Millions of students around the world are taking high-quality massively open online courses (MOOCs) for free. In 2012, an education revolution blossomed and has helped provide higher education to under-served populations worldwide without any fee. In 2013, MOOC providers secured millions dollars in funding and the growing number of people’s interest in online courses created many lucrative opportunities for education technology companies.
Education technology startups have started to reposition themselves, targeting differentiation and increased revenue in a crowded market. So, 2013 was a year of maturation in the education technology market, writes Lauren Hepler of Silicon Valley Business Journal.
In 2012, MOOC providers targeted the higher education sector. Now, the K-12 technology market is also booming due to the implementation of new Common Core education standards. It was one noticeable shift in 2013.
The flurry of activity raised a big question in 2013: Is this an ed tech bubble or an ed tech boom? Sky-high valuations in the sector have spurred some analysts to cry bubble, while others maintain that education entrepreneurs are simply moving past the emerging technology category and capitalizing on market openings.
Research firm CB Insights said that venture capitalist interest in education tech started to decrease during the first six months of the year, when venture capital investments dropped 26% year-over-year to $481 million. But Coursera investor GSV Advisors still believes that e-learning will be a $155 billion global business by 2017, representing 23% growth in the five years after 2012.
In February of this year, education investor and Stanford University adjunct professor Clint Korver described a frenzied ed tech environment: “What the exact opportunities coming out of this are, I would argue nobody knows,” said Korver, who co-founded Silicon Valley investment firm ULU Ventures. “Something big is happening, and they are trying to position themselves to take advantage of it however it breaks.”
MOOC providers are still looking for a viable business model. These free online courses were created as part of an ideological mission for entrepreneurs looking to expand access to quality education. Studies show that the courses largely reached educated, wealthy males, who have technology and reliable internet acess.
When the courses do reach a truly “open” consumer market, results are less than stellar as seen with the San Jose State University-Udacity remedial education pilot.
In order to generate revenues, MOOC providers are now focusing on employee training for corporations like Google. Udacity recently announced that it is working to offer employee training programs. In addition to Udacity, Coursera, Stanford University and University of Phoenix parent company the Apollo Group are all also considering similar forays into the $135 billion global corporate training market, which doesn’t have the teachers unions and regulatory red tape that accompany public education.
This year, Coursera signed dozens of contracts with universities. After securing a $63 million series B windfall, the company’s funding reached $85 million.
Lynda.com, an online education platform in Southern California, has been been operating for 17 years. The company in 2013 received a huge $107 million series A funding round.
MOOC providers are pushing lawmakers to craft legislation that reflects an increasingly disaggregated and complex web of education providers. In California, government officials have debated the possibility of granting academic credit for MOOCs.