse are incredibly synergistic businesses. This investment is the next progression in our business relationship and demonstrates our confidence in what we can accomplish together."
Udemy's expansion comes at a time when online education overall has generally continued to grow, although not without bumps.
Among those that compete at least in part with it, Coursera last year announced a $103 million round of funding at a $1 billion+ valuation and made its first acquisition to expand how it teaches programming and other computer science subjects. And in Asia, Byju's in India is now valued at $8 billion after a quick succession of large growth rounds. We've also heard that Age of Learning, which quietly raised at a $1 billion valuation in 2016, is also gearing up for another round.
On the other hand, not all is rosy. Another big name in online learning, Udacity (not to be confused with Udemy), laid off 20% of its workforce amid a larger restructuring; and further afield, Kano - which merges online learning with DIY hardware kits - has also laid off and restructured in recent months. Meanwhile, we don't seem to hear much these days from LinkedIn Learning, another would-be competitor that was rebranded Lynda.com after it was acquired by the social networking site (itself owned by Microsoft).
Unlike Coursera and others that aim for full degrees that are potentially aiming to disrupt higher education, Udemy focuses on short courses, either simply for the student's own interest, or potentially for certifications from organizations that either help administer the courses or "own" the subject in question (for example, Cisco for networking certifications, or Microsoft regarding one of its software packages, or the PMI for a course related to project management).
Those courses are delivered by individuals who form the other half of Udemy's two-sided marketplace. In the 10 years that it's been in business, Udemy has worked with some 57,000 instructors to develop courses, and in the marketplace model, Shimkus told TechCrunch that those instructors have been netted $350 million in payments to date. (He would not disclose Udemy's cut on those courses, nor whether the company is currently profitable.)
The company has a lot of areas that it has yet to tackle that present opportunities for how it might evolve. Working with enterprises but with a large base of consumer usage, there is, for example, a lot of scope to develop more data analytics about what is used, what is popular, and how to tailor courses in a better way to fit those models to improve outcomes and engagement. Another area potentially could see Udemy moving deeper into specific subject areas like language learning, where it offers some courses today but has a lot of scope for growing, particularly leaning on what Benesse has with Berlitz. To date, Udemy has made no acquisitions, but that is also an area that Shimkus said could be an option.