Like any successful founder, Andrew Grauer had bright long-term ambitions for Course Hero from the time he launched it in 2006.
He started the business to create a place where students could ask questions and get answers similar to Chegg, launched 15 months prior to Course Hero . But as he slowly built it, he was tempted by a larger question: "What would a university be like if it were built from the Internet?"
And so, the Redwood City-based startup has been itching to that nebulous goal over the years. Hero of the course tested and failed products: free curated e-courses, in-person tutoring, and teacher advice and ratings.
The clarity only came when Grauer realized that the main goal with which Course Hero was launched - giving students a place to ask and answer questions - wasn't simply a product that should fit into a larger suite. of services. Instead, it was a thesis around which to build products. Hence, the startup began looking for different ways and formats to organize knowledge, questions and answers.
"This was a groundbreaking discovery," 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 - such as subscriptions for students seeking access to learning and teaching content. Teachers and editors can post course-specific study content on the platform.
In 2020, Course Hero is a profitable business with annual revenues exceeding $ 100 million.
Today, Course Hero told ProWellTech that it has raised a new equity tranche in a $ 70 million Series B extension round. The round now totals $ 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 increase is not surprising. Other edtech companies have also recently added more capital to their balance sheets to meet the demand for distance learning during the coronavirus pandemic.
But in the case of Course Hero, the new capital stands in stark contrast to how the business operated before 2020. After launch, the startup waited eight years to raise $ 15 million in Series A. Now, after spending more nearly six years without raising venture capital, Course Hero has closed two rounds this year alone.
Grauer tells ProWellTech 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 a mentoring business in person).
Course Hero's change of mind with venture capital boils down to the company's ability to meet new needs of scale. Last year it surpassed 1 million subscribers on the platform. Now he's looking at "many millions" of students, says the co-founder.
Paraphrasing Bill Gates, Grauer said: "We overestimate what we can do in just three years. And we drastically underestimate what we can do in the next decade. "
Any edtech company that raises money from the current momentum in distance education will have to face the reality of what it means to grow up when distance learning is no longer a necessity. In other words, when the coronavirus pandemic ends, will these same platforms still experience peak usage?
"This is the risk and the reward of raising capital," Grauer said. He added that "if you raise too much money in the beginning, you can get misaligned expectations based on different time horizons set by different terms of incoming shareholders or investors."
Course Hero sees the favorable winds in a dynamic that has been in turmoil since before the pandemic and is likely to grow during and after: the growth of "non-traditional students" enrolling and participating in higher education. Grauer noted that over 40% of students work 30 hours or more per week. Over a quarter of the students are parents and of that quarter over 70% are single mothers.
"Because this is the reality, and because we can make an affordable subscription and the economy can work, Course Hero is aligned to serve the majority, the very majority, and that's the beauty of the 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 Course Hero analytics survey shows that 58% of students who enroll work at least part-time. Over 25% of subscribers are 35 or older and 22% of subscribers are parents.
Looking ahead, Course Hero hopes to continue expanding its multifaceted market.
In July, the company announced the launch of the Educator Exchange, which allows academics to earn money by uploading study materials for other teachers or students.
The "direct to faculty" relationship could ease previous tensions between the platform and teachers, giving teachers a way to monetize how Course Hero "opens up" to creative content on the verge of copyright infringement.
Grauer compares Course Hero's long-term vision with that of Google Maps, as the platform can provide content recommendations based on other people's usage.
But we're not talking about recommendations for the nearest gas station. Based on how a user learns, Course Hero can recommend a specific professor who has a specific curriculum on a topic the user is interested in.
"We have seen that the level of specificity differentiates us from others," he said. "Help the students when they are doing their real work, that homework, that study for a test. And I think that's where the magic lies for us. "