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EdTech Start-Ups Are Raising Billions In Venture Capital To Disrupt Business Schools

Udemy's $60m funding round highlights the growing digital threat to traditional universities

Thu Jun 2 2016

Edtech company Udemy has raised $60 million in venture capital, as it ramps up its aggressive expansion into the business education market.

The Silicon Valley start-up is one of a slew of online learning providers to raise multi-million dollar funding rounds, to “disrupt the future of education”. Total VC investment in edtech reached $2.8 billion in 2015, up from $800 million in 2011, according to data provider PitchBook.

Last year, Udacity raised $105 million at a valuation of $1 billion. Varsity Tutors pulled in $57 million. And LinkedIn completed its acquisition of, for $1.5 billion.

“There is a lot of competition in this space,” said Patrick Mullane, executive director of Harvard Business School’s digital learning initiative, HBX.

Udemy’s announcement marks the latest thrust into business education. Schools are under increasing threat from the pioneers of Moocs — massive, open online courses — such as Coursera and edX, which offer low-cost courses in areas such as management and entrepreneurship.

James Henderson, head of innovation at Swiss business school IMD, said: “Business schools that don’t continue to develop their digital offering can be supplanted by these new players.”

Edtech providers have attracted millions of users, who are enticed by the flexibility and cut-throat prices.

In doing so, they have come into direct competition business schools, which have been criticized for not moving quickly enough into cyberspace. Coursera, the biggest online learning group, launched in March a data analytics degree costing $20,000. The same month, UoPeople launched an online MBA with a $2,400 price-tag.

“The established education system is failing to keep up with the modern workforce,” said Udemy CEO Dennis Yang.

One of the areas most likely to be hit by the digital wave is executive education — short courses often tailored to corporations’ needs. The market is worth $70 billion, according to research from Deloitte.

Udemy launched Udemy for Business in 2013, and its corporate clients include Lyft, Oracle, and Pepsi. EdX has run courses for Microsoft and Thomson Reuters. And Coursera has developed programs for Bank of New York Mellon.

“You can think of it as a threat or an opportunity to make new partnerships,” said Roger Delves, dean of qualifications for Ashridge Executive Education.

He added: “Executive education is becoming more digital. Corporate clients want content available in as many different formats as possible.”

The prospect of disruption has forced many to innovate. IE Business School and Warwick Business School run highly-ranked online MBA programs. Stanford’s Graduate School of Business and MIT Sloan are among those exploring virtual reality. And every school worth its salt has developed Moocs. But some insiders warn the pace of change has been too slow.

“Your standard school is not keeping up with the demand for online education,” said Robin Teigland, professor at the Stockholm School of Economics.